Riot Games, the maker of hit computer games such as “League of Legends” and “Valorant,” is slashing 11% of its global workforce, becoming the latest tech giant to downsize.
The Los Angeles-based company, which is owned by Chinese internet behemoth Tencent, made the news Monday, calling the decision to eliminate approximately 530 positions “critical for the future of Riot.”
In a memo to employees, the publisher blamed the move on rising costs and significant risks that had not paid off.
“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,” Dylan Jadeja, the company’s chief executive officer, said. “This is absolutely the last thing we ever wanted to do.”
Riot’s layoffs follow widespread job cuts in American technology and media, which have already affected thousands of people this month.
In the first two weeks of 2024 alone, Google, Amazon, and other major tech companies reported almost 5,500 layoffs. Twitch, an Amazon-owned video game streaming site, laid off 500 employees.
Tencent purchased Riot in 2011, several years after the Shenzhen-based company obtained the rights to license its flagship title “League of Legends” in mainland China.
The game, abbreviated as “LOL,” has become a cultural staple, allowing users to compete in teams in an online battle arena where one squad must destroy the opposing squad’s base.
Riot relied on the game’s huge popularity for nearly a decade, prompting calls for the company to diversify its operations. In 2019, co-founder and chairman Marc Merrill informed CNN that the company would finally expand with a number of additional titles.
However, the business admits that it may have overreached since then.
In his Monday memo, Jadeja described how the company has aggressively pursued new avenues of growth since 2019, “expanding our global footprint, changing our operating model, bringing in new talent to match our ambitions, and ultimately doubling the size of Riot in just a few years.”
“Today, we’re a company without a sharp enough focus, and simply put, we have too many things underway,” he went on to say.
According to Jadeja, the firm will now cut the size of the crew behind “Legends of Runeterra,” an online card game, whose development costs are financed “through our other games.”
According to Jadeja, Riot will also close “Riot Forge,” a publisher that develops new games based on the “League of Legends” universe.
Moving forward, the emphasis would shift to teams behind Riot’s “core” games, he stated.
“This isn’t to appease shareholders or meet a quarterly earnings target,” he explained in a separate business blog post. “It’s a necessity.”
Jump in Tencent Shares
Riot’s actions coincided with other gaming-related headlines in China. China’s gaming authority made news on Tuesday when it removed draft guidelines aimed at limiting spending on online video games off its website.
The predicted measures took billions of dollars off the market value of Chinese tech behemoths in December, after a draft of the upcoming guidelines was released.
The proposed guidelines were removed from the National Press and Publication Administration’s website on Tuesday, a day after the public feedback period had ended, according to a CNN examination.
The news, first reported by Reuters, sparked concern that the legislation would be changed.
Tencent and its Chinese rival NetEase shares jumped 4.6% and 6.5%, respectively, in Hong Kong on Tuesday.
