There was a huge investment surge into gaming in 21/22 and we're now back to pre-covid levels.

Yeah. There are a couple of other factors, too:

• there are general economic issues around the world right now that are affecting most sectors. Borrowing is more expensive, utilities are more expensive, etc
• people had more disposable income and time to spend on things like gaming during COVID lock downs so games companies simply made more money because of that

So gaming (and tech in general) companies have seen a downturn in investment, their audiences are spending less money and the general economy is weaker. It's no surprise so many of them are having to resort to layoffs. Some of that is down to poor management and overspending/over-expansion during the pandemic, and those companies' management obviously deserves criticism. But some of it is just down to a collection of unfortunate circumstances all coming to a head at once.

That's just how all companies tend to react to global economic downturn (if that's the right stupid business word)