Hello I've had some experience with staff redundancies in the games industry, and to trivialise it as 'oh its just the economy, just a bit of downsizing not really a warning sign' seems massively naive or massively heartless, I can't decide which but I hope the former.
I wouldn't consider myself naive or heartless at all, I've got a background in dev as well and have been both sides of layoffs in the past. I know what it feel like when you see friends go while you stay employed, and on the other side when you yourself are amongst those let go. It's not fun, but the reality is business is business. A business has to do what it has to do to survive, even as a subsidary of a parent company. Perhaps my persceptive is different than yours as I worked in production, and saw things from a different level than most core team members would.
First of all, Firaxis are owned by Take Two. THEY will be the ones who said 'you got to let X people go', Firaxis probably had little to no say in the matter.
It wasn't that Firaxis shook their money bank and it was empty. Take Two made a decision of where cuts had to be made. Did they tell Rock Star to axe staff? Nope.
They made the call and Firaxis made staff redundant. A few weak links would have been the first picked, for sure...
I disagree. A parent company has the right yes, they can walk in and fire everyone should they so choose. A development studio however still has to manage the studio, and is involved in the allocation of manpower, hiring and firing, etc. 2K does not process the new recruits, nor do they tell Firaxis that they need X amount of animators and Y amount of programmers to do business correctly. It is my belief that Firaxis still runs very much like an independent studio.
With all that said, I firmly believe that the odds are just as good if not better that Firaxis saw a problem with their staff situation, and made the call to eliminate a small portion of their staff. Unless there is evidence to suggest otherwise, I'm not going to place the blame on 2K. Again, I do not see the layoffs as a warning sign whatsoever. I see it as restructuring, and I'd imagine that they will begin rehiring when there is more of a demand again in the company for additional manpower.
You can hate the spin all you want about streamlining the development process, but if you study business you'd understand that if you do not react to the needs of the company things can turn very grim very fast. For example, if an owner of a game development studio that has idle manpower chooses to just ignore the problem then it can easily turn a situation that once could be remedied by a minor layoff into one where the company ultimately fails leading to the unemployment of everyone.
To compound the situation, when there is a parent company to deal with, the need for quick reaction is even greater because the parent company sure as heck aren't going to accept paying for idle manpower. It doesn't matter how much the executive team loves their employees or how much experience those facing the axe have, there are times when there is no choice but to make cuts. The best you can do is make the right cuts, and hope that you can rehire those lost in the near future. It would essentially be career suicide to not react to a staffing problem if there were no other immediate solutions available aside from trimming staff.
But probably a lot of good staff who, although great at their job there was a cheaper and/or better person there to do their job. Probably a lot of dear friends of the remaining staff too. See the thing about the games industry is a lot of people move across the country to get a job at a studio. As such sometimes 90% to 100% of your life, social life, sometimes even love life is entwined deeply in the game studio you work at.
Yes, the game development sector is extremely interconnected. Anyone that has worked in dev though knows that this is just part of the industry. Game development is known for being relatively unstable whether you're in the US or abroad. Big or small, owned or independent, layoffs happen. This goes for any industry, and again business is business. It's cold, but the alternative of gambling by not reacting to a staff problem in the company a lot of times can and has resulted in total loss of employment for everyone. It's really about picking the lesser of the two evils.
*snip* This equals huge morale crushing depression that floods over the studio. Both studios I worked at where this happened never recovered from it. When morale plummets everything plummets. Suddenly best friends are moving across the country, house-mates moving out. It's f**king baaaaaaaad. It tears at many aspects of a lot of people at the studio's lives and has a dramatic effect on everything, even the output from the studio, which makes it all the more difficult to appease the publishers and keep the studio going.
So yeah, it's very sad and I hope Firaxis recover and get back as many of those staff as possible and hope Civ 5 is a huge success. But to trivialise it as just a number of staff is to totally misunderstand how much of an impact this has.
Morale drops no doubt after a layoff, however you do have to keep in mind that Firaxis is still 110 strong, and there will be many in the company attempting to counter the morale drop by rallying people back together. It's like any other grieving process. In business, productivity losses after a layoff usually subside after a few months. Remember, we're talking 20 people out of 130, and the layoffs hit many different departments. It's not like one entire department was killed off, or half the company is now missing. Yes it is extremely sad for those affected, and I sincerely wish them the best.
Just remember that industry veterans know that this sort of stuff comes with the territory. Those that don't like it tend to get out. Those that accept it simply move on, stick it out with the next company, and hope for the best.