The layoffs across the games industry over the last two years have been widely framed as a cost correction.

They are. Maybe you were fortunate enough for your 1200-person company to sustain itself on one big hit, but an economic downturn shrinks your audience considerably and makes it tougher for you to break even, and that's assuming the quality of your game and marketing are just as good as your last hit.

I saw this firsthand while leading the external production team during the development of Immortals of Aveum. The project makes a useful case study precisely because it was ambitious and structurally complex: one of the first major titles built on Unreal Engine 5, with multiple external teams contributing across characters, creatures, weapons, and first-person gameplay assets in a multi-vendor AAA environment.

Maybe the problem was that a brand new team made something so ambitious on their first go?

The question is no longer whether external development is essential. It's whether the industry is willing to treat production continuity as infrastructure — or continue optimizing for short-term cost while the capability that made AAA possible quietly fragments.

Maybe we ought to question whether AAA as the author knows it is really necessary. We can get excellent production value out of small teams that reduces the risk of not breaking even, and Unreal 5 is pretty damn good at enabling that. There's an enormous success like Clair Obscur, but then there's also a more modest success like The Alters or The Thaumaturge. I find it interesting that, despite their name and some pretty undeniable successes, a US studio like Supergiant Games can still measure their workforce in the dozens, not hundreds. I'll bet they're pretty good at retaining that talent.