Amazon just dropped a bombshell on its gaming division. The tech giant confirmed it’s cutting more than 14,000 corporate jobs, and the video game unit is taking a particularly hard hit. This isn’t just trimming around the edges – Amazon is fundamentally changing how it approaches game development.
What’s Actually Happening
Steve Boom, Amazon’s vice president overseeing Audio, Twitch, and Games, sent a memo to employees explaining the cuts. The company is halting a significant portion of its first-party AAA game development work, especially around massively multiplayer online games. The studios in Irvine and San Diego are bearing the brunt of these layoffs, along with the central publishing team.
This decision goes beyond the company-wide restructuring. Amazon Games leadership spent the past several months evaluating their strategy, and they’ve decided that big-budget MMO development isn’t where they want to focus anymore.
Which Games Are Affected
The cuts are hitting teams working on New World and the upcoming Lord of the Rings MMO that was announced back in 2023. Employees from both projects have already started posting on social media about losing their jobs. One former senior gameplay engineer shared on LinkedIn that colleagues on both the New World team and the LOTR game were let go.
New World, which launched in 2021 with strong initial numbers, has struggled to maintain its player base over time. The LOTR MMO was supposed to be Amazon’s next big swing at the genre, but now that project appears to be in serious trouble.
The New Direction
Amazon is shifting its gaming strategy toward Luna, its cloud gaming platform. Boom’s memo highlighted Luna as an example of where the company wants to go – focusing on streaming entertainment and delivering value for Prime members. The platform recently launched with an AI-powered Snoop Dogg game, which tells you a lot about the new direction.
The company is also leaning heavily into artificial intelligence as a reason for these changes. Beth Galetti, Amazon’s senior vice president of people experience and technology, called AI the most transformative technology since the internet. The company believes it needs to be organized more efficiently, with fewer layers and more individual ownership, to move quickly in this new landscape.
Amazon’s Rocky Gaming History
This isn’t Amazon’s first stumble in the gaming world. The company entered the market with Crucible, a free-to-play shooter that was so poorly received it was pulled back into beta and then cancelled entirely just five months after release in 2020. They also cancelled an earlier attempt at a Lord of the Rings MMO in 2021 following a dispute with Tencent.
Amazon has been trying to establish itself as a serious player in game development for years, but success has been elusive. While New World had a strong launch, it couldn’t maintain momentum. The company’s publishing efforts have had mixed results, with Lost Ark being one of the brighter spots.
The Bigger Picture
These layoffs are part of Amazon’s broader effort to optimize costs and address what many see as overhiring during the COVID-19 pandemic. The company’s CEO, Andy Jassy, stated back in June that Amazon plans to use AI for an increasing number of tasks, which would inevitably lead to workforce reductions.
The gaming industry as a whole has been hit hard by layoffs over the past two years. Major publishers and developers across the board have been cutting staff as economic pressures mount and companies reassess their strategies. Amazon’s cuts add to an already difficult year for game industry professionals.
FAQs
How many people are losing their jobs at Amazon Games?
Amazon hasn’t disclosed the exact number of gaming division layoffs, but they’re described as “significant” and are part of the broader 14,000 corporate job cuts. The Irvine and San Diego studios, along with the central publishing team, are the most affected.
Is Amazon completely leaving game development?
No, but they’re significantly scaling back their first-party AAA game development, especially MMOs. The company is shifting focus toward cloud gaming through Luna and away from big-budget game development.
What happens to New World and the Lord of the Rings MMO?
Both games have been impacted by the layoffs. New World is already live but has experienced significant staff reductions. The Lord of the Rings MMO’s future is unclear, with multiple employees from that project reportedly laid off.
Why is Amazon making these cuts now?
Amazon cites several reasons including cost optimization, addressing overhiring from the pandemic era, embracing AI technology, and streamlining operations. The company also believes its big-budget gaming efforts haven’t delivered the results they wanted.
Will this affect Prime Gaming or Twitch?
The memo doesn’t indicate major changes to Prime Gaming or Twitch specifically. The focus appears to be on first-party game development rather than these services.
What does this mean for Amazon’s publishing deals?
The central publishing team is facing significant reductions, which could impact future publishing deals. However, Amazon hasn’t announced the cancellation of any specific publishing partnerships yet.
Are other Amazon divisions affected by layoffs?
Yes, the 14,000 job cuts span multiple divisions including logistics, payments, and cloud computing. The gaming division is just one part of a much larger restructuring effort.
Conclusion
Amazon’s decision to gut its gaming division marks a major retreat from its ambitions to become a major player in game development. After years of expensive failures and mixed results, the company is cutting its losses and pivoting toward what it knows best – streaming services and cloud technology. For the thousands of talented developers losing their jobs, it’s a painful reminder of how volatile the gaming industry has become. Whether Amazon’s new strategy with Luna will fare any better remains to be seen, but for now, the company’s dreams of creating the next big MMO are effectively over.