Bungie Lays Off 100 Employees After Sony Paid $1.2 Billion for Employee Retention

Bungie Inc. is the latest company in the video game industry to undergo significant layoffs in 2023. While it is unclear exactly how many employees were let go, CEO Pete Parsons has confirmed that layoffs occurred.

The news comes just weeks after another giant in the industry, Epic Games, laid off over 800 employees amid rising legal costs and spending on its vision for the metaverse. Earlier this year, Harebrained Schemes, Halo, Twitch, and Relic Entertainment also underwent layoffs. In some cases, these layoffs trimmed workforces by as much as 80%. Several companies, like Epic Games, had mounting issues beneath the surface before layoffs, while others experienced corporate shake-ups or acquisitions. The gaming industry as a whole is struggling this year amid economic uncertainty and growth that is lagging in comparison to pandemic times. Many companies—not just the gaming industry—are turning their attention to cost-cutting, adjusting for a post-pandemic economy and over-hiring.

But with each round of layoffs comes questions about how well they were handled and if they were necessary, and these may be tough for Bungie to answer.

Who owns Bungie?

Bungie is a subsidiary of Sony, but that acquisition only occurred recently. Before Sony, Bungie had been an independent company since it parted ways with parent Microsoft Game Studios in 2007. Sony announced it was acquiring Bungie in January 2022 for $3.6 billion and completed its acquisition by July. As the creator behind Destiny, Bungie was an attractive subsidiary for Sony with its intellectual property and expertise in the gaming industry.

Of course, acquisitions can be messy, and one may expect that Sony was behind the recent layoffs. However, Sony actually seemingly paved the way for the acquisition to go smoothly and avoid reductions to the workforce. Sony maintained that it acquired Bungie for its employees, not just the IP. In fact, of that hefty $3.6 billion Sony paid, $1.2 billion was to be set aside for the employee shareholders. It was meant to incentivize employees to stay onboard and would be paid out over the course of several years. Immediately after the acquisition, The Washington Post reported that employees were “assured” that layoffs would not be a part of this acquisition.

Despite Sony’s interest in maintaining Bungie’s talented workforce, just over a year after its acquisition of Bungie, a large round of layoffs hit.

Bungie lays off an estimated 100 employees

As mentioned above, Bungie has not provided much information about the layoffs, offering neither a reason nor an exact number. However, after former employees began posting about the layoffs on social media, Parsons offered a brief statement on X (formerly Twitter), confirming the layoffs. He called it a “sad day” and mentioned the talent of those who were laid off. Parson’s message is hardly a consolation when there are so many unanswered questions about the layoffs.

What is clear is that Bungie’s management oversaw the layoffs, not Sony. It’s believed that an estimated 100 employees were laid off, which is about 8% of the workforce. Additionally, the layoffs were made after Sony paid Bungie $1.2 billion to retain employees, Bungie promised no layoffs would result from the acquisition, and Bungie announced it was hiring additional remote workers in August. Without Bungie’s official statement and Parson’s vague comments, it’s difficult to know why the layoffs occurred. However, Bloomberg suggests it was part of a cost-cutting initiative due to sales being down 45% this year and Destiny underperforming. Bungie also recently delayed two games, The Final Shape and Marathon, which is further evidence of internal struggles.

Many want to know just what Bungie did with the $1.2 billion it was given for employee retention and what Sony thinks of Bungie’s layoffs. $1.2 billion is no small amount, and Bungie only had a workforce of about 1,000 employees. Theoretically, each employee could’ve been paid over $1 million if the funds were divided evenly. It raises the question of how much of that money went to employees and new hires and how much went to the inflated salaries of higher-ups.

Bungie’s former Community Manager Dylan Gafner expressed frustration over the layoffs, indicating they were due to “poor management” and “poor decisions.” It can’t be denied that the video game industry is struggling. However, Bungie’s false promises and the apparent mysterious disappearance of funds that were supposed to go to employees definitely reeks of poor management and decision-making.

Sony wanted Bungie because of its people, which is a massive testimony to the immense talent and dedication of the company’s staff. It’s extremely disappointing that even when staff is valued and resources are dedicated to them, a management team can still sweep in and order massive layoffs.

(featured image: Chesnot / Getty Images)