Bungie's Layoffs: The End of an Era?

All right, let's go to the first story which we didn't get to last week. I think people were joking in the slack. Everyone drops their news like Wednesday after 8:00 a.m. Pacific when we typically record so that it doesn't get in that week's episode. So a couple of these happened I think Wednesday, Thursday of last week. So Sony cut roughly half of Bungie on June 25th ending Destiny after 12 years. And then the next day it's the PlayStation CEO reaffirmed live service and AI strategy that the acquisition of Bungie was meant to fund. So there was something called a Warren filing. This is like a US government filing that allows to kind of journalists to go and see what's going on with layoffs. So this filing confirmed 292 cuts in Bellevue which is a suburb of Seattle with total losses near 300 when you factor in remote. Folks, separation

starts July 9th. This is Bungie's third round since Sony's 3.6 billion buy in 2022 pushing cuts past 600. And Sony took a 766 million impairment on the studio for fiscal 2025. Destiny 2 shipped its final update to 9th. The studio head stepped down and Bungie lost its entire cinematics team and Halo era veterans. Oof. Marathon now carries the whole live service bet despite selling an estimated 1.2 million copies which is about 55 million gross. That's from Alenia Analytics that piece. Only 19% on PS5. And then the thing that was also interesting is that they later the PlayStation CEO said that it wants to revitalize live service and framed AI as a tool to augment not replace studio talent. This is red meat for Chris. Why don't you take this?
If you look at the history of talking about this particular acquisition, I was

not very bullish on the prospect of Bungie going to Sony because I don't think that this was a really good acquisition for them, and it was super expensive. It didn't make sense back then now, but the one clarification they want to make is that they even though the Washington was 292 jobs, I think the total was more like 400
Mhm.
including affected employees outside of Washington. So, if you think about it, it's like an absolutely massive cut, right? Cuz it's almost like 40% of their 850, right? That they have now, right? At their peak, they were 1,300. So, it's basically devastating, right? This cut. So, in essence, they're almost like shutting this thing down, it seems like um maybe they have one team left to make one other game, but that's unclear at this stage. It's very, very sad to see such a beloved a developer cut down because not only are they amazing developers, there's they also there's a lot of goodwill from the customer about about this particular studio. But again,

I have to counter it with the idea that this acquisition really didn't make sense at the time at all, right? Because cuz it was kind of a combination of like wild expectations of what Bungie could accomplish, and then also a little bit of hubris from the studio itself on what they could actually achieve. I don't think they really understood what they were buying as well because I think they set an insane level of expectations against the studio. But it goes both ways, is what I'm trying to say. And again, I made this point before is that you can't expect a studio like Bungie, which is fiercely independent, they build their own stuff to be kind of your centerpiece of live services for Sony worldwide, right? Because their goal and their objective was to make Bungie train all these studios that have no experience whatsoever on live services to do live services, right? That is an impossible task for any, you know, company, any independent studio, particularly one as fiercely independent as Bungie. That whole

narrative didn't make sense. And then on top of it, and as I said before, Destiny is not particularly good live service, either. It doesn't have any of the business models associated with live services that have made the most current ones popular. It is an expansion model, almost purely. It's like 80 80 90% of the revenue is driven by the expansions, not by microtransactions or any other those type of activities, right? I mean, it is a live service in the sense that like, you know, content's being delivered, people are playing all the time, etc. etc., but it's kind of an old-school model. It's not contemporary in a lot of ways. So,
not current live service. We we talked about this when it happened with like Concord back in the day, which is, you know, they were kind of asking folks to go train other people while continuing to run the game, who could be likely on completely different systems. And like you said, like they're they're from their own studio. Like you don't just become a professor overnight and go around to other studios and be like,

"This is how you do it."
Yeah, actually you can do that. The effectiveness is a different thing.
Well, okay, yes. Can and should are two very different
[laughter]
ideas.
Yeah, that's actually a really other good point that I didn't even think about is like from the tech stack perspective, like they're all working with different technologies, though. It's not like you're going to be able to just just just unplug it one place and plug it somewhere else because they're they're doing completely different things. So, anyway, this was a recipe for disaster from the get-go. And this is kind of the result, and it's really really really really sad because I do think Destiny has a brand, it has an audience, and Bungie definitely has a brand and an audience. So, they're basically losing out on that. And yeah, it's looking more and more likely this is going to get shut down.
I wonder if, you know, the world would be different would Destiny 3 come out if it wasn't acquired. I mean, you know, could it have is another question with how expensive things are, but I don't know. We're in a world where all of these studios, even Blizzard, even, you

know, Activision, are starting to fall under you know, these parent companies that have a say in the future of these storied studios. And we're about to get into Xbox in in a bit, too. But So, Mishka, what are you seeing from? I think you pulled some Steam numbers.
Yeah, yeah, Steam DB. Just I know these are quite inaccurate, but but at least it shows a trend line. Overall, kind of zooming out, I would say that what 80% of acquisitions fail in all business. So, I wouldn't per se say that this is specific to gaming or even specific to Microsoft or Sony. Just post-acquisition integration is very different. And by failure, I mean, they fail to produce the value that they intended to produce. Anyways, so looking at the Steam DB charts, Destiny didn't really fall off the cliff, but kind of experienced a gradual decline when we're looking at the player count. It's still pretty high. Like they had in June 167,000 on on Steam players. So, that was with

an update with the latest update, the bump was nice. But these update bumps, these DLCs, became radically smaller since 2024, and the time between the player count bumps start increasing. So, the way I read it, looking at this graph, is that despite the very strong gameplay foundation that each of the update delivered, these teams of hundreds of very expensive US-based developers, they shipped these massive releases that suffered from quite significant post-launch player retention issues, despite delivering on the player needs. And those costs losing a vast majority of their core audience in the months that followed. So, you would have players come in, and then they would kind of leave and then less players would come in with the next update. That kind of is the trend that this graph is showing or at least that's how I'm interpreting. And then we have to talk about also the Destiny mobile. Like you guys remember this one? So this came from NetEase. It was really well done. I remember Crest was talking highly of

this and it kind of made him want to play the OG version again, but we seldom see these type of graphs anymore. There's a launch and it looks like they just pulled the plug. Like just just pulled the plug. Just launched the game and be like, "Okay, enjoy. Bye." The numbers aren't that crazy bad. I think he made about 20 or 25 million dollars till date with 5 million downloads, but there's no live service. Do we talk about live service? We talk about live operation? This game received none of that. I don't know if it's NetEase. I don't know if it's a contract issue, but they launched and forgot the game. So that kind of leads me to the uh question that I kind of have for you is like with all these layoffs talking about this and talking about Bungie and Destiny, like if these people, these amazingly talented developers would come available in like 2020, 2021, 2022, maybe even 2023, they would be extremely hot commodity, I would assume. Currently, Destiny 2 is

they released their last update. There's no much talk about Destiny 3. Marathon didn't go on the run the developer hoped it would go on and the live service playbook, looking at these graphs and looking at the success of the publisher, seems kind of outdated in the current market. So my question kind of for you is is like where do these amazingly talented people go from here?
Oof. I mean, it's about to get worse on the next topic. Like I don't know. I got Maybe they have to form a new studio, but then, you know, for all of our other ranting, nobody's getting funding. I mean, so many people I know are leaving the industry. I mean, I don't know about developer. At least when I talk to like marketing publishing people, you know, they're starting to interview outside of games.
Well, they also don't know Destiny, right? So, they have to start over, start from scratch. So, you think about like teams from Blizzard and Riot and stuff that went off and tried to build

their own IP and were, you know, funded by people like, you know, Lightspeed, right? Like like doesn't exist anymore because it doesn't make sense either, right? And so,
Yeah, and those are like tens of jobs.
Yeah, and I think like some of these new publishing arms may be a home to fund like smaller things, but it'll never be Destiny, you know, there'll never be a $200 million you know, jaunt, right? So, yeah, it's it's really sad.
[music]