The video game industry was better prepared than most to make the switch to remote work. Even so, researchers found that companies that went remote during the pandemic suffered more delays than those that managed to keep working in offices. Why? Weak ties — or casual relationships — suffered in the pandemic. Looking at data on white-collar workers’ communications, strong ties got stronger and weak one frayed. That, in turn, led to communication breakdowns that made hitting big deadlines or continuing to innovate harder, even as workers were individually productive. In short, this was an institutional failure. So what should companies do? Turning back the clock isn’t an option — companies need to find ways to encourage weak ties while accepting that office culture has fundamentally changed. They should: 1) accept that a one-size-fits-all strategy for remote probably won’t work; 2) consider creating a team to help encourage weak ties and otherwise pursue strategies to help build relationships across the company, 3) acknowledge that worker expectations have changed and try to find a balance between flexibility and face time, and 4) stay nimble and keep evaluating their approach as time goes on.
Of all the industries that rapidly shifted to remote work due to Covid-19, the video game development industry seemed to be particularly well-positioned to continue operating successfully. Video game companies produce almost exclusively digital goods unencumbered by supply chain constraints — any delays they encounter are therefore due mostly to collaboration challenges. Moreover, with much of the world’s population stuck at home, video game purchases themselves exploded — in 2020 the industry grew by more than 20% to $180 billion in revenue.
As such, the video game industry is a nearly ideal test case for whether a fully distributed workforce is likely to succeed. If, as some have posited, knowledge workers are more productive when working remotely, video game development should have accelerated into 2021 — and companies asking whether they should divest themselves of their physical office assets and lean fully into the remote and hybrid work future would have a model to follow. Specifically, we’d expect games to be released on schedule and developers to complain less frequently about development challenges in their public statements.
But that didn’t happen.
Instead, many of these companies struggled. One third of developers experienced pandemic-related delays, according to a “State of the Game Industry 2020: Work from Home Edition” survey by the Game Developers Conference last August. In a more recent GDC survey released in April, 44% reported delays. Respondents in the 2020 survey credited these setbacks to external factors, such as rocky transitions to WFH at partner organizations and other pandemic-related slowdowns, but also internal problems, such as difficulty doing ad hoc problem-solving without being in the same physical space. Companies have also complained about struggling to record voiceovers, increased stress on servers, and shipping delays. As a result, marquee titles that were hyped as Game of the Year contenders missed their release dates by weeks or even months, in some cases costing companies as much as $1 million per day.
Some of this can be chalked up to the burnout, added caregiving responsibilities, and general stress of the pandemic, but that’s not the whole story. We found that video game companies that moved to a remote work model saw many times the delays and disruptions as those that could continue primarily working in the office — and the specific struggles the game industry has faced during the shift to remote work should make other industries worried. Like other sectors, game developers worked longer hours during the pandemic, but often saw this intense individual effort fail to add up. While there were bursts of near-term output, many saw innovation and milestone projects falter. Rather than a failure of individual employees, this was a failure of the tools and processes they — and we — use to collaborate.
To precisely understand what happened in the video game industry and glean insights into how to avoid similar mistakes, we collected data from two sources. First, we looked at earnings call transcripts from the 25 largest video game companies globally, dating back to the first quarter of 2019. We coded these transcripts for mentions of release delays and developmental challenges in each call to compare before and after the pandemic. Second, we assembled a globally representative dataset of collaboration data from Global Fortune 1000 companies with a high prevalence of information workers. Specifically, we collected email, calendar, and chat metadata over a multi-year period from over a dozen organizations, with the total data surpassing 20 billion communication events — a dataset that allowed us to see how collaboration at companies with workplace dynamics consistent with video game companies changed during the pandemic.
Companies that are deciding what a return to the office may look like — or whether to return at all — should consider the results as they weigh their next steps.
Remote Control
There are a few reasons why the video game industry is a good subject for measuring the effects of shifting to remote work. For one, it announces and is bound to major product release dates (an approach meant to reduce competition with similar titles that can seriously dampen demand). For another, the industry offers side-by-side test cases: Not all video game companies shifted to a work from home model. In particular a number of organizations in Korea and Japan, which fared relatively better from a public health perspective than their American and European counterparts, kept a primarily office-work model through early 2021. Therefore we can somewhat control for market effects by examining companies in the same industry that didn’t adopt a remote work model.
The comparison is stark: Public video game companies that moved to a remote work model reported 4.4 times more delays than they did pre-pandemic. In contrast, video game companies that didn’t shift to remote working reported roughly half the delays compared to pre-pandemic. Lest we chalk this up to a regional effect, Bandai Namco, which is headquartered in Japan and quickly pivoted to a remote work model, reported six times the delays compared to pre-pandemic. Meanwhile, Nintendo, also headquartered in Japan but staying in offices through the beginning of 2021, reported half as many delays and development challenges as pre-pandemic.
There are some notable huge release date misses. Halo Infinite, meant to jumpstart sales of the new generation of Xbox consoles, was delayed by nearly a year. (It may end up being longer.) If not for the semiconductor crunch that has put a squeeze on console manufacturing, the losses from this delay would have been an even bigger catastrophe than spending an extra year on development. While major releases from 2020 to early 2021 were partially developed before the pandemic, developers are running out of new games to sell. The 2021 release schedule looks historically barren, meaning that the full impact of these delays and development challenges is yet to be felt.
In looking for causes, we can take hints from some of the quotes from developers’ public statements where these challenges are reported.
Square Enix’s Naoki Yoshida, for example:
I’m sure people have realized that work from home does work to an extent, but there are certain losses that we see between very fine communications — detailed communications. Those times where you’re sitting in front of the computer, and your teammates are there, and a programmer would just pull in their teammates, saying, “Hey, can you come look at my screen and check this out?” You can’t do that in a work-from-home situation.
Daniel Sussman of Harmonix reports similar issues:
Being remote has made it much harder for the team to collaborate directly, which has always been a big part of how we make games. Traditionally, Harmonix has designed and built games using a very iterative process. We have social build reviews where the team reacts to prototypes, new features, new art, or whatever. The move to remote has made that aspect of our process difficult.
Particularly telling is this quote from Chad Grenier of Respawn Entertainment:
Aside from technical challenges, there’s a creative hurdle. You lose the hallway conversations. You lose the people sitting on a couch and discussing something for an hour or two. You miss the lunch conversations. All of that goes away and becomes scheduled instead of happening naturally.
These statements underline one particular potential cause for delays: a reduction in informal, unplanned conversations that lead to tacit knowledge exchange and new, creative ideas. (Earnings call data reflects this view, too, though not quite as succinctly.) The collaboration data collected by Humanyze, a workplace analytics firm founded by one of the authors, supports the view represented in these anecdotes. Specifically Humanyze observed a 21% drop in weak ties in organizational networks for companies that shifted to a remote work model, which are defined here as ties that represent the equivalent of five to 15 minutes of one-on-one communication (email, chat, and meetings) per week.
Decades of research has pointed to the importance of these weak ties for creativity and innovation, both of which are crucial for video game companies in the short-term milestone attainment in large projects. Weak ties are more likely to connect people in disparate teams that don’t regularly work together. If these groups don’t communicate, development delays are more likely. This often results because formal specifications and processes that groups create to collaborate without directly communicating are often incomplete, leading to errors.
The changes we saw in collaboration patterns were not universally bad. For one, employees were able to communicate 24% more with people at different hierarchical levels, as in-office social cues that discourage collaboration — e.g., private offices and separate executive floors — are non-existent in a remote environment. People also spent 16% more time with their strong ties (people with more than one hour per week of one-on-one communication), indicating that many employees proactively scheduled meetings and communicated with their most important collaborators. Spending more time with these close collaborators is essential for near-term performance and can even improve employee engagement through building stronger relationships. These ties can be counterproductive for innovation, however, as employees are cloistered in increasingly small, tightly connected groups that are vulnerable to groupthink.
This all adds up to a story of individual success and institutional failure. In general, employees appear to have effectively collaborated intentionally, but organizations have faltered at creating an environment where important serendipitous collaboration can flourish. The default mode of collaboration — both processes and tools — when people work remotely seems to impede the creation of new weak ties and the maintenance of old ones. Most individual awareness is rightly centered on near-term results but it’s much harder to push weak ties into conscious awareness. The long-term positive effects of weak ties can take months, or years, to become apparent.
While management can certainly mitigate this with different programs, it isn’t easy to spur a change in a relatively small portion of the work week. Unfortunately, meeting the long-term challenges of a remote work model will likely depend in large part on doing just that. The output data from video game companies would support that failing to make these changes has real costs to companies, which will only become clearer over time.
A Strategic Update
As companies develop their long-term workplace strategy, they need to understand these risks and work on mitigation strategies.
First, leaders must recognize that most organizations will not be able to have a one-size-fits-all approach to remote work. What differentiates teams that have been collaborating effectively? The nature of the work matters; video game developers have different needs and habits than, say, the marketing teams responsible for promoting finished games. Can you transfer best practices from teams within your firm that have created and maintained weak ties?
Second, companies need to consistently promote the creation of weak ties for the long-term health of the business, whether employees are remote or co-located. Companies should consider creating a team with the sole purpose of creating and maintaining weak ties through events, workplace strategies, and the like. Humanyze’s data from a number of firms shows that companies need to constantly refresh initiatives like virtual happy hours because they only have a short-term effect on weak-tie creation. If people are in offices, ensuring that people from a variety of teams are in person on the same day to maximize serendipitous interactions is essential. This requires picking specific days where people should come in, rather than leaving everything up to individuals.
There are risks with these strategies. Employee expectations about their workplace have undoubtedly changed, with people expecting more flexibility than ever. Companies that try to force people to return to in-person collaboration will likely lose employees, outweighing the benefits to the organization that weak ties can bring. Showing hard data about the macro negative effects of remote work, which are hard if not impossible for individuals to observe, can help mitigate these effects.
Lastly companies need to be nimble with their strategy. Collaboration needs constantly change, so workplace strategy needs to change as well. Certain teams will need to focus more on weak-tie creation which should lead them to be in the office more. That same team may need more heads down time within their team later, which could lead them to work remotely more the next quarter.
People have shown great resilience during the pandemic, adapting to workplace changes remarkably quickly. Employees have proved that they don’t need a long change management process to effectively change how they work — and companies should trust that they’ll be as effective as possible in new conditions. It’s the job of organizations to ensure that the structure of collaboration is as effective as possible. By guiding how people work and adapting it over time, we can avoid the pitfalls of working remotely while still harnessing its benefits.