COVID-19 and pivot towards game development lead to layoffs at Kongregate

Kongregate has laid off a reportedly sizable portion of its staff, a decision the company says in a statement to Gamasutra was set in motion by the ongoing coronavirus pandemic.

Yesterday the company announced its intention to wind down some features of the online game portal that had defined it for many of its years, saying at the time that its new focus on game development left fewer resources to support Kongregate.com.

That same day, several staff members took to social media to say they, and many others at the company, had been laid off. According to some accounts, those layoffs came without warning.

When reached for details, a Kongregate representative confirmed that the company had let “a number of appreciated team members go” and pinned the decision at least partially on the impact COVID-19 has had on its dealings.

“Over the last few years, we have been transitioning our focus to better align with our strengths and the gaming industry as a whole,” reads that statement. “This year has been especially difficult for us, and the rest of the world, with COVID-19 affecting our business in a negative way and changing the overall games market. That’s why we had to take this unfortunate step to reshape our organization. “

“To be more specific, we’re focused on our internal game development and acquisitions rather than our legacy Flash gaming platform. As we outlined on our website, all of the current games on Kongregate.com will remain playable, we are just not allowing any new games to be uploaded at this time.”

Peeking at the financial reports for Kongregate parent company MTG, it's possible the shift and resulting layoffs were driven by game development's resilience to the pandemic, rather than losses incurred by Kongregate during the past several months of COVID-19.

When the pandemic first began to show its colors in the United States, Kongregate had been one of the companies its parent company predicted “might be less exposed to the consequences of the [coronavirus] pandemic” due to the “resilience” it and sister company InnoGames brought to its video game vertical.

At the time of MTG’s coronavirus assessment in late March, the company noted that its video game development dealings represented 60 percent of its revenue in its 2019 financial year. One month later, that split increased to 67 percent (though revenue as a whole has decreased on year-over-year).

Given Flash's upcoming demise, plans to wind down Kongregate's Flash game portal have likely been in the cards for some time. But given MTG's note that its game development vertical has shown stronger "resilience" during the pandemic, and Kongregate's above note that COVID-19 contributed to the layoffs, its possible game the industry's stronger "resilience" during the pandemic played a part in the decision to accelerate the brand's game development plans and, unfortunately, lay off many of those responsible for Kongregate.com.