Riot Games, renowned for developing popular video games such as “League of Legends” and “Valorant,” is set to reduce its global workforce by 11%, aligning with the recent trend of downsizing within the tech industry.
The Los Angeles-based company, a subsidiary of the Chinese tech giant Tencent, disclosed this decision on Monday, citing the necessity to cut approximately 530 positions as crucial for the company’s future. In a memo to staff, Riot Games attributed the move to escalating costs and unsuccessful high-risk ventures. CEO Dylan Jadeja emphasized the need to refocus the business on elements that provide the most value to players and are genuinely worth their time. He stated, “This is absolutely the last thing we ever wanted to do.”
These job cuts at Riot Games contribute to the broader wave of layoffs in the American tech and media sectors, which have affected thousands of employees in recent weeks. In the first two weeks of 2024, major tech players like Google and Amazon announced over 5,500 layoffs, with Twitch, owned by Amazon, letting go of 500 employees.
Tencent acquired Riot Games in 2011, solidifying its presence in the gaming industry. Riot Games had heavily relied on the immense success of “League of Legends” for nearly a decade, prompting calls for diversification. Although the company had initially announced plans to branch out with new titles in 2019, it now admits to possibly overextending itself.
CEO Jadeja outlined in the memo how Riot Games aggressively pursued growth since 2019, expanding globally, changing its operating model, recruiting new talent, and doubling its size within a few years. Acknowledging a lack of focus, Jadeja mentioned that the company had “too many things underway.”
As part of its restructuring, Riot Games will reduce the team size behind “Legends of Runeterra,” an online card game, and wind down “Riot Forge,” a publisher developing new games in the “League of Legends” universe. The company aims to prioritize its “core” games moving forward.
Jadeja clarified in a separate blog post that these changes are not merely for shareholder appeasement but a necessity for the company’s sustainability.
The announcement from Riot Games coincided with developments in China’s gaming industry, where the gaming regulator removed draft rules aimed at curbing spending in online video games. This unexpected move led to a rise in Tencent and NetEase shares in Hong Kong, speculating a potential revision of the regulations.