The video game industry has entered 2026 with a grim sense of déjà vu. After two years of mass layoffs, studio closures, and corporate restructuring, many hoped the worst was behind us. Instead, the year has opened with three major stories that paint a far more troubling picture — one where even the most established studios and the most iconic personalities are vulnerable.
In a single week:
- Ubisoft announced a restructuring that could cut 55 jobs at Massive Entertainment and Ubisoft Stockholm.
- Meta confirmed the closure of several VR studios, including Twisted Pixel and Sanzaru Games.
- Larry “Major Nelson” Hryb revealed he was laid off from Unity after 18 months.
Individually, each story is concerning. Together, they form a pattern — one that suggests the industry is undergoing a fundamental contraction.
🧩 Ubisoft’s Cuts Hit Massive Entertainment — Even With The Division 3 in Development
Massive Entertainment, the studio behind The Division, Avatar: Frontiers of Pandora, and the Snowdrop engine, is facing a proposed restructuring that could eliminate 55 roles across its Malmö and Stockholm offices.
Ubisoft claims the cuts follow:
- A voluntary leave program that didn’t go far enough
- A finalized long‑term roadmap
- A reassessment of staffing needs for The Division franchise and Snowdrop engine support
Despite The Division 3 being a major pillar of Ubisoft’s future, the company is still reducing headcount. That contradiction is telling: even active, revenue‑generating franchises are no longer safe from cost‑cutting.
This isn’t an isolated event. Ubisoft has spent the last two years closing studios, canceling projects, and aggressively restructuring. The company’s strategy appears to be shifting toward fewer, larger, safer bets — a trend increasingly common across the industry.
I find it ironic that this very week, expectations went high after it was reported the appearance of banners at Japan promoting a “Definitive Edition” of the original Tom Clancy’s The Division game is bound to be announced along with the third game and the continuation of The Division 2.
🥽 Meta Shuts Down Twisted Pixel, Sanzaru Games, and Armature Studio
Meta’s Reality Labs division — once the centerpiece of its metaverse ambitions — has been hit with around 10% workforce cuts, resulting in the closure of multiple first‑party VR studios.
Among the casualties:
- Twisted Pixel — creators of ‘Splosion Man and Deadpool VR
- Sanzaru Games — developers of Asgard’s Wrath 2, one of the most acclaimed VR titles on Meta Quest
- Armature Studio — known for Resident Evil 4 VR
Developers from these studios confirmed the closures publicly, with Meta stating the cuts are part of a shift in investment away from the metaverse and toward wearables.
This is a seismic blow to VR development. Sanzaru and Twisted Pixel were two of the most experienced VR studios in the world — and Meta still shuttered them. If even top‑tier VR teams aren’t sustainable, it raises serious questions about the long‑term viability of high‑budget VR game development.
🎤 Larry “Major Nelson” Hryb Laid Off From Unity — A Symbolic Turning Point
Perhaps the most shocking headline came from Unity, where Larry Hryb — better known as Major Nelson — announced he had been laid off after just 18 months as Director of Community and Advocacy.
Hryb spent 22 years at Microsoft, becoming one of the most recognizable faces of Xbox. His departure from Unity isn’t just another layoff — it’s symbolic.
If someone with:
- Two decades of industry leadership
- A massive public presence
- A proven track record of rebuilding community trust
- Deep relationships across the gaming ecosystem
…can be cut, then no one is safe.
Unity itself has been in turmoil for years — from controversial monetization changes to multiple rounds of layoffs and office closures. Hryb’s exit underscores how unstable even foundational tech companies have become.
📉 What These Three Stories Reveal About the Industry
Taken together, these events highlight several troubling trends:
1. Cost‑cutting is now the default strategy
Ubisoft, Meta, and Unity are all reducing staff not because of project failures, but because of long‑term financial repositioning.
2. Even successful teams and franchises aren’t protected
- Massive is actively developing The Division 3 — still hit with cuts.
- Sanzaru delivered one of VR’s best games — still shut down.
- Larry Hryb rebuilt Unity’s community presence — still laid off.
Performance no longer guarantees stability.
3. The industry is shrinking, not growing
After years of pandemic‑era expansion, companies are now contracting to pre‑2020 levels — or smaller.
4. Public‑facing roles and community teams are no longer “safe”
Hryb’s layoff shows that even high‑visibility positions are vulnerable.
5. VR’s future is more uncertain than ever
If Meta — the biggest VR investor on Earth — is closing studios, the rest of the market will feel the shockwaves.
🔥 The Bigger Picture: If Major Nelson Isn’t Safe, Who Is?
Larry Hryb’s layoff is the clearest sign yet that the industry is undergoing a structural correction, not a temporary downturn.
For decades, Hryb represented stability, continuity, and community in gaming. His presence was a constant through console generations, corporate shakeups, and industry shifts.
If someone with his experience, influence, and legacy can be laid off:
- No role is secure
- No studio is untouchable
- No company is immune
This isn’t just a bad year — it’s a transformation.
🧭 Where Does the Industry Go From Here?
The next 12–18 months will likely bring:
- More consolidation
- More closures of mid‑sized studios
- Fewer experimental projects
- A stronger focus on “safe” franchises
- Increased outsourcing and contract‑based development
- A retreat from VR and metaverse investments
For developers, creators, and players, this means a more cautious, risk‑averse industry — one that may produce fewer innovative titles in the short term.
But historically, periods of contraction are often followed by waves of reinvention. The talent displaced today may form the studios and ideas that define the next decade.
The layoffs at Ubisoft, the closures at Meta, and the departure of Larry Hryb from Unity are not isolated incidents — they are symptoms of a deeper, industry‑wide recalibration.
The message is clear:
If even Major Nelson can be laid off, the industry is in a more fragile state than anyone wanted to admit.
But as always, the people who make games — not the corporations — will shape what comes next.
