Epic Games CEO Tim Sweeney warned that the investment boom driven by AI systems and data center construction is squeezing hardware supply, forcing the gaming industry to bear higher memory and storage costs. He believes this supply shortage will not end in the short term.
In a recent interview with Edge magazine, Sweeney described it as an "unexpected and severe shock." He stated that various parties have made massive investments in AI systems and data centers based on the belief that AI will profoundly transform the economy, leaving the gaming industry at a disadvantage in the scramble for hardware.
According to Sweeney, prices for memory and storage products have quadrupled and may not stop there. He predicts that related supply issues could last up to three years. Beyond rising hardware costs, the gaming industry is currently facing simultaneous pressures from layoffs, soaring development budgets, and increasing product prices.
Edge magazine dubbed the current situation "Crash 2.0," inviting Sweeney, former PlayStation executive Shawn Layden, Tencent's Amir Satvat, and Playable Worlds' Raph Koster to discuss industry issues. Unlike the market crisis of 1983, which was triggered by factors such as low-quality software and an oversaturation of console choices, today's major commercial games primarily face problems of excessively long development cycles and skyrocketing costs.
Layden suggested that large studios should adjust their revenue expectations, aiming for $50 million per game rather than $500 million, and scale their teams accordingly. Interviewees like Satvat also acknowledged that the industry had previously held overly high expectations for using AI tools to replace large teams, a notion that is becoming increasingly difficult to realize.
When discussing other tech bubbles, Sweeney also mentioned NFTs, stating that participants "all suffered losses" in the process. Despite Fortnite's continued operation, Epic has carried out multiple rounds of layoffs in recent years, citing declining revenue.
Sweeney believes that expanding domestic manufacturing could be a way to alleviate the problem, reducing reliance on suppliers like Nvidia and enhancing technological self-sufficiency. However, he admitted that this idea is somewhat wishful thinking, pointing out that physical infrastructure cannot advance as rapidly as chip performance does under Moore's Law.