Tencent’s Riot Games, the popular online gaming company behind titles like League of Legends and Valorant, has announced a significant reduction in its workforce. The company will be cutting 530 jobs, accounting for about 11% of its global workforce, in a bid to address unsustainable costs and refocus on its core development teams. The decision comes as the gaming industry faces challenges due to changing consumer behavior and economic factors.
In a letter to its staff, CEO Dylan Jadeja explained that the company’s costs had grown to a point where they were no longer sustainable. This move is aimed at streamlining operations and ensuring a sharper focus on key projects. The layoffs will primarily affect teams outside of core development, while the company plans to direct its efforts towards its portfolio of live games, including League of Legends, Valorant, Teamfight Tactics, and Wild Rift.
Riot Games is not the only company in the gaming industry to downsize its workforce in recent times. Last year, industry giants such as Amazon and TikTok owner ByteDance also made significant layoffs in their gaming divisions. Similarly, Epic Games, Ubisoft, and Niantic, the creators of popular titles like Fortnite, Assassin’s Creed, and Pokemon Go, respectively, also announced job cuts.
These cutbacks can be attributed, in part, to the massive hiring that took place during the early stages of the COVID-19 pandemic. As lockdowns eased and the world began to recover, sales started to slow down. Additionally, consumers are becoming more cautious about purchasing expensive titles and are sticking to fewer games, given the current high inflation rates. Despite the availability of highly rated titles like Baldur’s Gate 3, Zelda: Tears of the Kingdom, Spider-Man 2, and new entries in beloved franchises like Super Mario and Sonic the Hedgehog, the gaming industry as a whole has been impacted.
Riot Games acknowledged that its own headcount had more than doubled in recent years, leading to some of the challenges it now faces. In a statement, Mr. Jadeja expressed the need to refocus the company and eliminate excessive undertakings. As part of this effort, Riot Games will halt new game development under the Riot Forge initiative and scale back certain features in Legends of Runeterra, which did not meet performance expectations.
It is worth noting that Tencent, the parent company of Riot Games, acquired a majority stake in the company back in 2011. Tencent also holds a stake in Epic Games, the company behind Fortnite. China’s gaming industry has been facing increased regulatory scrutiny, with the government implementing measures to curb excessive gaming among minors. ByteDance, the owner of popular social media platform TikTok, also recently made cuts to its gaming division.
While these job losses signal a challenging period for the gaming industry, it is important to acknowledge the broader context in which they occur. The COVID-19 pandemic has had far-reaching economic consequences, affecting various sectors, and the gaming industry is no exception. As companies like Riot Games navigate through these changes, it is imperative for them to adapt their strategies, streamline operations, and focus on delivering innovative and engaging gaming experiences to retain and attract a loyal player base.
