Games studios just had their bloodiest week in years — and the store that sells their games had its best

Gaming 4 min 80 sources

Steam is on course for its biggest-ever year while Microsoft, Ubisoft and others cut thousands of the people who make the games. The storefront takes a slice of everything and bets on nothing.

Key takeaways

Steam is heading for its biggest year ever, pulling an estimated $11.1 billion in six months — while the studios that make its games cut thousands of jobs.
Most of this week's layoffs trace to Microsoft's Xbox retreat, hitting id Software (about half its team), Obsidian (a quarter) and IO Interactive, after Game Pass drew barely half its target subscribers.
A storefront takes a fixed cut of everything and risks nothing on any one game; a studio bets years and hundreds of jobs on a single title — which is why the shop stays calm while the makers burn.

The clearest number in games this week didn’t come from a studio. It came from the shop. Steam, the dominant PC storefront, pulled in an estimated $11.1 billion in gross revenue in the first six months of 2026 — its biggest-ever half-year, according to market analyst figures [1]. Valve, the company that runs Steam, employs a few hundred people and made none of those games. It just sold them.

The same week, the people who do make the games were losing their jobs in numbers the industry hasn’t seen in years [2]. Almost all of it flowed from one company’s retreat, and it lands on a simple split: the maker carries the risk, the store takes the cut.

Where the jobs went

Most of this week’s cuts trace back to Microsoft. After announcing a broad Xbox restructure, the actual layoffs began landing at specific studios [2].

At id Software — the Doom studio — a legally required WARN notice filed in Texas reported 96 jobs cut in Richardson plus a further 40 remote roles, roughly half the team, even as new Doom content shipped [3]. At Obsidian, the studio behind The Outer Worlds, between 60 and 70 people went, about a quarter of the workforce, spanning producers, QA testers and artists [4]. IO Interactive, the Hitman and James Bond developer, said it would close one of its studios in Istanbul after Xbox pulled funding for a long-in-development online RPG [5]. And at Ubisoft — a separate company — layoffs began at its Barcelona studio right after the launch of Assassin’s Creed Black Flag Resynced [6].

Doom co-creator John Carmack, no longer at id but watching, put the cold logic plainly: “To continue being produced long term, games need to succeed, not just be beloved” [3]. A studio can be respected, its games can be loved, and it can still be closed — because a publisher books what it spent buying and funding that studio as a cost it has to earn back, and cutting the team is cheaper than paying for the next attempt.

The workers push back

This time the response was organised. Bethesda’s union — one of the few in a largely non-unionised industry — began planning rallies and protests, arguing members were being told to accept the cuts “as a done deal and quietly disappear” [7]. Hundreds of affected union members signed on to a statement that workers “deserve protection, not to be treated like disposable line items” [8]. The union also said company HR forced staff to take down a display honouring laid-off colleagues [9]. A union is simply the mechanism by which people with no individual leverage combine it — which is exactly why it appears when individual leverage runs out.

The bet that didn’t pay

Behind the cuts sits a wager that missed. Microsoft built its Xbox strategy around Game Pass, a subscription where players pay monthly for a library instead of buying games one by one. Xbox’s own boss, Asha Sharma, acknowledged the bet fell short: the Wall Street Journal reported Microsoft expected around 77 million subscribers by now and has roughly 30 million — less than half the target [10][11]. A subscription only works if enough people join to cover what you spend filling it. When the crowd doesn’t arrive, every expensive studio you bought to feed the service becomes a bill you can’t justify.

Games switched off

The other quiet story this week: games disappearing. Bungie’s Destiny 2, once one of the biggest live-service shooters, entered maintenance mode — no more major updates — with a farewell gift for players [12]. Nintendo confirmed Mario Kart Tour will shut down for good on 29 September [13], and Square Enix said Final Fantasy 7: Ever Crisis, a mobile spin-off, is closing too [14].

A live-service game is one you keep paying into for years rather than buying once. That model only survives while the game is the most profitable use of the servers and staff behind it — not merely while it’s loved, or even while it’s making some money. When a better use of those resources appears, the switch goes off, and everything players built inside it goes with it. You bought access, not a copy.

The shape of it

Step back and the week is one story, not five. Studios everywhere are shedding people, whole franchises are going dark — and the storefront that distributes them is having its best year ever, powered by pricier blockbusters and surprise hits even as players drift toward older, cheaper games [15]. “The long arc is relentlessly up,” one report said of Steam, “as Xbox and PlayStation flounder” [16]. The party that takes a slice of every sale doesn’t need any single game to win. The party that makes the game needs its one bet to land — or the team pays for it.

02 · Lesson · why it matters

The one who takes a cut of everything never sweats a single loss

A store earns a little from every game and is safe when any one fails; a studio pours everything into one game and lives or dies on it.

Two numbers from the same week

At id Software, the studio that made Doom, about half the staff were let go — 96 people in Texas, forty more working remotely. At Obsidian, a quarter of the team. At IO Interactive, a whole studio closing. And in the same seven days, Steam — the shop that sells those games — booked its biggest half-year ever, an estimated $11.1 billion.

These read like two stories: an industry in trouble, and one company doing fine. They are one story, seen from two ends of the same chain. The people who make the games are bleeding jobs. The shop that carries them to players has never done better. To understand why, look at what each one is actually holding.

A slice of everything versus all of one thing

Valve, which runs Steam, takes a cut of every sale on the store — roughly 30 cents of each dollar. It doesn’t make the games. It doesn’t fund them. It doesn’t gamble years of payroll on whether any one of them lands. It earns a little from every game that sells, spread across tens of thousands of them.

A studio holds the opposite hand. It pours three, five, seven years and hundreds of salaries into one title. When that title ships, everything the studio is rides on how it does. There is no other bet running in the background to cover a miss.

That is the whole difference. One party is spread across everything. The other is concentrated in one thing. Spread across everything, no single failure can hurt you — some games flop, others surprise, and the average holds. Concentrated in one thing, a single bad outcome is the whole outcome.

Why the safe one stays safe

This is why the shop can be calm while the makers burn. A flop that ends a studio barely moves Steam’s total — it was one line among thousands. Steam doesn’t need any particular game to succeed. It needs games, in general, to keep being made and sold. The risk that a specific game fails sits entirely with the people who made it.

So when a publisher’s big subscription bet misses — Microsoft aimed for around 77 million Game Pass members and reached about 30 million — the cost of that miss doesn’t land on the store. It lands on id, on Obsidian, on the studio in Istanbul. The party that took the concentrated bet pays for the concentrated bet. The party taking a thin cut of everything was never exposed to it.

The cut is a choice, not a law

That 30-cent cut looks like a fact of nature — “that’s just what selling a game online costs.” It isn’t. It’s an arrangement. Valve set it in 2003, when it built one of the first big digital stores, and because Steam became the place PC players go, the number became the industry’s default. Nobody voted on it.

And it cuts two ways, honestly. The same store that skims a third of every sale also handed a lone developer in a bedroom a global shopfront they could never have built — the shelves, the payments, the reach to millions, all rented for that cut. Small studios exist today partly because the store exists. An arrangement can serve the one who built it and still help the ones who live under it. Both are true. The point isn’t that the cut is unfair. The point is that it’s a decision someone made, sitting under everything, quietly deciding who carries the risk.

You are in the chain too

None of this happens off to one side of you. When you buy a game for $60, that money splits — about $42 to the maker, about $18 to the store — and the $18 goes to the party carrying none of the risk that brought the game into being. The worker who lost their job this week was on the risk-carrying end. The small developer you love is on it too, needing the store to reach you and squeezed by its cut at the same time.

You are not watching this from above. You are a node in it, paying into the split every time you click buy.

What no one in the chain can see

Here is the part that should leave you holding your conclusions loosely. The store looks like it holds all the cards — the reach, the players, the cut. But it can’t make a single game. It needs the risk-takers to keep taking risks, or its shelves go empty. The studios can build worlds, but can’t reach you without a shop. Neither end is above the system. Each is bound into it, dependent on the other, and neither sees the whole.

The safe party isn’t safe because it’s wiser or better. It’s safe because it stands where the risk isn’t. That’s worth remembering the next time a business looks untouchable while everyone around it struggles. Ask where its money comes from, and where the risk it depends on actually sits. It is almost never sitting with the one who looks calm.

03 · Lab · your turn

Same Year, Two Seats

Pick the one game a studio bets everything on, then feel how a store that takes a cut of all of them stays safe while your single bet swings between a hit and a closure.

04 · Hope · carry this

The risk falls on the makers, but so does the one thing no storefront can replace — the people who actually know how to build. Studios close and that talent scatters and starts again, and this week, told to disappear quietly, it chose instead to be heard.