Tencent’s Riot Games Undergoes Significant Changes: Layoffs and Focus on Internal Projects

Tencent, the Chinese multinational technology conglomerate, has recently announced that its Riot Games division will undergo significant changes. The unit, which is responsible for publishing popular video games such as League of Legends and Valorant, will eliminate approximately 11% of its workforce, or around 530 jobs. Additionally, Riot is scaling back on its Forge division, which publishes games from independent developers.

In a letter to employees, Riot CEO Dylan Jadeja explained that the company is “changing some of the bets we’ve made and shifting how we work across the company to create focus and move us toward a more sustainable future.” This decision comes amidst a trend of job cuts across the media and technology industry, with companies like Amazon and Google also announcing layoffs in 2024.

Riot’s Legends of Runeterra title, which was released in 2020, will see a reduction in headcount. The company had been subsidizing the cost of development on the game through its other titles, but this is no longer a viable option. Eric Shen will take over as executive producer for Legends of Runeterra, replacing Dave Guskin, who will work on other Riot games.

The Forge division, which publishes games from indie developers, is also being refocused. Riot is proud of the work it has done to bring these games to life, but it’s time to “refocus our efforts on the ambitious projects underway internally at Riot.”

Tencent, based in China, invested in Riot Games in 2011 and became its outright owner four years later. Riot is headquartered in Los Angeles. When Microsoft announced its plan to acquire Activision Blizzard in 2022, the software company stated that the deal would make it the third-largest gaming company in the world, behind Tencent and Sony. Last year, Microsoft cut 10,000 employees as it faced slowing revenue growth.

Tencent, which also owns the WeChat app with broad usage in China, has encountered challenges lately. The company has seen revenue increase in the single digits or decline for the past seven quarters after a pandemic-era growth spurt. In September, Tencent-backed Epic Games announced it was cutting 16% of its staff. Shares slid 12% in late December after China announced new rules designed to limit excessive gaming.

Pony Ma, Tencent’s co-founder and CEO, told analysts in November that the company is shifting “away from less scalable activities” and boosting investments in artificial intelligence.

The layoffs at Riot Games are part of a larger trend in the tech industry, as companies grapple with economic challenges and seek to streamline their operations. The changes at Riot are intended to create focus and move the company towards a more sustainable future. The impact of these changes on the gaming industry and on Riot’s specific titles remains to be seen.

In conclusion, Tencent’s Riot Games is undergoing significant changes, including layoffs and a refocus on internal projects. The decision to eliminate jobs and scale back on the Forge division is part of a larger trend in the tech industry, as companies seek to adapt to economic challenges and create a more sustainable future. The impact of these changes on the gaming industry and on Riot’s specific titles remains to be seen.