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Life without layoffs, or why they are an avoidable part of game development | GI Sprint

We talk to veteran game designer and CEO, Jesse Schell, who hasn't laid off any devs in 22 years

Despite what the headlines suggest, no – layoffs are not an inevitability.

Jesse Schell – a veteran designer and author who hasn't laid off a single employee since establishing Schell Games in 2002 – believes the games industry's cyclical hiring and firing practices not only breed distrust and fear, but also weakens team dynamics over time.

As part of our new GI Sprint series of videos, podcasts, and articles about making games cheaper, faster, and better, Schell shares his strategies for building and maintaining a sustainable business in desperately uncertain times.

You can watch the full discussion below, download it here, or find it on the podcasting platform of your choice.

Watch on YouTube

Change how you do business, not your headcount

"The reason I think a lot of folks end up having layoffs is they put jobs at risk as part of the nature of doing business," Schell says when asked how he's managed to avoid layoffs at his studio when almost 11,000 devs from 120+ studios have lost their jobs in 2024 alone.

"[Studio executives] go into it saying, 'Look, we're gonna get this money, we're gonna make this game. If the game is a success, then great – if the game's not, then we're gonna have to lay people off'. That's just how it is," Schell says.

"I've always found it to be really toxic. I've been at companies where I've seen it happen. And you see how everybody lives in fear of what will happen next."

Not only is this bad for morale, but it's bad business, too. That's why Schell thinks studios should prioritise people over profits.

Prioritise your people by creating a desirable workplace culture

Firmly believing that the longer people work with each other, the better they get, Schell's keen to stress that retention isn't just about holding onto skills or experience – it's about strengthening relationships across your workforce, too, no matter its size.

"When somebody from the team leaves, not only have you lost that talent, but all of the experience that people have built up working with that person," Schell explains. "But when people stay together, they get stronger over time. For us, a big part of it has been prioritising stability, and the way that we have chosen to prioritise stability is to have a mixture of work-for-hire projects combined with our own IP. This way, if one [project] isn't going so well, we can lean more into the other.

"At the heart of it all is choosing not to put jobs at risk. We'll put cash at risk when we make a game, but we don't put jobs at risk. Even if our own IP brings in zero dollars, we still haven't put any jobs at risk – we still have a path forward where we'll be able to keep people on. So, in a lot of ways, it's a choice."

That doesn't mean Schell isn't prepared to make difficult decisions when someone isn't working out, or adversely affecting team dynamics, he adds; it just means Schell Games carefully fosters a working environment that "people want to stay at long term".

Be efficient and agile in your decision-making

Schell Games typically works on six to eight games at a time. Sure, it could double that if it doubled its workforce – Schell's quick to acknowledge that "there can be meaningful economies of scale" when you boost your headcount – but those improved efficiencies may come at the cost of "more chaos and miscommunication."

"Experienced devs can look at a project and estimate what they'll probably need. Estimating is hard to get right, and it's hard work. So the key is to respect the fact that it's difficult and respect that it's hard work. And then you do your best.

"Then, as the project goes on, you realise this isn't what we thought," he adds. "We thought this game needed 12 levels, but it only needs eight. We thought it needed 10 enemies, but actually, it needs 25. The project changes. This is why agile development is so important. Because agile development is a system where you're reevaluating the schedule and saying: what's changed? What have we learned in the last sprint that's going to affect the long-term plan for this?

"There's a real art form to estimating and planning and getting things done on time on budget at quality, and you have to respect that and have people focused on that."

Outsourcing can save money in the short-term but at a risk

While Schell appreciates why studios prefer to contract or outsource staff on a freelance basis to keep their core costs lean, he works differently.

"We'll put cash at risk when we make a game, but we don't put jobs at risk"

"You don't know these people. You haven't built a relationship with them," Schell says. "That works best when the work is very straightforward. But if you're living in an innovative space where you're inventing a new kind of gameplay, it's tough working with contracted folks because communication is just so important. It takes time to build up that trust between folks.

"Every few years, you'll get some Hollywood big-wig, they'll say: 'You games people, you don't know what you're doing. I'll show you how we do it the Hollywood way. It's really efficient'. And they'll jump in, and they'll start trying to do that, and then a year or two later, they're out. They just kind of just disappear into the shadows. It's just way harder in games."

There are alternatives to layoffs

Schell Games has experienced hard times, with the studio being "in danger" at various points in time.

"We've never taken investment," Schell says. "We've been a bootstrap studio. We started out doing work-for-hire projects where people would pay us to make a game, we would deliver, and we'd get paid. Obviously, we had to manage those in a way they were breakeven or profitable. And we did that for quite some time."

Using the profits generated by these work-for-hire contracts, Schell Games then reinvested in its own people to develop its own IPs. By Schell's own metrics, "they were not always profitable games," but that's okay – "we kept going."

"Layoffs are like an avalanche. If a company needs to do a layoff, it's a smart idea to do it when everybody else is doing it. Then it's like, 'Well, it's not us. That's just the economy right now..."

"Right now, we're in a spot where we can do about 50% our own IP and 50% work-for-hire, and it works really well," he adds. "Everything is feeling pretty good. But the recession back in 2012 was a really scary time. Projects were getting cancelled. We were having trouble getting new projects. And it was just constant hustling, just trying to get work.

"So there have been periods where we didn't do raises for a while. We needed to be careful. I remember somebody back during the recession quit over that. So he left and went and worked at a large game studio… and a year later, he got laid off.

"Belt tightening is part of it," Schell explains. "A part of that is, sometimes, you have to pull back on bonuses, or pull back on raises, or pull back on other kinds of spending. There's a lot of ways that you deal with it in a pinch, but you want to get ahead of it. We did some belt-tightening this past year, too, because we saw where it was going. And we had a tough situation. A big project was all lined up. We were saying no to other projects because of it. We'd been working for about six months, getting this deal, and poof – it vanished overnight. Just… it was gone.

"You just have to manage it and be thoughtful and be careful. I mean, it's business. There are no guarantees. But it comes down to what you prioritise. If you prioritise stability, you can stay pretty stable, but you've got to give it a lot of time and thought and attention."

Be honest and pragmatic about risk mitigation

Reflecting on industry trends, Schell says that the reason we've seen so many layoffs – not just in the game industry, but in the tech industry generally over the last two years – is about recovering from the pandemic.

"We moved into the pandemic, and suddenly everybody's working at home," he says. "We have a situation where everybody can work from anywhere. And so suddenly, we experienced the Great Resignation; people started quitting all over the place. As a result, everybody started trying to combat it. So salaries went way up, and companies started hiring in a kind of a desperate, fearful way.

"Layoffs are like an avalanche," he adds. "If a company needs to do a layoff, it's a smart idea to do it when everybody else is doing it. Then it's like, 'Well, it's not us. That's just the economy right now. So if we're going to do it, we should do it now because then it's not going to make us look like something's wrong with us. It's going to make us look normal. So that's what we're going through right now. Hopefully, everything's going to normalise pretty soon."

Schell thinks this "boom and bust" mentality isn't unusual, not just in the entertainment sphere but also in tech spaces. Ultimately, though, he believes layoffs are often the result of managers failing to properly mitigate risk and candidly consider all outcomes.

"If you care about prioritising [minimising layoffs], you can make it work"

"You can and you must think about the worst case. You must think about risk mitigation. What if the deal goes south? It's like a game of chess – there are entities out there that will intentionally put you in a bad spot, get you to go out on a limb, and then they're going to start sawing that limb off in order to get a better deal out of you. I've seen it happen to so many studios when they're setting up a deal with the publisher."

This is why, Schell says, studio heads should always have a backup plan and prioritise their people.

"I got a great piece of advice from [Insomniac Games CEO] Ted Price once when our studio was growing. We were pushing up past 40. And I was like, 'Ted, I know the way we've been managing is not right. We're gonna have to do things differently. We're gonna have to add a layer of management. But I don't know if it's the right thing to do'.

"He says, 'Here's what's going to make things okay for you. You care about these problems. You're thinking about these problems, you're giving them time and attention. If you do that – if you think about them, care about them, value them, prioritise them – you're gonna solve them. It's the people who just say, well, now let's just make our game. We don't need to think about that stuff. Let's just hope it works out. Those are the folks who get themselves in trouble'.

"So that's my main advice. If you care about prioritising [minimising layoffs], you can make it work."

Vikki Blake avatar
Vikki Blake: When? ?her friends? ?were falling in love with soap stars, Vikki was falling in love with? ?video games. She's a survival horror survivalist? ?with a penchant for? ?Yorkshire Tea, men dressed up as doctors and sweary words. She struggles to juggle a fair-to-middling Destiny/Halo addiction? ?and her kill/death ratio is terrible.
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