Tencent Holdings Ltd.’s US video game developer Riot Games Inc. has announced plans to cut jobs and end its division that releases games from small developers.
The online gaming company will lay off 11% or around 530 people from its global workforce, with teams outside core development expected to be most affected by the move.
The “League of Legends” publisher said the downsizing was necessary and not intended to pacify shareholders or meet a quarterly earnings target, noting its over twofold growth in employee numbers in the last few years.
In addition, Riot Games will reduce people and withdraw features for “Legends of Runeterra,” as the title, released in 2020, has shown lackluster performance.
New game development at its indie game maker Riot Forge would also stop after the “Bandle Tale: A League of Legends Story” launch in February.
Riot Games chief executive Dylan Jadeja stated that they were proud of the work they have done with Forge, although it is time to shift their attention to ambitious internal projects at the company.
Video Game Makers Struggle with Economic Slump, Weak Demand
Riot Games’ job cuts followed similar moves made across the media and tech sector in recent weeks and continued a trend in 2023 when firms reduced staff and curtailed hiring to keep up with tougher economic conditions.
Other companies in the video game industry, including cross-platform game engine Unity Software Inc. and Amazon.com Inc.’s live-streaming platform Twitch, have recently confirmed plans for layoffs.
Meanwhile, Amazon and Alphabet Inc.’s Google LLC are among the tech firms that have announced that they intend to trim their headcount so far this year.
Video game developers are having difficulty driving growth as users refrain from purchasing high-priced games or choose to buy fewer titles amid elevated inflation.
California-based Electronic Arts Inc. last year dismissed 6% of its personnel and divested office spaces.
Jadeja said they are currently a company without adequate focus and are attending to too many matters.
The Los Angeles-based firm has made significant investments that were unable to produce the results it was aiming for, and their costs have risen to an unmanageable extent, according to Jadeja,
The Riot Games chief expects the job cuts would help the company turn its attention to a suite of live games, including “League of Legends,” “Valorant,” “Teamfight Tactics,” and “Wild Rift.”
