Tencent’s Riot Games lays off 11% of staff globally

By CNN Newsource

Published January 22, 2024 11:35 pm

By Michelle Toh, CNN

Hong Kong (CNN) — Riot Games, the developer of hit video games like “League of Legends” and “Valorant,” is cutting 11% of staff around the world, becoming the latest tech company to downsize.

The Los Angeles-based company, which is owned by Chinese tech giant Tencent, announced the news Monday, calling the decision to eliminate about 530 roles “critical for the future of Riot.”

In a memo to employees, the publisher blamed the move on spiraling costs and big bets that hadn’t 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,” CEO Dylan Jadeja wrote. “This is absolutely the last thing we ever wanted to do.”

Riot’s redundancies add to sweeping job cuts in American tech and media, which have already affected thousands of people this month.

In the first two weeks of 2024 alone, more than 5,500 layoffs were announced at Google, Amazon and other prominent tech employers. Those included 500 workers let go by Twitch, the video game streaming platform owned by Amazon (AMZN).

Riot was acquired by Tencent in 2011, years after the Shenzhen-based group won the rights to license its flagship title “League of Legends” in mainland China.

The game, shorthanded as “LOL,” has become a cultural mainstay, allowing users to square off in teams in an online battle arena where each squad must destroy the other’s base.

Riot relied on the game’s massive success for about a decade, leading to calls for the company to diversify its business. In 2019, co-founder and chairman Marc Merrill told CNN that it would finally branch out with a slew of new titles.

However, since then, by its own admission, the company may have gotten ahead of itself.

In his Monday memo, Jadeja detailed how the developer had aggressively chased new sources 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 said.

The firm will now reduce the size of the team behind “Legends of Runeterra,” an online card game, according to Jadeja, who said its cost of development was being subsidized “through our other games.”

Riot will also wind down “Riot Forge,” a publisher that works on developing new games from the “League of Legends” world, according to Jadeja.

Moving forward, the priority will shift to teams behind Riot’s “core” games, he said.

“This isn’t to appease shareholders or to hit a quarterly earnings number,” he wrote in a separate company blog post. “It’s a necessity.”

Tencent shares jump

The changes at Riot coincided with other gaming news in China. On Tuesday, China’s gaming regulator made headlines by removing draft rules from its website that had aimed to rein in spending in online video games.

The expected rules had wiped billions of dollars off the market value of Chinese tech giants in December after a draft of the upcoming guidelines was unveiled.

As of Tuesday, the draft rules had been taken down from the National Press and Publication Administration’s website, a day after the public consultation period had expired, according to a CNN review.

The news, which was first reported by Reuters, prompted speculation that the regulation could be revised.

Shares of Tencent and Chinese rival NetEase each rose 4.6% and 6.5% in Hong Kong, respectively, on Tuesday following the news.

— CNN’s Wayne Chang contributed to this report.