Iron Galaxy Studios is laying off an undisclosed number of employees as it announces a permanent shift in its business model, framing the cuts not as a temporary response to hardship but as an inevitable adaptation to a changed industry.
The Chicago-based studio, best known for co-developing ports like The Last of Us Part I and leading work on Tony Hawk’s Pro Skater 3+4, confirmed the layoffs in a LinkedIn post that expressed regret while insisting the reductions were necessary to align with a new company structure. The announcement came shortly after the positive reception of the Tony Hawk remaster collection, underscoring the irony that critical success did not translate to operational stability.
Sources familiar with the situation told Kotaku the layoffs could affect as many as 90 workers, though Iron Galaxy has not confirmed the exact figure. This follows a round of 66 layoffs in early 2025, which the studio described at the time as a “last resort” to ensure long-term survival. That effort, it now appears, was insufficient.
Iron Galaxy traces the roots of its current reckoning to 2020, when shifts in player behavior, publishing priorities, and development economics began to accelerate. The studio says it has spent years waiting for a return to normalcy but has now concluded that the post-2020 landscape is the new permanent state of the industry.
The studio’s history reflects a pattern of reinvention. Founded in 2008 as a work-for-hire developer, it has contributed to major franchises including Batman: Arkham, Killer Instinct, and Borderlands. Its attempt to launch an original IP, Rumbleverse, ended in failure when the live-service wrestling game was shut down within six months of its 2023 release. Since then, Iron Galaxy has leaned heavily on co-development and porting work, including PC versions of The Last of Us Part I and Part II Remastered, and Uncharted: Legacy of Thieves Collection.
Despite that steady stream of work, the studio says it can no longer sustain its current team size. Its LinkedIn statement noted that even after the 2025 layoffs, maintaining the workforce levels of the past year has become “impossible” under prevailing market conditions. The language echoes a broader industry trend: over 10,000 game industry workers were laid off in 2023 alone, and the pace has continued into 2024 and 2025 as publishers reassess budgets and delay or cancel projects.
Iron Galaxy’s leadership insists the cuts are not a sign of failure but a strategic evolution. The studio says it will help departing employees transition to new roles, framing the support as an extension of its core value of providing a “wonderful experience” for its talent. Yet the repetition of phrases like “it’s time for us to evolve again” and “we are terribly sorry to lose them” reveals a tension between pragmatic necessity and genuine regret — a duality familiar to studios caught in the industry’s cyclical downturns.
The layoffs as well raise questions about the sustainability of the co-development model that has kept many mid-sized studios afloat. As publishers increasingly favor internal development or select external partners with proven IP track studios, firms like Iron Galaxy may find their traditional role squeezed between rising costs and shifting demand.
How many employees is Iron Galaxy laying off in this round?
The studio has not disclosed the exact number, but one source told Kotaku the layoffs could affect up to 90 workers.
Is this the first time Iron Galaxy has laid off staff in recent years?
No. The studio laid off 66 employees in early 2025, describing those cuts as a “last resort” to survive. This round comes just over a year later.
What does Iron Galaxy mean by accepting market conditions as “permanent”?
The studio says that shifts in how players consume games, how publishers evaluate investments, and the overall economics of development since 2020 have created a new industry normal that it does not expect to reverse.
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