Nye's Digital Lab is a weekly scribble about creativity at the intersection of AI & distributed systems.

This week, I'm slinging three reasons why I think the tech industry has changed and why you should position yourself to what's next.

The anxiety is real. Texas may be flooding, but tech is crashing.

The headlines are extremely depressing. "Meta Cuts 11,000 Jobs." "Microsoft Eliminates 10,000 Positions." "Gaming Studios Shutter ." When you're just starting your career, these numbers feel like they've targeted you specifically. They feel like doors slamming shut before you even get a chance to knock. This isn't just students however, the layoffs in tech are deep.

So, here is another guess as to why.

What we're experiencing is, yes, the death of the way it used to be. And I am struggling with this truth, that it might be a painful but necessary transformation. Think of it like updating your game engine or operating system. The old version worked, but it's bloated, inefficient, and can't handle what you want to build next. Like my transition from Windows to Linux , the transition is messy, you need a new tech stack, but what emerges on the other side is potentially more powerful and freeing.

So let me share my best understanding of why this tech storm is happening, not to sugar-coat a difficult reality, but to help you navigate it with clarity and purpose. Because you didn't choose game development because it was easy or guaranteed. You chose it because you love creating worlds, telling stories, and making awesome s***. I believe you need to hold on to that, (and keep building!) but how you build will be profoundly different.

Here are the three seismic shifts reshaping our industry.

Let's revisit March 2020. Overnight, the entire world went digital.

For tech companies, it felt like Christmas morning every day for two straight years. Let's imagine the studio executive at this time, sitting in a bathtub, pouring buckets of money all over themselves. Gaming revenue exploded... and I mean nuclear.

Everyone was stuck at home playing Animal Crossing. We all went on zoom, played games, watched insane amounts of Netflix and Youtube. As we began to run out of content, companies thought this was the new normal. People touted we were "accelerating by a decade," and that "we'd permanently shifted to a more digital lifestyle." So, hiring went crazy. Companies rapidly expanded their workforces, anticipating a continued acceleration of digital adoption that, in hindsight, proved to be an exuberant overestimation.

Unfortunately, whiplash comes back around. Hard.

As the world reopened, that manic digital adoption slowed down. People went back to restaurants. They visited friends instead of binge-watching yet-another Marvel knock off. Gaming companies that had built teams expecting perpetual growth suddenly found themselves with far too much.

This COVID overspend was the shock to the system that changed everything. When companies suddenly found themselves with bloated budgets and oversized teams they could no longer justify, it forced a fundamental reckoning with how they operated. That painful pullback didn't just mean cutting headcount, it meant questioning every assumption about cost, efficiency, and value.

And once executives started asking "How can we do this better and cheaper?" the door opened to considerations that might have seemed unthinkable during the boom years. This financial reality check is what's fueling the conversation... but it's just the start.

The easy thing to say is that studios are just shipping jobs overseas for cheaper labor. The reality is more nuanced, and honestly, a little more amenable to our friends on the Indian continent.

India has long been recognized as the "IT outsourcing capital of the world," primarily due to the significant cost reduction benefits it offers to companies seeking to lower operational expenses. The country boasts a large pool of skilled IT professionals, making it an attractive destination for businesses looking to offshore various technology related functions. But honestly? Recently, they've gotten really, really good.

It could just be the sheer number of Indians entering tech, or the work ethic, or just that it took time for them to learn the ways of western digital development. But the modern Indian developer is not just the cheaper option anymore. Couple a fractional price (we're talking 1/10th the cost of a $300K American developer) with increasingly strong technical skills, and it's hard not to buy into it.

I have a lot of Indian students who are absolutely hungry for this work. They spend late nights not just learning Unreal Engine but sucking the marrow out of the blueprint functions. They bring an enthusiasm and work ethic that puts some of us to shame. The talent is undeniable. I'm only seeing a small cross-section, but it's an indication that talent is talent, no matter where it comes from. The quality gap that existed ten years ago? It's closing fast.

The truth is, outsourcing isn't as simple as "send it to India and save money."

While the cost advantages are undeniable, outsourcing to India is not without its potential drawbacks and complexities. Time zone differences are hard to work with. The Indian IT industry also experiences high attrition rates, often exceeding 20% per year. There are all kinds of problems when you send complicated multifaceted work across the planet. And just being "frank" here, the great stuff of game design (merging story and mechanics) might still be in the American (and Japanese) drinking water. At least for now.

When you can get excellent technical execution at a tenth of the price, those $300K American developer salaries start looking less appealing to keep on the books. This isn't just about saving money anymore, it's about accessing a talent pool that's both cost-effective and increasingly skilled.

What I hope, or perhaps what I'm optimistic about, is that we will discover a new form of global collaboration that actually makes our industry stronger and the ideas more compelling. When you work with diverse teams, you build better games. Period. So instead of seeing this as competition, maybe we see it as a new reality of game development. We might be looking at truly international, collaborative, and (hopefully) more creative projects because of it.

But also understand that the days of commanding premium salaries purely for being local are ending. Stay with me. Did you get into game development to make a lot of money, or because you wanted to tell stories and make cool s***?

Now, let's talk about that elephant in the room. But not the way you think.

Most of the conversation about AI focuses on "Will AI replace artists?"

The real conversation is "How do we spend $80 billion on AI infrastructure?" Microsoft alone plans to spend an estimated $80 billion on AI infrastructure in the coming year, representing a $25 billion increase over the previous fiscal year.

My research leads me to believe that firings were primarily driven by the need to fund these substantial investments in the AI cloud. Microsoft's aggressive push into AI means trimming costs elsewhere within the company, not necessarily because AI is directly replacing human workers, but because the sheer cost of building and scaling AI infrastructure is immense. You lay people off, your stock goes up, you have liquidity to invest. Ain't capitalism grand?

Think about what this means practically.

To build scalable AI systems that can generate art, assist with coding, or create procedural content, you need massive cloud computing power. You need data centers that consume enough electricity to power small cities. You need to move away from the old model of localized development teams with their cute little servers and workflows, toward cloud-based, globally mega-AI-integrated pipelines.

So that's how it is. Companies are strategically reducing their workforce to reallocate capital towards AI spending, focusing on developing advanced AI technologies and the underlying infrastructure required to support them. It sucks if you are job hunting, but it's not personal. It's a massive capital reallocation from humans to infrastructure.

I know the hatred is there. I know the backlash is here. I feel it, I see it. But the companies of tomorrow will be AI driven. It's just something you need to internalize and be aware of.

The future game developer won't just be someone who can model characters or design levels. They'll be someone who can direct AI to generate hundreds of variations, who can use simulations to create responsive, adaptive gameplay, who can orchestrate AI systems to build worlds that react intelligently to player behavior. I made some guesses about this last year.

The game industry of tomorrow will be global and international, and all driven through billions and billions of dollars of cloud.

I wish I could end this with a neat bow, telling you exactly what your career will look like in five years. But, I don't know, and anyone who claims they do is probably selling you something.

What I do know is that the industry is not shrinking; it's morphing and evolving. We're moving from the era of massive teams building traditional applications to something entirely new. Probably smaller, more efficient and modular teams. AI-augmented creativity. Global collaboration. New business models. Cloud-based everything.

The key to success and employability in this evolving landscape lies in figuring out how to get those pesky neural networks to create compelling content. You'll need to embrace AI literacy, not just knowing how to use these tools, but understanding how to direct them, when to trust them, and when to override them with human intuition.

The most valuable professionals will be those who can effectively guide AI, interpret its outputs, and infuse projects with a distinct human touch. I believe that it can't understand why a player feels frustrated at that specific moment in level three. It can't recognize that a character's emotional arc needs a different kind of visual metaphor. It can't "feel" the difference between a good game and a great one. I use AI every day, but I still need to edit my essays, rewrite the bloated sentences when it regularly goes off the rails. I also need to be the one who comes up with what to actually write about in the first place.

The idea to write it, will always come from me.

So yes, grieve what we're losing. Grieve the end of the grandiose industry we thought we knew, where massive studios promised the illusion of stability and clear career ladders. But gaming was never really certain or stable to begin with. We're an industry built on hit-or-miss creativity, where studios rise and fall with single releases, where even beloved franchises can disappear overnight. What we're really grieving isn't stability we had, but the hope that we might finally get it. There isn't a single industry that won't be touched by this shake up, even as an educator, I'm right there with you.

But maybe there is a way to get excited. We're living through the birth of something entirely new. The next decade of game development is going to be like crazy... wilder, weirder, and more creative than anything we've seen before. You are the first.

As Gandolf says, this too, shall pass. And when this one does, the creative developers who learned to dance with the devil will be the ones shaping the future of interactive entertainment.

Make it Happen.

I do this every week. If you vibe to the ideas I express here, please consider subscribing or sharing with friends. We'll see you next time.

Nye Warburton is a systems designer from Savannah, GA. This essay was largely written with human labor, with a few Claude Sonnet passes to sweeten it up.

For more information visit https://nyewarburton.com

COVID Overspend and Layoffs:

• Forbes: "From Overhiring To Overhauling: The Tech Industry's Talent Paradox" (https://www.forbes.com/councils/forbestechcouncil/2024/07/03/from-overhiring-to-overhauling-the-tech-industrys-talent-paradox/)

India Outsourcing:

• FDM Group: "The pros, cons and alternatives to outsourcing IT in India" (https://www.fdmgroup.com/news-insights/outsourcing-it-in-india/)

AI Infrastructure Investment:

• Windows Central: "Microsoft's cuts to employee headcount are for AI infrastructure investment" (https://www.windowscentral.com/microsoft/report-microsofts-2025-layoffs-revolve-around-its-desperate-usd80-billion-ai-infrastructure-investment)

Additional sources from the documents:

• WIRED: "AI Is Already Taking Jobs in the Video Game Industry" (https://www.wired.com/story/ai-is-already-taking-jobs-in-the-video-game-industry/)

• UX Collective: "AI is coming for our design jobs, but it can't touch taste" (https://uxdesign.cc/ai-is-coming-for-our-design-jobs-but-it-cant-touch-taste-afd5c7a48184)

• CuriousCore: "AI Meets UX: 3 Emerging Jobs at the Intersection" (https://curiouscore.com/resource/ai-meets-ux-3-emerging-jobs-at-the-intersection/)

• UX Design Institute: "Will AI (Artificial Intelligence) replace UX Designers?" (https://www.uxdesigninstitute.com/blog/will-ai-replace-ux-designers/)

• Rethinking Talent for Generative Game Pipelines, Dec 3. 2023

• Hang On! Coding A Game with AI, Dec 18, 2024

• Reframing Crisis as Opportunity, April 13, 2025