What are some ways AAA studios and publishers could feasibly lower the costs of producing videogames without laying off people?

The big issue is that the vast majority of the costs in game dev are in the salaries for people doing the work. There's really only a few ways the industry can feasibly cut costs - either companies don't hire as many people, enact sizable pay cuts for employees, or both.

Game publishers have already been pushing in the direction of avoiding hiring where they can. There's a large quantity of work currently being outsourced to external third-party studios in places like Southeast Asia and Eastern Europe because the labor is cheaper. Many companies have also been looking at utilizing generative AI and other new workflows to reduce the headcount needed to produce games.

The other option is to enact pay cuts. This does reduce costs without layoffs, but it tends to be unpopular among companies. Most companies don't like doing pay cuts because it tends to push the top performing workers out of the company and it makes hiring new workers difficult. If I knew I was one of the biggest contributors to the team and my pay got cut by 25%, I would seriously consider taking my contributions to another company that would pay me what I feel I am worth. Further, it makes eventually hiring new workers more difficult if the salary band for a given role is lower than competing companies. Why would a candidate come work for Company A when Company B is paying 20% more?

This is probably where most laymen will point at cutting executive salaries as a possible solution, but that isn't super feasible either. Executives are primarily (more than 85%) paid in stock, not cash. Stock compensation comes with major constraints like vesting time and restricted selling windows, primarily to prevent insider trading, but the biggest issue with stock compensation is that people can't spend stock to buy groceries or pay rent. Most people need to be paid in money.

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