The gaming industry experienced another wave of turbulence in early 2025, with Canadian developer Phoenix Labs announcing significant layoffs affecting the majority of its staff. This downsizing, potentially the largest in the gaming sector thus far that year, follows a series of similar cutbacks and closures across the industry, impacting companies such as Ubisoft and Highwire Games. While broader industry trends may have played a role, the circumstances surrounding Phoenix Labs’ layoffs point towards internal challenges, specifically the faltering performance of their flagship title, Dauntless, and its poorly received “Awakening” expansion.
Dauntless, a cooperative monster hunting game launched in 2018, had cultivated a loyal player base with its free-to-play model and engaging gameplay loop. Players hunted colossal creatures known as Behemoths, utilizing their spoils to craft improved gear and tackle even greater challenges. The game’s success seemed promising, but the release of the Awakening expansion in December 2024 marked a turning point, introducing controversial changes that alienated a significant portion of the player community.
The primary source of contention revolved around Awakening’s aggressive monetization strategy. Departing from Dauntless’ previous approach to in-game purchases, the expansion introduced a slew of new microtransactions, simultaneously resetting player progression and essentially requiring players to repurchase previously earned in-game items with real money. This perceived betrayal of the player base sparked widespread backlash, with many accusing Phoenix Labs of adopting predatory monetization tactics. The negative reception to Awakening likely contributed significantly to the studio’s financial difficulties, ultimately leading to the drastic staff reductions.
The influence of Phoenix Labs’ parent company, blockchain gaming company Forte Labs, cannot be ignored when analyzing the studio’s recent struggles. Forte Labs acquired Phoenix Labs in 2023 under a shroud of secrecy, a move that raised eyebrows within the gaming community. Forte Labs’ focus on blockchain technology and its potential integration with gaming has been met with skepticism, and some speculate that the company’s influence may have played a role in the controversial monetization decisions surrounding the Awakening expansion. Furthermore, reports suggest that Forte Labs orchestrated a previous round of layoffs at Phoenix Labs in May 2024, including the cancellation of an unannounced project, suggesting a pattern of intervention and restructuring.
The future of Phoenix Labs and its remaining projects, including Dauntless and the upcoming farming simulator Fae Farm, remains uncertain. The studio has promised to provide further details regarding its plans, but the extensive layoffs cast a long shadow over their prospects. The situation serves as a cautionary tale about the potential pitfalls of aggressive monetization strategies and the challenges of integrating new technologies like blockchain into established gaming ecosystems. The long-term impact of these decisions on player trust and the studio’s ability to recover remains to be seen.
The Phoenix Labs situation highlights a growing concern within the gaming industry regarding the balance between monetization and player satisfaction. While microtransactions have become increasingly common, particularly in free-to-play titles, the backlash against Awakening demonstrates the importance of respecting player investment and avoiding practices that are perceived as exploitative. The resetting of player progress and the subsequent push towards paid items created a sense of betrayal among the Dauntless community, damaging the studio’s reputation and potentially contributing to the game’s decline. This incident serves as a reminder that sustainable monetization models should prioritize player engagement and value rather than short-term profits.
The gaming industry, like any other, is subject to market forces and economic fluctuations. The recent wave of layoffs and studio closures, including those at Phoenix Labs, Ubisoft, and Highwire Games, reflects the challenges faced by developers in a competitive and rapidly evolving landscape. While specific circumstances vary, factors such as changing player preferences, increased development costs, and the pressure to deliver innovative experiences contribute to the volatility of the industry. The Phoenix Labs case, however, underscores the importance of carefully considering the impact of design and monetization decisions on the player community, as these choices can have significant consequences for a studio’s long-term viability.
