How small studios can scale amid games industry turbulence

Gennadii Potapov is CEO of General Arcade and Andrei Morozov is CEO of Lunate Games.

With the games industry still reeling from layoffs, shrinking budgets, and the aftermath of post-pandemic overexpansion, the question for many studios isn’t just how to stay afloat, it’s how to stay relevant and resilient.

For small and mid-sized developers, the solution doesn’t have to be cutting back. Not every studio is retreating, some are doubling down - together.

We’re not talking about classic publisher-developer deals, but a new wave of structural collaboration between studios: long-term partnerships, joint ventures, and shared teams.

These alliances allow studios to scale up without spiraling costs, access new skills without aggressive hiring, and offer a more complete service to clients, all while giving their teams more security and flexibility.

We recently formed a joint venture between our companies, General Arcade and Lunate Games, called Beware of Bytes! We believe more studios should be thinking about collaboration and how it could help them scale safely, build more resilient teams, and create better games.

The case for teaming up

Too often, small and mid-sized studios are forced to choose between growth and stability. You want to pitch for bigger projects, but can’t afford to overextend. You need specialists in new engines or platforms, but can’t justify a full-time hire. You want to keep your team engaged, but can’t offer the variety of work they crave.

Collaboration solves many of these problems at once.

By aligning with a complementary studio (not just outsourcing or hiring freelancers) you can offer more complete services, compete for bigger projects, and give your teams access to more opportunities without sacrificing job security.

We’ve already seen it work. And we believe its an approach that can work for others and help support the industry.

1. A flexible model for global teams

We both operate studios across multiple countries and time zones, and yet our teams collaborate as seamlessly as if they were in the same office. That’s the power of a remote-first, remote-smart setup.

At the same time, we’re intentional about when and how we connect in person. A remote-first model doesn't mean remote-only.

We’re already planning short-term team exchanges, sending engineers to each other’s offices to co-work, knowledge-share, and build stronger cross-team bonds. It’s not just about productivity. It’s about culture.

2. A platform for learning and growth

One of the best parts of working in a collaborative structure is what it unlocks for your people.

Suddenly, an engineer who’s spent years in Unity can start learning Unreal on real-world projects. A QA tester in one country gets to experience new pipelines and tools from another. Everyone is exposed to new ways of thinking, new workflows, and new challenges. That kind of growth is rare- and powerful.

For us, the collaboration has become a platform for upskilling and career development, not just a business move.

3. Offering a full-cycle solution without growing recklessly

As individual studios, we had different technical strengths: porting, remastering, engine work, simulation, optimisation, and networking.

Together, we now offer something closer to a full-cycle development team, but without the fragility that comes from sudden growth.

This model allows smaller teams to offer AAA-level solutions while staying lean and focused. It’s a smarter way to scale.

4. Shared risk, shared reward

One of our shared values and motivations was that collaborating would help avoid the boom-and-bust hiring cycles that so many studios go through.

By combining pipelines and spreading project load across a larger joint team, we can grow without constantly contracting. Our people get more stability. Our companies get more agility. It’s a trade-off that benefits everyone.

What to think about before you collaborate

Collaboration isn’t easy. It takes trust, transparency, and time. You need to be honest about your goals, your limits, and your working styles. And you need to invest in systems and processes that support both companies, not just one.

But if you get it right, the benefits are immense:

• You can pitch for work you’d never be able to deliver alone

• You can offer your team more variety, growth, and job security

• You can build something bigger than either of you could on your own

The result? Stronger studios. Happier developers. Better games.

We don’t think the challenges the industry is facing today are going away anytime soon. But we also don’t believe the only answer is to downsize or wait for a miracle.

The future, in our view, belongs to those who adapt. And sometimes, the best way to adapt isn’t to go it alone but to build something new together.

We hope more studios consider it.