Riot Games, a subsidiary of Tencent Holdings, announced on Monday that it plans to lay off 530 employees, which is about 11% of its global staff. The news was shared in a blog post that included a letter from CEO Dylan Jadeja to the employees.
Riot Games, based in Los Angeles, is known for popular games like “League of Legends”. The company stated that teams not directly involved in game development will be most affected by the layoffs.
The digital gaming industry is facing challenges as audiences are hesitating to buy expensive titles or are sticking to fewer games due to high inflation. This trend was also seen last year when Electronic Arts Inc cut 6% of its staff and reduced office space.
In his letter, Jadeja explained, “We’re a company without a sharp enough focus, and we have too many things underway. 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.”
The layoffs will allow Riot to concentrate on its live games portfolio, which includes “League of Legends”, “Valorant”, “Teamfight Tactics”, and “Wild Rift”. This was mentioned in a separate blog post by Jadeja and co-founder Marc Merrill.
Riot will halt new game development under “Riot Forge” and will reduce some staff and features in “Legends of Runeterra”.
Tencent, which bought a majority stake in Riot Games in 2011, also has a stake in U.S. video game developer Epic Games.