Tencent's Riot Games To Cut 11% Of Global Workforce, Citing Unsustainable Costs

In a recent announcement, Tencent Holdings Ltd (OTC:TCEHY) subsidiary Riot Games revealed plans to lay off approximately 11% of its global workforce.

What Happened: Riot Games, the developer of popular titles like “League of Legends,” will be reducing its staff by 530 employees, Reuters reported on Monday. This decision is attributed to the company’s struggle to expand its audience amid high inflation.

CEO Dylan Jadeja acknowledged the need for a more focused approach, stating, “Today, we’re a company without a sharp enough focus, and simply put, 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.”

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The layoffs will primarily affect teams outside of core development. Riot Games will also discontinue new game development under “Riot Forge” and make adjustments to “Legends of Runeterra.”

Why It Matters: The gaming industry has been experiencing a series of layoffs. In 2023, over 10,000 workers were laid off, with one-third of game developers being directly or indirectly affected, according to a survey from the Game Developers Conference (GDC).

The company’s leadership, especially at Alphabet Inc‘s Google (NASDAQ:GOOG) (NASDAQ:GOOGL), has faced criticism from employees amid these layoffs, with some openly expressing dissatisfaction.

Furthermore, the impact of artificial intelligence (AI) on jobs has been a growing concern. The International Monetary Fund (IMF) warned that AI could potentially increase income inequality, urging policymakers to mitigate this trend.

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