Earlier this month, Microsoft released Fable: The Journey, the Kinect-controlled spinoff of the Xbox role-playing game series. Almost immediately thereafter, it laid off nearly 10 percent of the staff at developer Lionhead Studios.

It’s just business as usual in the game industry. Developers staff up to make a huge game, then shed members once it ships because they no longer have anything for them to do. It happens again and again, whether the game is successful or not: Take-Two had a huge hit with Red Dead Redemption in 2010, then immediately canned 40 workers from its Rockstar San Diego studio, calling the layoffs “typical.”

Typical? Sure. Good business practice? Not so much, say developers.

"If a studio is finding itself in a position where they have to hire a huge number of developers in a short time, most likely there will be layoffs at the end of a project," said Chandana Ekanayake, executive producer at Super Monday Night Combat developer Uber Entertainment.

Ekanayake says that any number of missteps during development can lead to layoffs: poor project planning, lower-than-expected sales, or not having a new game ready for the staff to work on.

Dustin Clingman, executive director of the International Game Developers Association, says that layoffs are “not likely an inevitable consequence” of game development, but that they are “becoming the norm for ... development houses that can’t afford to pay the overhead of keeping the developers on past the launch date of the game.”

In an e-mail to Wired, a Microsoft spokesperson called the layoffs “common.” Lionhead plans to hire 100 employees over the coming year as production ramps up on its next project.

From a purely pecuniary perspective, it all starts to make a certain kind of sense: Throw people at a project to make sure a game hits its release date, then pare down to a smaller group while you’re prototyping the next big thing.

Game creator Tim Schafer says that's not how a creative team should be run.

"One of the most frustrating things about the games industry is that teams of people come together to make a game, and maybe they struggle and make mistakes along the way, but by the end of the game they’ve learned a lot — and this is usually when they are disbanded," says Schafer, president of San Francisco developer Double Fine Productions.

"Instead of being allowed to apply all those lessons to a better, more efficiently produced second game, they are scattered to the winds and all that wisdom is lost,” he said in an e-mail to Wired.

"Eventually you will need to rely on their loyalty to you, and it just won’t be there."In other words, the hire-fire-repeat cycle not only isn’t good for the individual employees, it’s bad for business. If Schafer is right, it’s keeping employees from creating the best, most interesting videogames that they can by breaking up well-functioning teams just as they’re finding their groove.

Schafer faced this situation after the release of Double Fine’s first game.

“After Psychonauts, we could have laid off half our team so that we’d have more money and time to sign Brütal Legend," he said. "But doing so would have meant breaking up a team that had just learned how to work well together. And what message would that have sent to our employees? It would say that we’re not loyal to them, and that we don’t care.”

“Which would make them wonder,” Schafer said, “'Why should we be loyal to this company?' If you’re not loyal to your team you can get by for a while, but eventually you will need to rely on their loyalty to you and it just won’t be there."

Just knowing that a “typical” round of layoffs is likely approaching as a game nears its release date is enough to tank a game developer’s spirit, say experts.

"The threat of layoffs can have a huge impact on employee morale, stress levels, and well-being," said Dr. Ronald Riggio, an organizational and workplace psychologist.

Some employees, he said, might have a “productivity boost,” putting in extra effort to keep their jobs. “But others may simply give up, or the stress and worry takes their minds off of their jobs so that they make mistakes and underperform."

And since “crunch,” the most stressful and chaotic time in a game developer’s life, comes right at the end of the development cycle, the threat of layoffs immediately after will only make things worse, says IGDA director Clingman.

“When you’ve given your all to a game,” he says, “only to earn a pink slip for your efforts, it is always going to hurt.”