The video game industry has endured a particularly rough stretch of news, marked by significant layoffs, game delays, price increases, and shifts away from physical media. This period of turmoil has cast a shadow over the sector, with more challenging news anticipated in the immediate future.
The somber news began on June 22 with the tragic report of Ubisoft co-founder Claude Guillemot's death in a plane crash. This was followed by ongoing discussions surrounding Santa Monica Studio's God of War: Laufey and CD Projekt Red's continued efforts to recover its reputation after the troubled launch of Cyberpunk 2077. The week also saw an Ocarina of Time fan project cease development due to concerns about potential intellectual property issues, and the announcement of the Steam Machine's $1,000 price point sparked considerable online debate.
Further negative developments emerged on June 23. Lords of the Fallen II was officially delayed to avoid conflict with the anticipated release of Grand Theft Auto VI. Rockstar Games confirmed that Grand Theft Auto VI would not include a physical disc, a decision that was met with dissatisfaction from some retailers who reportedly stated they would refuse to stock physical copies.
The situation escalated on June 25, as reports indicated that impending Xbox layoffs were beginning, with Compulsion Games, the developer behind South of Midnight, reportedly being among the first affected. Bungie also conducted significant layoffs, impacting a substantial portion of the Destiny team and some Marathon staff, with studio head Justin Truman stepping down shortly thereafter. To compound these issues, Microsoft announced an upcoming price increase for Xbox consoles, effective in August, with further hikes potentially occurring in 2027 or 2028.
The influx of negative news continued into the final days of June and the start of July. On June 29, Activision began marketing Call of Duty: Modern Warfare 4, slated for an October 23 release, by noting that it would not be available on Xbox Game Pass during its first year. This follows Microsoft's earlier statement in April 2026 that new Call of Duty titles would not join the subscription service. This strategy is notable given Microsoft's acquisition of Activision and raises questions about the financial viability of including such major titles in Game Pass.
On the same day, Sony aimed to manage expectations for the PlayStation 6, indicating that hardware would no longer be sold at a significant loss, suggesting the console's price will be considerably high. Meanwhile, reports surfaced that Undead Labs, the developer of the State of Decay franchise and owned by Xbox Game Studios, is at risk of closure, with other studios like Double Fine and Ninja Theory also facing uncertainty unless buyers are found.
Microsoft continued to announce further cuts on June 30, with IO Interactive, the developer of Hitman, experiencing layoffs after funding was withdrawn from its fantasy RPG project. Reports also suggested that Microsoft might be considering the closure of Arkane Studios, the developer of Blade, although Hideo Kojima's Xbox-exclusive project OD appears to be safe. On a smaller scale, developer Papergames reversed its decision to add a new romance option to its dating sim Love and Deepspace following fan backlash.
The most significant shift came on July 1, when Sony announced plans to cease all physical disc production for PlayStation games by 2028. This move suggests that the PlayStation 6 could be a digital-only console, a possibility that reports indicate may also extend to Microsoft's next Xbox console, codenamed Project Helix. The announcement sparked widespread online debate, and Sony also confirmed the closure of the PlayStation Stores for the PS3 and PS Vita, scheduled for July 2027.
Looking ahead, the challenges are expected to persist. According to a report from The Verge on June 30, the anticipated Xbox layoffs are slated to commence on July 6. While the exact number of affected employees remains unknown, rumors suggest that as many as 1,500 individuals could be let go. In response, unionized Xbox workers are advocating for protections against these executive decisions. The current landscape paints a bleak picture for the industry, with many anticipating further difficulties before any potential improvement.