From the Atari Shock to a Modern Crisis: Analyzing Mass Layoffs in the Post-Pandemic Video Game Industry

The video game industry (VGI) has faced a profound crisis from 2023 to 2025, marked by unprecedented mass layoffs and studio closures. This study delves into the root causes and long-term implications of this workforce reduction, drawing critical parallels to the Video Game Crash of 1983, also known as the Atari Shock. By examining the economic and market dynamics that precipitated these layoffs—including overinvestment, escalating development costs, intensified market competition, product homogeneity, and shifting player behaviors—the research highlights the industry's structural vulnerabilities and resilience. Furthermore, the study explores the historical lessons from the Atari Shock. Through a combination of empirical analysis and historical pattern recognition, this research proposes actionable strategies for sustainable growth. The findings aim to provide a comprehensive understanding of the current crisis and offer practical recommendations for industry stakeholders to navigate future challenges effectively.