Riot Games overreached with "big bets" and now 530 people are losing their jobs

League of Legends developer Riot Games is laying off 530 employees after expanding too quickly and seeing a number of "big bets" fall short.

The cuts represent 11 percent of the Tencent-owned studio's workforce and will largely impact teams "outside of core development."

In a letter to employees published online, Riot CEO Dylan Jadeja explained the studio has doubled its headcount since 2019 in a bid to broaden its portfolio and create new experiences.

The decision to rapidly expand in the wake of the pandemic has ultimately backfired on the very workers Riot hired to realize its ambitions of becoming a "multi-game, multi-experience company," with Jadeja suggesting the studio now needs to alter its trajectory to become more sustainable.

"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, and we've left ourselves with no room for experimentation or failure–which is vital to a creative company like ours. All of this puts the core of our business at risk," he wrote.

Jadeja says Riot attempted to avoid layoffs by implementing hiring slowdowns and freezes, emphasizing the need to control costs internally, and asking leaders to make "tradeoffs" to alter the scope of production. Despite those efforts, the chief exec claims it has since "become clear" that more needed to be done in order for the company to recenter on the aspects of its business that "drive the most player value."

"I want to be super clear about something: this is absolutely the last thing we ever wanted to do. A decision like this has a massive impact on people's lives and on the culture of Riot," he continued. "We're not doing this to appease shareholders or to hit some quarterly earnings number–we've made this decision because it's a necessity. It's what we need to do in order to maintain a long-term focus for players."

Riot will be supporting those impacted by the cuts by providing six months of severance pay as a minimum, a cash bonus equal to the annual bonus being offered, health benefits, an additional $1,000 payout through the Play and Wellness Fund, career support, access to a laptop, visa support, continued Riot email access (that will vary by region), and the ability to maintain equity in the company.

"We're not expecting this to be a normal, 'business as usual' week for us. We're asking everyone to cancel meetings and rituals over the next few days where possible as we move through these changes together," adds Jadeja. "Also, if you're at one of our US offices now, we ask that you head home for the rest of the day and work remotely through Wednesday. If you need to come into the office on those days, please respect those who may be having difficult conversations and give them space to process."

Riot Forge and Legends of Runeterra significantly impacted by layoffs 

Riot said the layoffs will help it "double down on the games at the center" of its business, and that means some projects and studios will be downsized moving forward.

Riot Forge, the internal studio formed to produce and publish titles set in the League of Legends universe, won't be releasing any new titles following the launch of Bandle Tale: A League of Legends Story.

Forge has so far worked with partner studios to launch six titles, including Hextech Mayhem and The MageSeeker, but will now essentially be mothballed. "It's been inspiring to see what these devs created in partnership with the Forge team. We're proud of what we’ve done together to bring these stories to life, but it's time to refocus our efforts on the ambitious projects underway internally at Riot," reads a separate player update on the Riot blog.

The Legends of Runeterra dev team is also being downsized and will move forward with a "renewed focus" on single-player roguelike mode The Path of Champions. The digital collectible card game launched in 2020 but according to Riot still costs "significantly more" to develop and support than it generates in revenue.

Riot said the shift in focus will allow the Runeterra team to experiment more in the PvE space and concentrate on the game mode where players have been spending the most time. Beyond that, the company said it remains committed to its core live service titles, including League of Legends, Valorant, Teamfight Tactics, and Wild Rift, and will be prioritizing those teams so they can deliver ongoing, community-led support.

"Expect events, modes, and long-term roadmaps that lead to vibrant (hopefully multi-decade) futures for these games," continues the post. "Our vision for the future is bold and our commitment to our core live games [...] is more ambitious than ever."

Moving forward, Riot will implement a strategy that involves more tightly integrating of esports, music, and entertainment with its game projects, and claims those multimedia projects can act as gateways to deeper narratives, characters, and worlds that "enrich the game experience."

"Beyond live titles, we have projects in the pipeline that we can't wait to get to you when they're ready. Project L has been making great progress and we're looking for more opportunities for you to try out the game (stay tuned for more updates coming later this year). Arcane Season 2 is on track for November 2024. Plus, we have a number of projects cooking in various stages of R&D," continues the post.

"Our volume of releases will never be massive. We want everything we deliver to be something that you can be proud of and excited to share with friends. That requires having financial flexibility to be able to take the time to make things that are truly great for players. We know we'll still have occasional misses, but we want those misses to be for the right reasons, not because we prioritized the wrong things or had to rush projects out the door before they were ready."