Record profits at the top of gaming, record job cuts below it

Gaming 3 min 15 sources

Capcom and Krafton post blockbuster quarters while more studios shed staff, and the way players pay keeps shifting toward the bundle.

Key takeaways

Capcom and Krafton posted record quarters (Capcom profit up 81%, Krafton revenue up 94.9%) even as Double Fine, Crisol, and other studios cut jobs.
93.3% of Capcom's sales this year were digital downloads, showing how far the industry has moved off physical discs.
Subscriptions keep bundling games, cloud, and even other services into one price, which is why Xbox is adding ads and its per-unit revenue is falling.

The games business split into two stories this week. At the top, publishers reported some of their best numbers ever. Below them, more studios cut staff. The same industry produced both at once.

The blockbuster quarters

Capcom had a record quarter. Its Q1 ordinary profit rose 81% to $252.5 million, lifted by the Resident Evil, Monster Hunter, and Street Fighter franchises [6]. Monster Hunter and Street Fighter sales hit record highs, and the sci-fi title Pragmata added to the haul [12]. A milestone landed inside the numbers. The Resident Evil 2 remake, at 19.75 million copies, passed Resident Evil 5’s 19.01 million. After 15 years, it is the series’ best-seller [7].

One figure drew the most notice. 93.3% of Capcom’s sales this year have been digital downloads, leaving just 6.7% on physical discs [8]. Of those digital sales, 60.4% were on PC [8]. That is the shift away from the disc, shown in one company’s ledger. (“Digital” means the game is a download tied to an account, not a disc you can lend or resell.)

Krafton, the South Korean maker of PUBG, matched the mood. Its Q2 revenue jumped 94.9% to $889.1 million, driven by the PUBG and Subnautica franchises [3]. Two publishers, two very strong quarters.

And the job cuts below

The same week brought more layoffs. Double Fine, the studio behind Psychonauts 2, cut 23 roles - about a quarter of its staff - as Xbox spun it back out into an independent company [15]. Xbox said the studio left with its IP, catalog, and runway for its next games [13]. Crisol, a smaller studio, laid off all its employees less than six months after launching its game, and warned full closure is a “feasible possibility” [2]. Tencent-owned Lightspeed LA also cut staff [4].

The contrast sharpened at the executive level. EA awarded its chief executive, Andrew Wilson, $38.6 million for the 2026 fiscal year - a year that also included studio layoffs and a push into generative AI [9]. Strong franchises and thinner teams are, increasingly, the same industry running the same play.

How you pay is being bundled

Underneath the news, the way players pay kept sliding toward the bundle - one price for a pile of things instead of one price per thing. YouTube said its Premium subscription will soon include Peacock’s ad-supported tier in the US at no extra cost, folding a whole streaming service into a sub people already buy [14]. (A “bundle” sells several things together for a single price.)

Gaming has been running this model for years. Xbox Game Pass Ultimate bundles a rotating library, cloud streaming, and EA Play into one monthly fee. PlayStation Plus does the same with its monthly free-games lineup, revealed again for August [11]. The economics behind the machine are visible in the accounts: Xbox’s own revenue fell 10% last quarter even as Microsoft’s cloud business grew 27% to $59 billion [5]. Microsoft also confirmed ads will start playing before cloud-streaming sessions [10]. When the game is bundled into a subscription, the money has to come from somewhere else.

The quieter counter-story

Not everything this week was a giant. The UK Games Fund announced its largest group of funded studios since 2015. 29 independent teams received grants of up to 100,000 pounds through its expanded Prototype Fund [1]. The money is meant to help small studios build original games and attract further investment [1]. It is a reminder that the industry’s floor - the small teams making new things - is where most of its future actually starts.

02 · Lesson · why it matters

Why one price for everything beats one price for each

Sell things separately and every buyer pays for only what they love; sell them together and the loves average out, so one price can catch the whole crowd.

Two players, two very different wants

Picture two friends. One only wants the shooter. The other only wants the sports game. Sell each game on its own, and each friend pays for one and skips the other. You collect two half-interested wallets.

Now sell both games as one bundle for a single price. The shooter fan still wants the shooter. The sports fan still wants the sports game. But now each of them is looking at a package that contains the thing they love plus one they are lukewarm about. If the price sits below what they would pay for their favourite alone, both buy the whole bundle. You just sold each friend a second game they would never have bought on its own.

That is the move underneath this week’s news. YouTube folded a whole streaming service, Peacock, into a subscription people already pay for, at “no extra cost.” Xbox Game Pass and PlayStation Plus have done the games version for years: a library, cloud streaming, extra services, all for one monthly fee. The bundle is not a discount being generous. It is a pricing machine.

Why the average is the trick

Here is the part that is easy to miss. What makes bundling work is not that people get more. It is that different people want different things.

The shooter fan values the shooter high and the sports game low. The sports fan is the mirror image. Their tastes are spread far apart. But add each person’s two values together, and something quiet happens: the totals bunch up. High-plus-low and low-plus-high both land near the middle. The bundle values cluster where the separate values scattered.

A seller who sets one price hates scatter and loves a cluster. When everyone’s willingness to pay sits in a tight band, a single price near that band catches almost everyone. When values are spread out, any single price you pick leaves half the room out - too high for some, money left on the table for others. Combining goods with opposite fans squeezes the spread. The bundle turns a diverse crowd into something that behaves like one agreeable customer.

This is worth separating from two nearby tricks, because they look similar and work differently.

A tiered menu - a standard edition, a deluxe, a $150 collector’s box - sorts buyers by how much they will pay and lets each sort themselves into a slot. That is about telling rich wallets from thin ones. Bundling does not sort anyone. It does the opposite: it blends buyers together so their differences cancel out, and one price fits them all.

A subsidised console that makes its money on games later - cheap hardware, profit on the software - is a different machine again. That moves the profit from one product to another. Bundling does not move profit between products. It captures value the separate menu would have left lying on the floor, by charging one price for a group whose tastes average out.

Where the bundle costs you

An arrangement can serve the seller and still serve you. The shooter fan who now also owns a sports game may enjoy it. The subscriber who gets Peacock thrown in may watch it. That is real.

But the same averaging that helps the seller can quietly work against you. If you only ever wanted the shooter, the bundle makes you help pay for the sports game you will never launch. If you only wanted YouTube without ads, you are now, in part, funding a streaming service you did not ask for. The bundle is priced for the crowd, not for you. The person with narrow taste subsidises the person with broad taste, and neither can see it happening, because it all arrives as one number.

That is also why the money has to reappear elsewhere. When Game Pass swallows a game’s price into a monthly fee, the per-game revenue falls. Xbox’s own take dropped even as its parent’s cloud business boomed. So ads start playing before your cloud session, and the library keeps rotating to keep you subscribed. A single blended price hides a lot of moving parts.

Standing inside the average

The thing to hold is that you are not a spectator here. You are one of the values being averaged. Every subscription you carry, every “free” service folded into one you already had, is a bet by someone. The bet is that a crowd of people with tastes unlike yours will, on average, make your indifference worth charging for.

None of this is a trap to escape. It is just the shape of how things are increasingly sold. Your games, your shows, your music arrive as one price for a package. And it is built so the person beside you, who wants none of what you want, still pays the same. Seeing that does not tell you to cancel anything. It only makes the single number on the bill a little less mysterious, and your own place inside the crowd a little easier to feel.

03 · Lab · your turn

Price the Bundle

Rehearse how one price for two games together captures buyers that separate prices would split.

04 · Hope · carry this

Beneath the layoffs, 29 small studios were just handed the money to start something new. The people who make games and the people who play them both keep showing up, and that is the part no quarter can cut.