In the high-tech locker rooms of the video game industry, one company’s pink slip is another company’s draft pick.

Top publishers like Santa Monica-based Activision Inc. and Redwood City-based Electronic Arts Inc. announced large layoffs in the past few weeks, a reaction to disappointing holiday sales. Activision trimmed about 150, while EA is firing nearly 400. Wall Street pummeled their stocks, and the companies revised revenue estimates for the coming year. “We believe 2006 will likely be another challenging year for the major publishers,” wrote Gary Cooper, analyst with Bank of America Securities.

But don’t call it a slump. In this video game town, it seems, everyone else is hiring.

“Most independent developers are hiring like crazy,” said Mike Arkin, director of studios for Mumbo Jumbo, an L.A.-based developer currently making games for Sony’s PlayStation Portable. At just 50 people, Mumbo Jumbo is dwarfed by the size of an Activision, where the 150 dismissed employees represent roughly 7 percent of its workforce. But even as most big publishers are struggling, smaller players are more than happy to pick up the pieces.

“We are in a huge growth phase right now, ” said Josh Resnick, president of Pandemic Studios, which recently merged with Canada’s BioWare Studios in a deal by private equity firm Elevation LLC. At 500 people, the combined studio is considered mid-sized. Resnick said he is looking to hire “well over” 100 people. As far as he’s concerned, layoffs at industry giants can be a good thing. “Obviously if some good people come out of that and come our way, we’re thrilled,” Resnick said.

Generation gap


The transition to the “next generation consoles” Microsoft Corp.’s Xbox 360, Sony Corp.’s pending PlayStation 3 and the upcoming Nintendo Co.’s Revolution has companies twisting themselves into all kinds of knots

New games are about twice as expensive to make $10 million to $20 million per game and a development team of 30 people is no longer big enough to make a game. Smaller studios are scrambling to beef up. “I don’t know anyone who’s not hiring,” Arkin added. “Every little developer out there has an Xbox 360 game they’re working on.”

Many industry observers feel that publishers like Activision and EA are too big to be nimble and they can’t change gears as quickly, so every once in a while, they have to trim big. hese layoffs come in cycles,” said Tamara Rothenberg, head of the L.A. office of video game recruiter Mary-Margaret.com. But even with the layoffs tossing hundreds of people into the hiring pool, Rothenberg said game programmers are in “very high demand” right now.

Ironically, EA’s studios continue to be hiring even as the layoffs are going on.

Pandemic’s Resnick said his company has to be a lot more selective when it makes those moves. “We can’t go through a binge and purge cycle like they can.”

Calabassas-based THQ Inc. seems to be the exception. With about 1,400 employees, THQ is definitely big. But unlike rivals Activision and EA, THQ is expanding during these “down times.”

“When other people are laying off people, it’s always an opportunity for us to expand our talent base,” said President and Chief Executive Brian Farrell. THQ plans to hire at least 200 people this year. “Even though the overall video game market is expected by most analysts to be relatively flat, we’re expecting double-digit growth,” Farrell continued. Indeed, THQ was the only big publisher to deliver on its holiday sales estimates, and it was the only major publisher to maintain its earnings guidance for the coming year.

Farrell says it’s because he runs his company like a network of small studios. THQ’s corporate headquarters handle administrative responsibilities and business initiatives, but each video game developer it acquires maintains its own identity and team structure, and exists as a satellite outside of the corporate offices.

Other big companies in L.A. are also scooping up gaming talent. Buena Vista Games, the video game division of Walt Disney Co., has about 150 people in its Glendale studios, and is recruiting.

“We welcome people to come check out our open positions,” said Angela Emery, communications director for Buena Vista. And people have. The crop of applicants is unusually strong, according to Emery. “It may be because of the recent layoffs,” she said. “We’re certainly receiving resumes from some of them.”

But not all employees will land in the open arms of another studio. While skilled developers and producers are in demand, sales and marketing types might be out of luck, according to Rothenberg. Those are positions that are usually redundant when studios merge or get acquired.

“You can have one marketing guy handle one title or three titles,” she pointed out. “He might be a little busier, but you can do it.”