5 Video Game Things I Learned | 2026 July 25 - July 31
I was challenged a bit this week, and I appreciated that. This time after Summer Game Fest likes to drag. If it wasn’t for XBOX and PlayStation keeping things interesting, this summer would be a bit of a snooze fest. Nonetheless, I have once again managed to learn five things about video games this week. It wouldn’t be 2026 without more layoff news, so I have another topic on that this week. There’s also been a bit of progression in the story about PlayStation’s removal of physical games from its library. I then talk about two different games: a success story in The Incident at Galley House and a horror story in Last Sentinel. I cap it off with more of an editorial bit based on articles I read about the hit-driven nature of the video games industry. Enjoy!
2026 Layoff Estimates Rise 78%
Yet another continuation of what I believe will become known as “The Great Shuffle,” or something to that effect. The western portion of the video game industry has gone through an interesting mix of heaven and hell in the 2020s: starting first with the COVID surge in video game revenue and greenlights, and over the past few years finishing with still-record-breaking sales figures, tremendous games, and an unfathomable number of layoffs.
What we’re seeing is not akin to the crash of 1983 during which consumer video game spending plummeted. Rather, this is more similar to a child shuffling cards. The child takes a deck of employee cards that’s in a particular order and dumps them all onto the games industry table. Being a child and therefore inherently more clumsy than an adult, they spread the cards around, mixing up the order and causing some to fall off of the table. Those remaining on the table at the end of the day are in a very different order than they were before.
We’ve seen a lot of studio closures and layoffs, but as those occur, we’ve seen a high number of new studios coming into being, creating more entrepreneurs who want to make their own ways in video games. Many of the largest companies, such as Ubisoft, XBOX, and PlayStation, flounder while smaller, more sustainable teams rise into the AA space, producing hit titles that gamers truly connect with.
With all of that said, smaller teams’ successes as of late do not change the fact that people’s lives are being upended at various stages in their careers. Some are brand-new to the industry and are having trouble getting a foothold; some have been around but are firmly in the stage of life where they’re trying to raise families, and it’s hard to do that in an industry that even before 2020 was known for its terrible cycle of layoffs; some are around retirement age and decide they simply are tired of the fight after so long and trade in their keyboards and monitors for a cold drink on a beach.
According to latest numbers from the ASGC Games Industry Layoffs Tracker, 2026 layoffs are expecting to reach over 14,000 by December 31. For reference, the initial projections in January were just above 8,000. In total, the projections have so far increased by about 78%. Currently, around seven months into 2026, layoffs for the year sit at around 9,700. In comparison, 2025 clocked in just under 9,200.
There’s no doubt that a large component of this huge jump in projections is the XBOX Reset that laid off 1,600 people in a day will go on to lay off up to 1,600 more people over the next year or so. Not to mention the 50% cut in XBOX vendor usage that will no doubt lead to other layoffs across the industry since they will no longer be receiving Microsoft’s business or money. However, when looking at the charts, layoff projections for the year have been steadily rising throughout the whole year. Projections surpassed the aforementioned 2025 numbers by February.
For years now, the idea has been that it has to get worse before it gets better, but we’re all still eagerly awaiting the shift where it actually does start to get better. Maybe in 2027?
PlayStation Network and XBOX Live Crap Out
Some poetic justice from the video game gods this past week. Just at the tail end of last week, PlayStation Network (PSN) experienced tremendous outages. Less than a week later, XBOX experienced a very similar outage affecting many services, including “games & gaming.”
Major outages happen for probably every web-based service on at least an annual basis. However, these are different.
This comes hot off of the heals of PlayStation announcing that they will no longer be producing physical copies of games starting in 2028. PlayStation and other video game companies have been wanting this reality for a long time. The retailer middle man takes a big chunk of revenue for video games, so for PlayStation and XBOX, having their own digital storefronts puts more money in their pockets. Meanwhile, consumers get fleeced in the process because they no longer have a physical disc that they can use to play the game they’ve spent their hard-earned money on. Instead, publishers, distributers, developers, and platform holders wield more power over the consumer by reserving the right to flip a switch and take away the “license” the customer purchased.
While this is a hot topic right now, it’s not new. The idea of purchasing a license instead of a copy has been around since the early days of mass-produced computer software. Games are no exception. They have been distributed for decades using the same philosophy and model, physical or not. What is different now is that physical has been shifted more and more toward digital. I don’t just mean more people purchasing digital copies; I mean people who purchase physical copies but the physical copy doesn’t actually contain all of the necessary logic to start the game. Nintendo did this more publicly last year when announcing that physical copies of Switch 2 games would be nothing more than a pass allowing the player to download a digital copy of the game. This year, Rockstar announced a similar practice slated for the release of Grand Theft Auto VI.
Now, though, PlayStation has truly said the quiet part out loud, and gamers are sick of it. These PSN and XBOX online outages left many gamers unable to access their game libraries or run games that they already had installed. This ironically underscores the exact problem with the future that companies like PlayStation, XBOX, and Nintendo have longed for. In the world of consumer rights, the physical copy was leverage; “If you want to take away my license, you’re going to have to come pry it from my cold, dead fingers.” Now, consumers are left with the same rights as before but no leverage over the interactions they have with companies. Actually, I take that back. The consumer is left with fewer rights because they no longer have the First Sale Doctrine that gives consumers the right to resale a physical used good that they previously purchased legally.
Companies hold all of the power. They can sell you a game digitally for upwards of $80 and then the literal next day revoke that license and be well within their rights outlined in their End-User Licensing Agreements. And now, with their own digital storefronts, they can do so while reaping a higher profit margin. This is where legislation is required. These types of terms were already sketchy when physical copies were still physical copies. Now, they are completely anti-consumer and leave consumers with no recourse or power over the product that they purchased.
The Development of The Incident at Galley House
The Incident at Galley House has quickly risen to the top of my list of games I’ve played in 2026. It’s a remake of the popular Itch.io game Type Help made by the remasterer of The Roottrees are Dead, Evil Trout Inc. Evil Trout put out a blog post this past week detailing some of the development process for Gally House and lessons learned along the way. I enjoyed reading it and seeing how other indie developers create amazing games. So many dev diaries are really just marketing ploys with little to know actual information regarding the development struggles that the team has. The problem with that is that struggles are where innovation comes from. If you’re not detailing any struggles, what is interesting about the game you’re making?
Evil Trout definitely had some struggles, including inefficiencies with the UI styling in the Godot interface, as well as questions of how to take a text-based game and make it something more immersive and interactive. I found the section of the blog post focusing on controller support interesting. Since The Roottrees are Dead couldn’t really have proper controller support “because so much of the game depends on typing in web searches to a fake search engine,” Evil Trout focused strongly on creating an interface that is more controller friendly. That led to “The Machine” that allows players to make simple inputs with minimal text entry in order to navigate the game’s puzzles. This is the perfect example of taking a challenge and creating a robust and unique mechanic to solve it.
I also greatly appreciated the candidness regarding the frustrating yet extremely important role of iteration when developing games. “Iteration is the key to good design, so most of my technical and production decisions were about enabling that.” I tend to agree wholeheartedly. Like Evil Trout, I find the best thing to do is put out something complete that sucks so that you can go back and refine the whole experience iteratively. This leads to more refined mechanics and visuals by way of embracing the idea of throwing out things that don’t work in favor of new, better ways of accomplishing things.
Evil Trout seems to operate with the same philosophies that I usually do. Whenever there’s a task to do, especially by a non-programmer, I wonder, “Can we automate this, and how?“ As we can see with The Roottrees are Dead and The Incident at Galley House, this leads to tooling that allows for much faster development with greatly improved final results. While it helped that both games were based on already existing games on Itch.io, there’s no doubt that a lesser developer could’ve dragged the processes for each game on for several years, all the while scope creeping and failing to rapidly iterate. Instead, in the span of about three years, during which many studios failed to produce a single game, Evil Trout released two, and both of them were received by fans of mystery puzzle games with thunderous applause. If Gamalytic.com is to be believed, then the two games combined in the 2.5 years since the release of The Roottrees are Dead have managed to gross somewhere in the ballpark of $8 million. And no publisher/investor is taking huge percentages off of the top. Evil Trout is a hero in the world of indie game development!
Last Sentinel Flounders
I wouldn’t be surprised if at some point over the years, I saw the 2023 trailer for Last Sentinel, but honestly, I don’t remember it at all. I never remembered it for the same reason many gamers didn’t think it would amount to anything: over the course of three years (2023 to present), the development studio, LightSpeed, never shared any details about the game. LightSpeed committed the classic cardinal sin of creating an ultra-realistic-looking, high-fidelity, pre-rendered trailer with no gameplay. For years no gameplay ever materialized and no new information was shared.
Even when LightSpeed created four dev diary videos in 2025 about the making of Last Sentinel, the videos skirted around details, talking mainly about game development philosophy and the values of the studio when it comes to creating. It peppered the videos with plenty of pats on the back for how amazing, ambitious, and unique the project was, as well as how experienced the team was, constantly flashing on screen all of the games that their various employees have worked on. And all of this has been done over the past 6-7 years using hundreds of millions of dollars from Tencent, LightSpeed’’s parent company and the largest video game company in the world by revenue. Yet, somehow, this incredible game that was going to completely redefine the open-world genre was confirmed to be canceled this past week, according to reporting by Jason Schreier.
After years and years of what was undoubtedly tremendously hard work, LightSpeed LA sent 80 employees home with no jobs and reassigned the remaining members of the Last Sentinel team. One of the things I find most interesting that Schreier touches on is the way that this could be a precursor to what we see from a lot of new teams following this decade of mass layoffs and studio closures. With these layoffs, a lot of long-time developers at huge AAA studios, ranging from Electronic Arts to XBOX to Ubisoft, have gone on to start studios with the aim of making AAA games on their own. And when I say on their own, I really mean on their own. They’re doing so without the backbone of a AAA company that (despite a complete lack of sustainability) knows how to fund and ship AAA games. Instead, these developers are trying to make magic happen with hundreds of employees and hundreds of millions of dollars from venture capitalists and other video game investors who frankly aren’t in the business of making these sorts of games. Over the next five years or so, could we be headed for a lot more similar stories from developers who also want to make AAA games without the proper backing, manpower, and/or producing experience to do so?
Time will tell.
In the specific case of Last Sentinel, LightSpeed did themselves no favors with the amount of hype they gave to their game and studio. In addition to the aforementioned back patting about their experience and ambition, Last Sentinel started out as a game meant to rival Rockstar in their consistent ability to set the bar for open-world adventure titles. In particular, LightSpeed aimed high at the success of Grand Theft Auto, desiring to directly compete with one of the best-selling video game franchises of all time. However, according to internal sources whom Schreier talked to, multiple gameplay demos presented to Tencent fell well short of Grand Theft Auto, failing to make an impression. This ultimately is what torpedoed Last Sentinel.
Thankfully, despite the reduction in staff, LightSpeed is still around as a studio and will continue to make games. I wish them the best and hope they can eventually deliver something truly unique. Again, time will tell.
The Randomness and Non-Randomness of Video Game Success
I read two different sources this week that strangely agree and disagree with one another regarding predicting the success of a video game.
The first was from HowToMarketAGame.com in which Chris Zukowski discussed the relatively new friendslop genre and if it’s saturated or not. In it, he focuses heavily on the real definition of “saturation,” finding the term to be insufficient. Instead, he prefers the idea of “hungriness” in a particular genre, and players in friendslop are hungry. As part of his analysis, Zukowski posits that trying to find which genre can lead to video game success isn’t as easy as looking at the genres with the most games in it (a typical measure for saturation). Rather, it comes from looking at the genres where players are hungry for more. However, he caps off his post by saying that “The games industry is a random, hit driven business.” He then uses that point to argue that it’s important to look at genres as a whole instead of individual success or failure stories. This provides a more data-driven approach that can help indicate good genres ripe for a new game to enter and rake in the bucks.
Seemingly in contrast, I read a GamesIndustry.biz article based on findings from Rami Ismail, a developer and consultant in the industry, that indicate “The games industry is stifled by a culture of fear that prioritises algorithmic trends and market research over the creative conviction and personal taste required to produce genuine hits.“ This article seems to agree with Zukowski’s blog post in the sense that video games are a hit-driven business. How those hits come to be may at first glance appear to be the contentious factor between the two sources. Ismail sees Zukowski’s style of analyzing the datapoints to be too cold and impersonal to be the primary decision-making factor for a creative medium. The article gives more credence to avoiding fear-driven development and sticking to personal taste, as this is what creates innovative games that have the capacity to do well by speaking to a niche of players. After all, allowing fear to sterilize your game so that it appeals to everyone is in reality ensuring that it appeals to no one.
As I’ve alluded, when I first read these two pieces this week, I had the initial thought that these are two differing perspectives that combat one another: the first, a cold, statistical analysis that says hits are random and success can be found through utilizing data to find a genre target, and the second, an artistic-based view that prioritizes creativity and taste above data to appeal to like-minded players.
However, I’ve come to feel that these two pieces actually work in concert and demonstrate the true nature of the video game industry. Essentially, both are indeed correct. As I said before, both pieces apparently agree that this is a hit-driven business. Zukowski, who looks at data and graphs, does in fact see randomness. From a statistical standpoint, these hits don’t follow any particular formula. There’s no line of best fit. There’s no hard-and-fast rule to exploit as a game developer to ensure a game’s success. Statistically, it really and truly is random. However, is that because there’s no correlations that could help predict a game’s success, or is that because data points fall short of the capability to measure taste, as Ismail refers to it?
I believe what in reality appears to be randomness to a numbers person is actually creativity. How do you measure creativity? You can’t. It’s amorphous. It’s abstract. It can’t be expressed through numbers. This is why art exists. Art acts as the measure of creativity. Video games are an art form. So when Zukowski says that this is a “random, hit-driven business,” I believe you can replace the word “random” with the word “creative.” True hits in the games industry come from this head-on collision of creativity and statistical analysis. On one hand, Ismail would probably argue that the statistical analysis is not on equal ground with creativity since no amount of statistical analysis will get players to like a game that is watered-down. Zukowski might counter that there are tons of games out there being released every year that have incredibly high quality but don’t actually sell because they don’t take into account the data that points toward what works and what doesn’t. That leaves us with the truth. These two concepts work together.
Hit games are those that put an emphasis on creativity while adhering to the practices that data shows work when it comes to marketing, release timing, genre selection, and community building. Do all hit games have the same journey? No. This doesn’t mean there’s a particular, correct way to make games. There are many roads that lead to the golden gates. Those roads typically have very similar stops, though. Once a road is followed to the golden gates, it’s then a question of if your game will be allowed through, and that’s where creativity and taste come in.