Creative Destruction in the Games Industry

The games industry is cutting thousands of jobs. But is it cutting the right things?

I just finished "The Power of Creative Destruction" by Aghion et al. It examines why some nations grow while others stagnate. The answer: new entrants displace incumbents. Innovation replaces ossified systems.

Cuts were inevitable. Investment had been climbing since the mid-2010s. COVID poured gasoline on it. Too much capital chased too few experienced people. Games take years to ship, so the correction hits all at once.

But there's cutting to preserve the status quo — and cutting to enable the future.

I'm seeing a lot of the former. Return-to-office mandates. Tighter oversight. A thousand small cuts that bleed out safety and trust.

The instinct is to grip harder, not leap forward.

Yesterday's innovators are becoming today's blockers. In survival mode, teams shed risk — and risk looks like experimentation, new tools, unproven approaches.

Aghion identifies unobstructed market entry as a key driver of growth. Block the new entrants, and you get short-term stability followed by long-term decline.

These are answers to the wrong question.

The Real Problem

The industry's real problem was never headcount. It was productivity.

Our tech stagnated while our productions scaled. Iteration crawled. Teams ballooned to compensate.

Trimming those teams doesn't fix the underlying problem. It's compacting dried cement.

Real creative destruction looks different:

• Let aging systems burn. The maintenance cost isn't worth it — build the replacement.
• Empower leaders who leverage AI to multiply productivity — not generate slop.
• Fund 10 cheap long shots instead of 1 safe bet — Aghion calls venture capital "the optimal tool for advancing innovation" precisely because it funds risks traditional financing won't touch.

The destruction is happening. Where's the creation?