The United States video game industry ranks among the global leaders, with its projected revenue of it to reach $131.30 billion by 2033. The recent sudden increase in H-1B visa costs, though, has sent shockwaves all across the industry. After all, the policy shift threatens to cripple the studios. It’s especially for ones already grappling with talent shortage & escalating budgets of production. It potentially derails the gaming project plans, while stifling innovation in the multi-billion-dollar sector.
H-1B Visa brings a financial strain on the already-pressured industry
The global gaming sector was projected to surpass $300 billion by 2025. The United States of this growth was expected to be a huge part. The rise in H-1B visa application fee (one-time payment of $100,000 per hire), as introduced by the President Donald Trump is not viable. It introduces a new and massive financial burden on the companies.
For the gaming studios, it comes at a time when the industry has already been navigating a complex landscape, making studios already contending with cautious hiring. Not to mention, globally, in 2024 alone, the industry saw a two percent headcount reduction. There were huge jobs cut, signaling a move towards cost control after the rapid expansion period.
The new fee effectively increases prices for many studios from having access to the global talent pool, on which they are reliant. The cost is prohibitive for all but the largest AAA companies are now creating a significant barrier for indie-sized and mid-sized studios, which drives a higher part of creativity within the sector—after all, the fees will increase the development cost.
How are the industry experts reacting to this change?
As per the TiE Global Board of Trustees, it’s been highlighted that the move will add “significant financial burden on startups and technology first that rely on global talent.” It will raise entry barriers and will further complicate strategic planning for teams, irrespective of their size. In consideration to it, it’s important to note that, the United States video game industry job was expected to see 10 to 15% increase by 2030.
To understand the above-mentioned, let’s take an example of mid-sized studios specifically. So, any studio looking to hire five specialized foreign engineers team, $500,000 will become an immediate and non-negotiable overhead, even before the salaries are discussed. It will force studios to cancel projects, scaling down ambitious plans, delay releases and directly have an impact on creative output as well as technological advancement within the United States gaming market.
All of the above-said will happen mainly because the studios therein have been highly reliant on the H-1B visa program for bridging the talent gap. They source top-tier international professionals to have a competitive edge, and now, it is under a lot of pressure.
Global talent sourcing is becoming prohibitively expensive—Prohibitively
As said above, the United States has always looked beyond its national talents to bridge the talent gap. It made the requirement for looking beyond traditional hubs like Silicon Valley in California, for talent, a core tenet of the growth strategy for this industry.
While some emerging hotspots like Germany, Sweden, Portugal, etc., did become great spots for vital sourcing grounds, offering a perfect blend of cost-effectiveness and high skill, now, with the H-1B visa cost, it has become difficult. Even when the remote work revolution has cemented the globalized hiring approach, helping studios to build distributed teams, having an on-site presence is now being compromised.
The high visa cost fundamentally undermines the studio’s strategy. It is important to note that, administration’s justification that cites concern over the United States workers getting replaced by the lower-paid foreign labor, clashes with gaming industry hiring practices’ reality. After all, these aren’t just roles where the foreign workers are undercutting domestic salaries. They are highly specialized positions for which there has been a documented shortage of qualified candidates coming from America.
Increased hiring cost put gaming studios under pressure
While the niche skills demand is intense, approx. two-third of the cybersecurity professionals within gaming have reported being understaffed. 20% of the studios even indicate that it takes approx. 6 months for finding qualified candidates. Such a talent shortage further makes it important to keep global recruitment open. It for them is not as an option but a necessity. It helps studios to compete. By making it expensive to hire talent from some emerging talent markets, including India, the new visa costs thereby undermine years of industry adaptation.
The H-1B visa, therefore, can be said to effectively slam the door on global talent pool access. It will or can (highly likely) force the studios to compete for an extremely limited supply of specialists domestically. Moreover, it would inevitably drive up the hiring costs for varied roles. Some of these roles are- AI/Machine learning specialists, Advanced Unity and Unreal Engine developers, Backend Infrastructure Engineers, etc. Not to mention, it will even slow down the cycle of development, all across the board.
Talent market, industry trends and more contradict
The move stands in stark contrast to all the previous predicted growth trends within the gaming industry and tech market. While the industry was forecasted to grow at a CAGR of 10.7%, and was expected to reach $131.30 billion by 2033, the current policy will handicap the primary engine—innovation via specialized talent. Such an impact will be felt disproportionately by the workers from countries like India. India has been known to constitute a significant portion of the H-1B beneficiaries (71%).
The numbers are quite jarring. For Indian workers, whose means salary was considerably lower than the average offered in the United States, the new fees can represent a shocking proportion of earnings. As per reports, it means $100,000 fees can exceed 60% of the annual salary of Indian professionals in the US. It makes the hiring of such talent quite economically unfeasible for most companies. It will thereby cut off the critical pipeline of the skilled developers therein.
As stated by TiE Global Board of Trustees Murali Bukkapatnam, the move raises entry barriers. It even disrupts the hiring timelines. It will create immense uncertainty and risk the export of the high-value work to some other global innovation hubs. The United States Chamber of Commerce has echoed some concerns too. It’s been highlighted that policy will have profound impact on employees. It will also impact their families and also employers who are dependent on them.
The Ministry of External Affairs further notes that the gaming industry of the United States is now left to navigate newer realities. Now, building a world-class team will become exponentially difficult & expensive. It will potentially hinder its competitive edge and growth on the global stage.
