The stark difference between layoffs in the Western video game industry and employment stability at many Japanese studios has drawn attention from Alanah Pearce, the former God of War writer and current YouTuber. In a recent video, Pearce examined why Japanese developers often appear to retain employees for longer while major Western publishers continue to announce widespread cuts.
According to Pearce, one of the biggest factors is Japan’s labor system, which makes dismissing permanent employees considerably more difficult than in the United States. Japanese companies can still restructure, but they may rely more heavily on contract workers or use other approaches when they want to reduce their workforce.
Japan’s Labor Laws Make Layoffs More Difficult
Pearce also discussed the issue through an interview she conducted with former Sony Interactive Entertainment executive Shuhei Yoshida. Yoshida described a practice in which employees who companies want to leave can remain employed without meaningful assignments.
“They are given no tasks and are encouraged to find jobs outside the company,”
Yoshida explained in the interview with Pearce.
That does not mean Japanese studios are immune to layoffs. Nintendo, Square Enix and Sony have all made workforce reductions affecting employees or operations outside Japan in recent years. However, the legal and cultural environment can make maintaining long-term employment more practical for domestic workers.
Japan’s shrinking population also plays an important role. A smaller working-age population creates a tighter labor market, giving companies a stronger incentive to retain experienced developers and compete for talent through better compensation. The Japanese government has likewise highlighted population decline, labor shortages and wage growth as major economic issues JapanGov.
Why Developer Retention Can Benefit Game Studios
Pearce argues that employment stability can ultimately benefit companies as well as workers. Keeping experienced developers means studios retain institutional knowledge instead of repeatedly rebuilding teams after layoffs and rehiring.
Japanese companies have also demonstrated a willingness to increase compensation. Nintendo raised employee salaries by 10 percent in 2023, while Capcom increased average salaries and significantly raised starting pay for new graduates.
Pearce’s argument is therefore less about Japan having a perfect game-development industry and more about companies operating under different economic and legal incentives. For developers facing repeated layoffs in the West, those differences help explain why career longevity can look dramatically different between the two markets.
