Bandai Namco Faces Workforce Cuts Amid Canceled Titles and Rising Industry Pressures

In a sign of the shifting tides within the gaming industry, Tokyo-based Bandai Namco Holdings Inc. is reducing its workforce following the cancellation of several game titles. The company, known for iconic franchises such as Dragon Ball, Gundam, and the legendary Pac-Man, is struggling with rising development costs and declining demand in the post-pandemic world, forcing it to make tough decisions.
Bandai Namco’s workforce reductions highlight a broader trend affecting the gaming industry, with the company reportedly using a controversial strategy to reduce its staff. According to individuals familiar with the matter, Bandai Namco Studios Inc., an affiliate of the parent company, has placed around 200 employees into so-called oidashi beya, or "expulsion rooms," where workers are given no tasks. This tactic, common in Japan, is designed to pressure employees into resigning voluntarily. Since April, nearly 100 of the 1,300 employees in the company have left, and more departures are expected in the coming months.

Cost-Cutting Measures Amid Industry Slowdown

Bandai Namco’s actions come at a time when the global gaming industry is experiencing a slowdown after years of growth fueled by the pandemic, which saw millions turn to video games for entertainment during lockdowns. However, as daily life normalizes, user engagement with games has dropped, particularly in mobile and online games, sectors that have taken a significant hit. The company incurred ¥21 billion ($141 million) in writedowns in the first three quarters of the fiscal year due to the overhaul of its game lineup.
Bandai Namco’s decision to discontinue several titles, including the smartphone game Tales of the Rays and the upcoming closure of the big-budget online game Blue Protocol, reflects the company’s ongoing struggle to manage rising development costs and a diminished user base. Projects featuring characters from popular anime series Naruto and One Piece, as well as a highly anticipated collaboration with Nintendo Co., have either been paused or canceled altogether.
In response to rumors about the use of oidashi beya, Bandai Namco has denied any formal organizational practice designed to force employees to leave. "Our decisions to discontinue games are based on comprehensive assessments of the situation. Some employees may need to wait a certain amount of time before they are assigned their next project, but we do move forward with assignments as new projects emerge," a representative from the company said.

The Pressure on Japan’s Gaming Giants
The workforce reduction at Bandai Namco is part of a larger trend in Japan’s gaming sector, where several major players have faced mounting financial difficulties. Rival companies such as Square Enix Holdings Co. and Sony Group Corp. have also been forced to cancel multiple loss-making projects. Square Enix took significant writedowns last year after scrapping several smartphone titles, while Sony recently canceled its Concord title just two weeks after its release, despite reportedly investing $400 million in the project.
Nathan Naidu, an analyst from Bloomberg Intelligence, noted that "Bandai Namco’s staff cuts show a sector that faces higher development costs, gamers’ limited attention spans for new games, and an expected game-revenue drop in Japan this year." These challenges are not unique to Bandai Namco but are reflective of broader market dynamics across the industry.
The shrinking consumer attention for new games is particularly problematic for gaming companies. Despite ongoing innovations, the oversaturation of content—especially in the mobile and online sectors—has led to a plateau in user engagement. The high costs of developing and marketing new games have not been met with a commensurate rise in consumer spending, which is pressuring companies to either find efficiencies or cut their losses on underperforming projects.

The Future for Bandai Namco
While Bandai Namco continues to grapple with the challenges of rising costs and declining demand, its long-term prospects may depend on how it navigates the next few years. The gaming giant’s cancellations of key projects, particularly those tied to popular franchises like Naruto and One Piece, suggest that the company is prioritizing financial sustainability over risky ventures.
However, the question remains whether Bandai Namco will be able to recover from this downturn. With competitors facing similar struggles, the industry’s ability to innovate and keep players engaged will be critical to future growth. Moreover, the company will need to manage internal morale and reputation, especially as reports of oidashi beya circulate, which could affect employee retention and recruitment in the highly competitive tech and gaming job markets.
An anonymous website launched last month, purportedly by disgruntled former employees, alleges that Bandai Namco is using a variety of tactics to pressure workers to resign. The company has acknowledged the website's existence but denies the accuracy of the claims.
Despite the challenges, Bandai Namco’s legacy as a pioneer in the gaming industry may provide a buffer as it repositions for a post-pandemic world. However, with the industry facing unprecedented pressures from both economic headwinds and shifting consumer behavior, the coming years will determine whether the company can maintain its standing as a leader in global gaming.