By Sagar V. Mankar 
Liquid Swords, a video game studio created by Just Cause‘s Avalanche Studios founder Christofer Sundberg, has revealed plans to reduce its workforce. The company shared this news through a post on its official website.
The studio explained that after looking at its money situation and current problems in the video game industry, it decided layoffs were necessary to keep the company running in the future.
“I promised our employees and shareholders success and to build a studio redefining game development with a small, expert-driven team and a sustainable work model,” Sundberg stated. “While we achieved much of this, shifting market conditions prevented us from succeeding within our timeframe. As a result, we must part ways with talented individuals who have been instrumental in our journey.”
Despite these challenges, Sundberg emphasized that the studio isn’t giving up. The team will continue working on its first game and developing its original ideas with a smaller but dedicated group of developers. According to the statement, the company still aims to “simplify the game development process to create exceptional gaming experiences for players.”
The studio backed by NetEase is developing a AAA game which they describe as “a narrative-driven, open-world, hardboiled AAA revenge story“, built using Unreal Engine 5. However, no more details about the game have been shared yet.
These layoffs at Liquid Swords aren’t happening in isolation. According to the game industry layoff tracker Obsidian, the industry has seen significant job losses since the beginning of 2025. Nearly 1,000 jobs have been cut across 28 different companies in just a few weeks.
Some major studios affected include Rocksteady (known for the Batman: Arkham series), tech giant Microsoft’s gaming division, game engine creator Unity, and publisher Ubisoft. Other notable companies implementing layoffs are Reflector Entertainment, Huuuge Games, Moon Active, Iron Galaxy, HiRez, 10:10 Games, and Crytek.
Industry analysts suggest these widespread cuts reflect broader economic pressures, changing player habits, and the high costs of modern game development. Many studios expanded during the pandemic when gaming surged in popularity, but now face a market correction as players return to more balanced entertainment habits.
For the developers affected by these layoffs, the situation is particularly challenging. Game development is highly specialized work, and with so many studios cutting staff simultaneously, finding new positions becomes increasingly difficult.
For now, Liquid Swords joins the growing list of studios making tough decisions to weather what appears to be an industry-wide storm.
The announcement didn’t mention how many people would lose their jobs or how many would remain at Liquid Swords.