Riot Games lays offs 11% of total workforce worldwide

Tencent’s Riot Games has announced a significant restructuring, resulting in the termination of approximately 530 employees or 11% of its total workforce.

In a blog post on their official website, the company’s chief executive Dylan Jadeja expressed regret over these redundancies and acknowledged the company's responsibility for the situation, which arose from expansive growth strategies that have led to a loss of focus and unsustainable costs.

Jadeja also said the layoffs were a last resort to refocus the company and ensure its long-term viability for players.

Impacted employees will be notified and provided with severance packages, including a minimum of six months' salary, a cash bonus equivalent to their 2023 annual performance bonus, extended health benefits, and additional financial support.

The company's future strategy includes continued investment in its main titles, adjustments in R&D, and re-evaluating enterprise support levels.

Changes to the portfolio include scaling back the team for Legends of Runeterra to focus on a specific game mode and discontinuing the Riot Forge initiative after the release of Bandle Tale.

Campaign understands Riot employs nearly 200 people in Asia-Pacific. Singapore is the company’s headquarters in this region.

According to a LinkedIn post by Jem Loh, Riot’s head of communications and channels for the region, the layoffs have also impacted its staff in APAC.

Despite not being personally affected, Loh expressed gratitude for the community's support and took the initiative to recommend colleagues who had been made redundant. She also highlighted the talents of three of her former co-workers.

The wider state of the esports industry

In its 2023 third-quarter revenue, Tencent saw a 14% increase in revenues for its international games division, with titles like PUBG Mobile and Riot’s Valorant making significant contributions. 

Meanwhile, domestic games’ revenues grew by 5% to RMB32.7 billion (US$4.5 billion), driven by new launches and strong performance of existing titles like Lost Ark and Valorant, as well as increased revenues from evergreen titles such as Honour of Kings and Dungeon Fighter Online.

However, 2023 saw a spate of layoffs at the likes of Epic Games, Activision Blizzard and professional esports organisation FaZe Clan.

Before the pandemic, the hype around esports was evident in packed stadiums and high-profile events. However, despite initial resilience and growth during the pandemic, the sector is now confronting stark financial realities with failed deals like FaZe Clan's $725 million SPAC deal and professional esports organisation Team SoloMid (TSM) USD$210 million FTX sponsorship.

Failures and financial losses, such as those from the defunct Overwatch League and the devaluation of FaZe Clan, have highlighted the industry's volatility.

The collapse of FTX Games has impacted organisations like Team SoloMid (TSM), illustrating the precarious nature of the industry's financial structures. Executives within the industry have expressed concerns about the unsustainable valuations and the need to diversify revenue streams beyond fan viewership.

While financial struggles have led to widespread layoffs and organisational downsizing, some companies like M80 have approached the industry with a more cautious and sustainable mindset, focusing on long-term viability rather than rapid expansion.

In terms of governance, there is a call for publishers to provide better support and infrastructure for esports businesses.