Iron Galaxy Cuts Up to 90 Staff, Calls Downturn Permanent

Most studios that announce layoffs frame them as a temporary measure. A painful but necessary step to weather a storm that will eventually pass. Iron Galaxy Studios just did something different: it told its employees, its partners, and the rest of the industry that the storm isn't passing.

In a post on LinkedIn, the Chicago-based work-for-hire studio confirmed it is reducing its company size, with one source telling Kotaku the cuts could affect up to 90 people. That follows the 66 staff Iron Galaxy let go in early 2025, which the studio called "a means of last resort" taken "to enable our long-term survival." This time, the language has shifted entirely. "Ever since 2020, when everything about making video games started to change, people have been waiting for business 'to get back to normal,'" the studio wrote. "This year, we're adopting a new posture to accept these current market conditions as permanent."

That single word, "permanent," is doing a lot of heavy lifting. I've covered dozens of layoff announcements over the past two years, and almost all of them use the same playbook: blame market conditions, promise a leaner and more focused future, imply things will bounce back. Iron Galaxy skipped the last part. Whether you read that as refreshing honesty or a white flag depends on your perspective, but either way it's a studio with nearly two decades of history openly admitting it doesn't expect the environment that sustained it to return.

A Studio That Kept Surviving

Founded in 2008, Iron Galaxy built its reputation as one of the industry's most reliable co-development partners. The studio contributed to Killer Instinct, the Batman: Arkham series, Borderlands, and more recently handled PC ports including The Last of Us Part II Remastered and Uncharted: Legacy of Thieves Collection. Its attempt at original IP, the live-service brawler Rumbleverse, launched in 2022 through a partnership with Epic Games and shut down within a year. PlayStation veteran Adam Boyes departed as co-CEO in 2024.

Despite that high-profile failure, Iron Galaxy kept the lights on through its bread-and-butter port and co-dev work, and last year shipped the Tony Hawk's Pro Skater 3 + 4 remaster collection to positive reviews. The fact that even a well-received release on a major franchise wasn't enough to prevent a second, potentially larger round of cuts says more about the state of the support studio model than any earnings report could.

The LinkedIn statement frames the layoffs as an inevitability driven by shifting player habits and tighter publisher investment criteria. "It's impossible for us to sustain the team size that we've carried this past year, even after our downsizing from last year," Iron Galaxy wrote. The studio asked the industry to keep an eye out for the affected staff, offering introductions and referrals.

Iron Galaxy's announcement lands in a week where the numbers keep getting worse. A recent Skillsearch survey of over 1,000 industry professionals found that 44% of respondents are considering leaving games entirely because of layoffs. The GDC State of the Game Industry 2026 report found that one in four developers had been laid off in the past two years, and nearly half of those were still looking for work. "I can't fully trust anywhere now," one respondent told GDC after being laid off multiple times in six years.

I keep coming back to that word: permanent. Studios have been treating the post-2020 contraction like a cycle, something to endure until the next upswing. Iron Galaxy just said out loud what a lot of people in the industry have been thinking privately. The work-for-hire model that kept mid-sized studios alive for years is shrinking alongside the publisher budgets that funded it, and no amount of waiting is going to reverse that. The studio still has its own projects in development, including Deathtrap Dungeon, but the company making those games is now significantly smaller than it was even 12 months ago.