11% of Riot Games’ worldwide workforce is let go by Tencent

Riot Games, the renowned developer behind popular video games such as “League of Legends” and “Valorant,” has announced a global workforce reduction, cutting approximately 11% of its staff, amounting to around 530 roles. The Los Angeles-based company, owned by Chinese tech giant Tencent, revealed the decision on Monday, citing the need to refocus and streamline its business for future success.

In a memo addressed to employees, Riot Games’ CEO, Dylan Jadeja, attributed the workforce reduction to escalating costs and strategic initiatives that did not yield anticipated results. Jadeja emphasized the necessity of prioritizing efforts that contribute the most value to players and admitted that the decision to cut jobs was “absolutely the last thing we ever wanted to do.”

Riot Games’ move to downsize follows a broader trend in the tech industry, where several prominent companies have recently announced significant layoffs. In the first two weeks of 2024, major tech employers like Google and Amazon, among others, reported over 5,500 job cuts. Notably, Twitch, the video game streaming platform owned by Amazon, let go of 500 workers. Tencent acquired Riot Games in 2011, securing licensing rights for Riot’s flagship title, “League of Legends,” in mainland China. “League of Legends,” commonly referred to as “LOL,” has achieved cultural significance, providing users with an online battle arena experience where teams compete to destroy each other’s bases.

While Riot Games thrived on the success of “League of Legends” for nearly a decade, calls for diversification arose. In 2019, co-founder and chairman Marc Merrill expressed the company’s intention to expand its portfolio with new titles. However, Riot Games may have overextended itself in its pursuit of growth since then.

Jadeja, in his memo, acknowledged that the company aggressively pursued growth opportunities by expanding globally, altering its operating model, recruiting new talent, and doubling its size in a short span. He highlighted that Riot Games had become a company lacking a sharp focus with too many initiatives in progress. As part of its strategic realignment, Riot Games plans to reduce the team behind “Legends of Runeterra,” an online card game, and phase out “Riot Forge,” a subsidiary focused on developing new games within the “League of Legends” universe. The company aims to refocus on its “core” games moving forward.

Jadeja emphasized that the restructuring is not driven solely by shareholder appeasement or meeting quarterly earnings targets but is a necessary step for the company’s future sustainability. Riot Games now faces the challenge of reorienting its efforts and resources to ensure continued success in the competitive gaming industry.