July 12th 2025.
It's a commonly held belief that video games are solely a business, driven by competition and profit. But one reader argues that this mindset is not necessary for innovation in the industry. Instead, they propose that all developers need is fair wages and proper recognition for their work.
The recent news of job cuts at Xbox has sparked discussions about the impact on competition. Many, like myself, are appalled by the ruthless cutting of jobs in the pursuit of increasing shareholder value. This not only has a negative effect on the industry, but also on the artform of video games. While it's true that private companies exist to make a profit, there are ways to do so without sacrificing jobs and job security. Nintendo has proven this with their successful practices, which prioritize fair wages and job security for their employees.
Unlike Microsoft and Sony, Nintendo understands the importance of investing in quality and profitability. This comes at a cost, but it's necessary to attract and retain talented individuals who can produce great video games. Unfortunately, for those working under Microsoft, their focus is often on simply keeping their jobs and making ends meet, rather than on creating innovative and fun games. This pressure is a result of a management class fixated on shareholder value, where talent is often used to chase trends rather than push the boundaries of creativity.
But it's not just about wages. Working in an industry where you can find satisfaction in your work is crucial. Many people are drawn to so-called "creative industries" because they have a passion for the medium, and not just for the promise of a high salary. Nobody wants to work in a job that feels soulless and unfulfilling, even if it means making more money.
As someone who also works in a creative field, I can relate to the fears and concerns of those in the video game industry. The constant threat of job cuts and the pressure to cater to short-term interests of CEOs and shareholders can be soul-sapping. I stand in solidarity with every worker whose livelihood is on the line, facing the same struggles as I do in my own profession.
So, what if Microsoft were to pull out of the video game industry altogether? Would Nintendo and Sony stop innovating, knowing they have no competition in the console market? Would they become complacent and produce endless reiterations of their past successes, knowing consumers have no other options? It's a question worth considering.
Some argue that competition drives innovation, pointing to the Nintendo Wii U as a prime example. After the console's failure, Nintendo bounced back with the commercially successful Switch. But there's more to the story. Nintendo's former CEO, Satori Iwata, rejected the idea of cutting jobs to increase profitability. Instead, he took a pay cut and focused on what they do best: producing quality and innovative video games. This ultimately led to the creation of the Switch and its follow-up, the Switch 2.
Of course, companies do innovate to stay relevant and increase their value. But solely relying on competition is not the answer. Nintendo could have followed Sony's lead and focused on processing power, or they could have used their reserves to buy up other companies. But they recognized the risks and chose to double down on their strengths: their reputation for innovation and their talented workforce.
Nintendo's platform is not just their consoles, but the talent they have accumulated over the years. And it's not just about having talented individuals, but also providing them with the support and conditions necessary to harness that talent. The Switch 2 may not be a groundbreaking console, but it's the games that truly drive innovation. After all, novelty alone does not determine quality.
This is not to say that Nintendo is not in it for the money. Of course, they must consider the bottom line. But they're not willing to sacrifice their values and long-term success by chasing short-term gains like their competitors. Sony may be celebrating the downfall of Xbox, but they should be careful not to follow in their footsteps. In the end, it's the employees who suffer the most. And even if they could afford to celebrate with champagne, I doubt many of them would.
As we all know, the world of video games is a lucrative business. However, one reader has a different perspective. They believe that the industry doesn't need Xbox or competition to drive innovation. Instead, they argue that what truly matters is having well-paid and properly appreciated developers.
There has been a lot of talk about the decline of the Xbox brand and its impact on competition. Many of us are shocked by the ruthless job cuts made to increase shareholder value, and the negative consequences of these rationalizations on the video game industry and its art form. While it's true that all privately owned companies exist for profit, there are ways to generate profit without sacrificing jobs and job security, as Nintendo has demonstrated.
Unlike Microsoft and even Sony, Nintendo understands that quality and profitability come at a price. This price includes maintaining fair wages to attract talented individuals and providing job security so they can focus on producing great video games. However, for those employed by Microsoft, their focus is more likely on keeping their job, searching for other employment opportunities, and worrying about their financial responsibilities such as mortgages, rent, and supporting their families.
Under pressure from a narrow-minded managerial class who are obsessed with shareholder value, talented individuals are often forced to use their skills to create games that follow trends rather than using their collective imagination to produce truly innovative and enjoyable video games. It's not competition that drives innovation, but rather the nurturing and harnessing of talent by providing the necessary resources for people to do what they are passionate about. After all, many people enter this industry because of their love for it, not just to earn a living.
Of course, fair wages and job satisfaction are crucial factors. This is why many people would prefer to work in creative industries, even if it means they won't become wealthy. Nobody dreams of making a living by stacking shelves or working in administration, and even those who could make a lot of money in high finance may not find it fulfilling.
As someone who also works in a creative field, I understand the fear and uncertainty that comes with being subject to managerial decisions that could potentially jeopardize our ability to do what we love. I can only imagine what those in the video game industry must be going through. Despite working in a different profession, I stand in solidarity with every worker whose livelihood is under threat and who are forced to serve the narrow interests of CEOs, managers, and shareholders.
So, if Microsoft were to pull out of the video game industry entirely, leaving no effective competition in the console market, would Nintendo and Sony stop innovating? Would they become complacent and continue to churn out repetitive games that guarantee profit, knowing that consumers have limited options?
Let's look at a well-known example of how competition, or more specifically, a loss of profitability and market share, has driven innovation: the Nintendo Wii U. Instead of focusing on Satori Iwata's response to shareholders, where he stated that cutting jobs would make for unhappy workers and negatively impact the company's long-term success, let's focus on what came out of the Wii U's failure – the commercially successful Switch and its sequel, the Switch 2.
Companies do sometimes innovate to tap into new markets, reduce costs, and increase their value, as Nintendo did when they abandoned the Wii U and introduced the Switch as its replacement. They do so to survive. However, competition alone doesn't explain the switch to the Switch. They could have followed Sony's lead and focused on creating powerful hardware to compete on their terms. Alternatively, they could have used their billions in reserve to buy out other companies, similar to Microsoft.
But they probably realized that both strategies came with significant risks and could ultimately prove counterproductive. Instead, they doubled down on their competitive advantage – their reputation for producing innovative and high-quality video games. They achieved this by harnessing the talent of their employees and providing them with the necessary resources to do what they do best.
Their platform is not just their hardware; it's the talent they have accumulated over the years and how they utilize that talent. The Switch 2 may seem like a conservative iteration compared to previous consoles, but the real innovation lies in the games that the console serves as a platform for. After all, novelty alone does not determine the quality or appeal of a game.
This is not to say that Nintendo is not concerned with making a profit. Ultimately, they are a business and must chase the bottom line. However, it's not a race to the bottom. They have learned that imitating the managerial practices of their competitors and focusing on short-term gains for shareholders will only lead to their downfall, as is evident with Microsoft's gaming division.
While Sony may be celebrating the decline of the Xbox brand, with shareholders popping champagne corks, few employees of Sony will be joining in the celebrations, even if they could afford the champagne. After all, they are likely to be facing similar struggles and fears as their counterparts in the video game industry.
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[Generative AI is experimental.]
