I don't think there are actual financial woes in the industry right now and its not experiencing a contraction. There are layoffs happening all across the economy and most of the companies implementing layoffs are reporting record profits. I think companies are just using the moment to get rid of ppl to boosts their bottom line.
Hopefully, a lot of the laid off game developers will join existing indie studios or start their own. I really hope they don't wait around until the next boom in this stupid boom-and-bust cycle and join back up with some corporation. Maybe if enough go to indies, the industry can transition to a focus on smaller, more creative games and the big players will struggle to find talent.