Tencent's Riot Games to cut around 530 jobs, or 11% of its workforce

By Bill Peters

'Today, we're a company without a sharp enough focus, and simply put, we have too many things underway,' CEO says

Videogame maker Riot Games on Monday said it would lay off around 530 employees globally, or around 11% of its total staff, as it tries to narrow its focus after making what executives said were several years of "big bets" and expansion.

In a letter to employees, the company - owned by Chinese tech giant Tencent Holdings (HK:700) and known for "League of Legends" - also said it was "sunsetting" its Riot Forge publishing unit and would cut the size of its "Legends of Runeterra" team.

The layoffs will occur over the next several weeks, the company said. Among other forms of assistance, Riot said it would offer a minimum of six months' worth of salary for severance.

In the letter, Chief Executive Dylan Jadeja said that since 2019, Riot made "a number of big bets across the company" intended to serve gamers. As it expanded, adding games and staff, Riot doubled in size, accumulating multiple projects and higher costs along the way.

"Today, we're a company without a sharp enough focus, and simply put, we have too many things underway," he said. "Some of the significant investments we've made aren't paying off the way we expected them to."

"Our costs have grown to the point where they're unsustainable, and we've left ourselves with no room for experimentation or failure - which is vital to a creative company like ours," he continued. "All of this puts the core of our business at risk."

Jadeja said the cuts were a necessity, and not done to "appease shareholders or to hit some quarterly earnings number."

The moves come after the pandemic's digital-demand boom gave way to a spike in prices for basic necessities in 2022, which left people with less room to spend on gaming. And amid shakiness in China's economy, some of that country's big tech companies - including Tencent - have ratcheted back investments, the South China Morning Post reported this month.

The layoffs, Jadeja said, followed hiring freezes and efforts to rein in costs. But he said those earlier changes, on their own, weren't enough.

"We have to do more to focus our business and center our efforts on the things that drive the most player value - the things that are truly worth players' time," he said. "Unfortunately, this involves making changes in the area where we invest the most - our headcount."

-Bill Peters

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01-22-24 2005ET

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