The layoff season is still going strong, and the gaming industry is far from immune. After expressing hopes to automate 70% of its QA and debugging tasks with AI, Square Enix has now turned to mass layoffs. The company indicated that the job cuts were unrelated to these AI-based changes, and were instead targeted at making the organization leaner and more agile, shifting investments into multi-skilled teams.
Video game publisher Square Enix’s job cuts in 2025 are set to affect “nearly all areas” of its Western business wing, which implies considerable changes for employees in the US and UK. Unlike with the gaming updates the studio has delivered, these cuts are expected to be quick and decisive.
Square Enix’s layoffs are reportedly a result of the company shrinking its overseas operations, increasing investments back home in Japan. (Image: Pexels)
Square Enix Mass Layoffs Announced: The Gaming Industry Deals Its Employees Another Blow
The Square Enix job cuts announced in 2025 will affect an undisclosed number of staff in the US, with at least 137 workers expected to make an exit in the UK. Regulations in the UK will require the company to invest in redundancy consultations to recheck whether some jobs can be protected, which means that the final headcount of workers laid off could potentially be lower.
Square Enix’s US and UK staff cuts are part of the strategy to “improve operational efficiency,” with an annual cost savings of over 3 billion Yen expected. These savings translate to approximately 19.6 million Dollars or 14.9 million Pounds. Multiple reports indicate that Square Enix’s layoffs will affect a range of roles in IT, marketing, publishing, sales, QA, and business planning.
Details on severance pay and benefits are limited, but after expressing gratitude for the workers having been asked to leave, Square Enix also stated its support for the team. “During this period of transition, we remain committed to treating each individual with the utmost respect and providing extensive support throughout this process,” it said in a statement.
Square Enix’s Restructure Comes with a Focus on Centering Operations in Japan
Employees who are set to be laid off have begun receiving updates on the future of their roles, with the announcements going out after the company shared a detailed progress report with them. Square Enix’s restructuring is expected to help the company focus resources in Japan, as its presentation alluded to a “reorganization of overseas organizations.” It also explained that “a decision was made to close overseas development studios and shift toward consolidating development functions in Japan.”
The document detailed a 3-year reboot strategy for long-term growth, laying out plans to diversify its earning opportunities and reassess capital allocations. In terms of the company’s plans for the workforce, these included strategies for introducing new HR initiatives and establishing a new Human Resource Development Committee, specifically in Japan.
The investment in human capital management is a welcome consideration, but with the emphasis on operations in Japan, the company confirmed many fears for workers in the US: many jobs appear to be moving outside their reach.
The Gaming Industry Is Not Immune to AI Disruptions
The Square Enix layoffs, announced after its AI plans to “automate 70% of QA and debugging tasks in game development by the end of 2027,” leave many worried about the number of ways that the job market is changing.
The company announced its plans for future collaboration with the Matsuo Laboratory at the University of Tokyo, which will result in the establishment of a 10-person joint research team “aimed at improving the efficiency of game development processes through AI technologies.” The impact on the quality of the company’s offerings has many gamers worried about this proposed partnership. For workers, the concerns lie in a different area.
In 2025, we’ve witnessed multiple rounds of layoffs across organizations, whether we turn to Microsoft’s Xbox teams or the People Can Fly studio. The Square Enix job cuts are only the latest to join the ranks. The use of AI in the gaming industry has been a highly controversial move, and the news of Square Enix’s layoffs so soon after its AI plan further dampens attitudes towards the technology. While gamers continue to resist the influx of tech, companies like EA encourage reluctant employees to look at AI as “thought partners” that they can train on their work. The gap in the reception of such AI technology continues to grow.
As Square Enix Cuts US and UK Staff, the Shift in Company Plans Leaves the Gaming Industry Wary
Not only is Square Enix looking at automating some of its processes, but it will also relocate these processes and teams specifically to Japan, operating in a more limited capacity overseas. The shrinking job market presents multi-layered concerns for employees in the US, particularly given that gaming companies have conducted similar layoffs in recent years, only to find that they were ineffective strategies.
The layoffs may serve a higher purpose this time, allowing the business to centralize its operations better, but employees remain unconvinced about the need for such change. The Japanese government is also looking at adding further revisions to the Foreign Exchange and Foreign Trade Act (FEFTA) to change how it reviews foreign investments in the region. This may also be part of the reasoning behind Square Enix’s decisions to shift operations locally and reduce its reliance on external teams.
Rockstar Games’ recent allegations of union-busting have also been met with disappointment in the gaming sphere, bringing us back to the soured mood of industry workers at large. Gamers remained primed for disappointment, whether it has to do with the delay of a game or the shutdown of a favored studio. For employees in the industry, the changes don’t address their existing woes of working in gaming, only adding concerns to their list with sweeping changes instead.
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