Lots of people work overtime once in a while. Some even do it a lot. But in the Gaming Industry overtime is so common it has its own term: Crunch Mode. "Crunch Time" is usually expected for a few days to a few weeks prior to major milestones, demos, alpha and beta, and release candidates.
Since most game industry employees are salary, there is usually no additional "compensation" for this overtime. It's just an expected part of making games. Gaming geeks, passionate about making games, willingly conceed to this overtime. Why is there crunch time? Many reasons. But first let me explain the triage of game development as I understand it. There are 3 things that you can adjust during a game's development cycle:
Resources: Add more people, outsource to 3rd party companies, etc. At some point this can be saturated and adding more people hinders production instead of speeding it up.
Time: Postpone the due date. A lot of companies do this, and some have done it so much they don't even list due dates for their games anymore. Instead they say "when's it done". This probably means they care about the other 2 aspects more than this one.
Budget: This may seem like resources, but it's not. It's the result of adjusting the other 2 and locking this aspect down limits the other two. In the end, the game has to make money or else there may not be another one. Like resources though, there is a saturation point where adding more money yields questionable results.
Sometimes a due date is a due date and you cannot postpone it, such as when a game title is based on the release of a movie. Or your publisher already planned the title launch with the release of a new console and has spent untold dollars for marketing and shelf space. So if you can't adjust the time, you can either pour more money into the project, which only works for a while, or add more people, which again, only works for a while.
So why is there crunch mode? Can't management plan and schedule these things to be done on budget, on time, with the people provided? Well, That's NOT an easy task. Game Development is basically taking a whole bunch of mud, throwing it against a wall, and seeing what sticks. Some companies throw mud at random and some others throw mud pies. Either way, its still mud. There's no way to really know how long something is going to take until its done, and believe me, things are never truly done. You can always make tweaks, adjustments, polish, and add more features. It's only "done" when its "Good Enough (for now)" and you move on.
Also, there's no real way to know everything that there is to schedule. Who knew 3 months ago that the model the artist made that the designer put into the level wasn't going to "work". You don't. Who knows how much time it takes to put in "Feature X". You may have a good, perhaps even educated or experience based, guess. But you don't know. God forbid the publisher changes their minds and decide on a different model. So you can't blame the producers. Or the artists. Or the designers. Or the programmers. You could blame the publisher but they're the ones paying your salary and are taking most of the risk so its clearly not their fault. So what to do? Just accept that crunch mode happens. Everyone else has.
What matters here then is how munch crunch time is required? If you're crunching for weeks at a time all the time, then that's bad. Very Bad. Look for another job bad. American McGee Presents Bad Day LA bad. And that's bad. If you only crunch a few days before a major milestone, then buy a house near your company... you're staying.
The average lifetime in the game industry is 2-3 years. Why would someone give up on their "Dream Job"? Crunch Mode. It'll burn you out faster than a California brush fire. That and the toll it takes on family is enormous. Also add in the fact that people in the game industry tend to make less money, on average, then someone else of their field in the "professional" sector.
What also matters is compensation. Many companies don't compensate you. Sucka. Others? Well... it may be a "volunteer" basis. If you stay late you get a free dinner. Cool. Work on a Saturday and you'll get compensated PTO time. Score. You're still a sucka, but you're a well rested, well fed sucka.
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