What the Playtika Layoffs Mean for the Wider Mobile Industry
On the 12th of December, leading social gaming developer Playtika announced massive layoffs of 15% of their workforce, which accounts for around 600 of their 4000 employees. Is this just a one-off event though, or does it indicate a general issue within that market?
The news was announced by Chief Executive Robert Antokol via an internal letter and shows a surprising turnaround within a relatively short time, although immediate financial difficulty doesn't seem to be the reasoning behind the move. Instead, it is being framed as a refocusing and slim-lining activity, where alongside the personnel themselves, three projects in the pipeline are also being cut off.
Who are Playtika?
Playtika as a company is known for creating its own library of unique app-based social games, and had only just expanded earlier this year with the acquisition of developer JustPlay.lol in the interest of diversification. However, now just nine months on, the message seems to be to focus on the core products and cut out anything that isn't essential, a complete upending of the recommendations made in their 2021 annual report that spelled out the risks of not making acquisitions.
Their 'core' products include titles like Slotomania and Bingo Blitz, downloadable titles that work less like mobile versions of online casinos and closer to other general gaming apps, although they do straddle the line between the two. In reality, the downloadable aspect is one of the main separators from online mobile casinos such as MrQ as well as having a different target audience in mind.
Those two games listed above accounted for half of their revenue within 2021 according to that same report, and it's unclear how the games acquired from JustPlay.lol have performed, although this latest move suggests it has been less than ideal. As part of the announcement, Antokol also indicated that any future projects would be worked on through the tried and tested creative team at Wooga, which has an impressive track record when it comes to development.
What does this mean for the market?
As of yet, thanks to the scarce details and carefully produced language from Playtika, it isn't clear on the exact reasons for the move. Their CEO does seem to suggest that the financial situation of the company is secure, as he thanks all employees for putting the company in a good position moving forward. This does give the impression that it's less to do with downsizing and more to do with underperforming assets.
Current market research into social gaming seems to indicate that the market is still growing rapidly despite the current global economic downturn. The uptake of mobile gaming seen over the last decade looks set to continue, especially with the increasing rollout of 5G technology around the world, and social gaming is proving popular in markets where full console or PC gaming isn't cost-effective.
While Playtika is a major entity within the market, the announcement of the layoffs and the new strategy are unlikely to cause any immediate market disruption.
