Video game maker Riot Games said Monday it will lay off about 530 employees globally, or about 11% of its total staff, as it tries to narrow its focus after making what executives described as several years of “big bets” and expansion.
In a letter to employees, the company, which is owned by Chinese technology giant Tencent Holdings 700, said:
Known as “League of Legends” – it also said it was “terminating” Riot Forge's publishing unit and would reduce the size of its “Legends of Runeterra” team.
The company said the layoffs will occur over the next few weeks. Among other forms of assistance, Riot said it would provide at least six months' severance pay.
In the letter, CEO Dylan Jadeja said that since 2019, Riot has made “a number of significant bets across the company” aimed at serving players. As it expanded, adding games and staff, Riot more than doubled in size, accumulating multiple projects and higher costs along the way.
“Today, we are a company that does not have a sharp enough focus, and we simply have too many things in the pipeline,” he said. “Some of the big investments we've made are not paying off the way we expected.”
He continued: “Our costs had increased to the point where they had become unsustainable, and we left ourselves no room for experimentation or failure – which is vital for an innovative company like ours.” “All of this puts the core of our business at risk.”
Jadeja said the cuts were necessary, and were not made to “satisfy shareholders or reach some quarterly profit numbers”.
The moves come after the surge in digital demand due to the pandemic gave way to higher prices for basic necessities in 2022, leaving people with less room to spend on games. Amid China's shaky economy, some of the country's major technology companies — including Tencent — have scaled back their investments, the South China Morning Post reported this month.
Jadeja said the layoffs came after a hiring freeze and efforts to curb costs. But he said those previous changes, by themselves, were not enough.
“We have to do more to focus our business and focus our efforts on the things that increase player value – the things that are truly worth players’ time,” he said. “Unfortunately, this involves making changes in the area in which we invest the most – our headcount.”
