Valuable Lessons Learned from Studio Layoffs

In the game Trash Goblin, players uncover hidden treasures by chipping away at muddy blocks and polishing them until they shine. This mirrors the real-life journey of its creators, who transformed a difficult situation into a valuable learning experience while prioritizing their team's well-being. Back in 2023, Spilt Milk Studios initially pitched Trash Goblin to 20 potential publishers, but by the end of the year, they had pitched to 76 publishers. Despite two offers and one contract negotiation, the deal fell through, dealing a significant blow to the studio. The studio then launched a Kickstarter campaign, which, although successful, was not a massive hit. However, with the help of a UK Games Fund application and a work-for-hire project, Spilt Milk's fortunes slowly improved, allowing them to rehire two team members who had been let go and offer a freelance artist a full-time position. Today, the games industry is marked by grand plans being put on hold and sudden studio closures. It is the studios that find ways to persevere, prioritizing team protection and preserving institutional knowledge, that deserve attention. Aurora Punks, a Swedish publisher and co-dev partner, expanded rapidly during the COVID-19 pandemic, growing from a team of four to almost 50 people in 2022. However, the company soon had to undergo a painful pivot, laying off nearly 30 people at different stages. Aurora Punks now adopts a more cautious approach, focusing on creating a baseline revenue stream for each team to sustain themselves. The company's founder, Robert Bäckström, attributes many unsustainable developments to a single-stream revenue approach, advocating for a portfolio strategy with multiple revenue streams to maintain balance. Bäckström suggests that studios should think like publishers, exploring consulting or work-for-hire projects to build a financial safety net. This approach allows studios to be proactive and avoid layoffs, even if it means taking on less ambitious projects. In recent years, Aurora Punks has focused on premium mods for games like Fortnite and Ark: Survival Ascended, ensuring a diverse revenue stream. The company has also released paid mods, such as Necrotic Dominion for Ark, which, although not a massive commercial success, helps offset costs and provides a sense of security for the team. Having small, profitable passion projects that team members can work on during downtime is a significant advantage, particularly when there's no need for external approval. However, this approach requires clear goals, effective management, and a strong company culture. Taking a more sustainable path may mean slower progress on riskier and more ambitious games, requiring understanding and patience from staff. It is essential to celebrate successes and share challenges as a team, acknowledging the contributions of all members, including those working on consulting and work-for-hire projects. Spilt Milk Studios has also learned the importance of multiple revenue streams. The company plans to grow modestly, relying on a pool of trusted contractors to meet specific project needs. At the core of Spilt Milk's strategy is a team with specialized expertise in delivering cozy games that audiences want. The studio aims to scale up slowly, avoiding overhiring and maintaining a clear-eyed evaluation of operational and financial risks. By prioritizing consumer-driven revenue streams and maintaining a small-to-medium size, Spilt Milk Studios aims to ensure its survival and independence, allowing it to make games without being dependent on external funding.