Despite the lack of mass layoffs in Japan, game developers say their numbers are still reducing ‘in a less visible manner’

A number of Japanese game developers have warned that while there haven’t been reports of mass layoffs in Japan like there have in the West, staff reductions are still taking place in less immediately visible ways.

While the games industry has seen countless cases of mass layoffs across the West for the past few years, there have been significantly fewer examples of this happening in Japan, leading to speculation as to why things are so different there.

Sega producer Taira Nakamura posted his views on the situation on X (as spotted by Automaton), suggesting that mass layoffs aren’t as widespread in the Japanese games industry because Japanese employment law makes it harder for companies to carry them out. Instead, Nakamura says companies have been reducing costs by hiring fewer new staff.

“I think one reason why Japanese companies, even when facing similar cost pressures, appear to have fewer visible layoffs is due to Japan’s employment regulations,” he said (via machine translation).

“However, ‘difficulty in letting staff go’ simply transforms into ‘not hiring in the first place’. New graduate hiring quotas are shrinking, and the door for mid-career hires is narrowing. An era may come when it’s even harder to get into a game company in Japan than it is now.”

This view was then backed by Hiromichi Takahashi, CEO of Crescent Tower and Ooo publisher Amata Games, who suggested support studios are also seeing less work as a result of cost-cutting measures.

“While no overt layoffs have been announced in Japan’s gaming industry, many major game companies have significantly reduced the lines of work they outsourced to external developers over the past two years or so,” he said.

“As a result, developers continue to face a very tough situation. So, Japan is also experiencing a reduction in developers, albeit in a way that isn’t visible on the surface.”

The Game Industry Layoffs tracker, which is being run by game developer Farhan Noor, has estimated that 13 studios have been shut down in 2026 already, with an estimated 1,500 layoffs.

The same tracker estimated that there were 10,500 layoffs in 2023, 14,600 layoffs in 2024, and a further 5,300 layoffs last year.

According to this year’s annual State of the Game Industry survey, which surveys more than 2,300 games industry professionals around the world, 28% of respondents said they had been laid off in the previous 24 months, and 48% of them said they hadn’t found a new job yet.