Exclusive: Israeli mobile games company Playtika (Nasdaq: PLTK) will today inform employees about cuts in the company worldwide, focusing on game development sites in Europe and North America. Playtika will lay off 250 employees, about 6% of the company's workforce, in three studios for developing games in Los Angeles, Montreal and London. New games that have been under development will be cancelled and responsibility for some activities will be transferred to Israel.
The measures are not expected to harm the company's activities in Israel, Germany and its development centers and studios in Eastern Europe, including Ukraine, Belarus, Poland and Romania. Earlier this month, Playtika reported that it has 4,000 employees.
Playtika said, "The company is working to unify parts of its activities. Consequently, development centers in London and Montreal will be closed. The activities of the Seriously studio in Los Angeles will be transferred to Israel and Poland. The studio in Los Angeles will be closed and closing the studio in Helsinki is being considered, out of belief that there is large potential for the game that has not yet been realized. As a leading company in the market, working for growth and profitability, we have chosen at Playtika to examine various measures. The company will continue to invest in long-established games and new games, while seeking investment opportunities and growth in games."
The rise in interest rates and rampant inflation together with the recovery from the Covid pandemic has placed huge pressure on industries that benefitted from the pandemic such e-commerce, delivery, and computer games companies. Less and less users are trapped at home, thus reducing the amount of time and money they spend on games. Even so, Playtika has remained a highly profitable company, almost since it was founded. Nevertheless, as a publicly traded company, it has seen its share price fall by more than 50% since its Wall Street IPO in January 2021 and by 47% since November 2021, when tech shares began to tumble. The company's share price closed 1.78% higher on Friday at $14.85, giving a market cap of $6.124 billion, and it is currently 2% higher in premarket trading.
With concerns that the global economy is moving towards recession, Playtika is not the first games company to make cuts. Indian company Mobile Premier League (MPL) yesterday announced that it was laying off 10% of its workforce and exiting operations in the Indonesian market. Last week Chinese company Tencent announced that it was expanding layoffs to include 10% of the workforce in its mobile games division.
Playtika's Seriously studio in Los Angeles produces the popular Best Fiends game, which competes with King's Candy Crush. According to Venturebeat, Playtika acquired the game in 2019 for $275 million. As said responsibility for the game will now be transferred to Israel and Poland.
Seriously was originally developed in Finland where the future of another Playtika studio now hangs in the balance. However, Playtika's Finnish operations based on last year's acquisition of Rework, which develops the Redecor application, a mobile game for interior decoration, will remain in operation.
Playtika's Games Lab London studio was set up for casual games and aimed to have 150 employees and diversify its games portfolio, which has been dominated by games that simulate gambling such as poker games and slot machines. The studio will now be closed although Playtika will retain business development staff in London.
The center being closed in Montreal was once considered to be one of the company's leading studios, having developed World Series of Poker, one of Playtika's most successful games in its initial years. But over the years, the Canadian center has lost its importance as more and more activities were transferred to Israel.
The cuts will not be effecting operations in Eastern Europe, where Playtika was the first company to reopen operations in Kiev and return to full operations, despite the ongoing war. Before the war, 1,100 Ukrainian employees worked in three centers in Kiev, Vinnytsia and Dnipro, where operations are suspended because of its proximity to the southern front. Although no Ukrainian employees will be laid off, 50 are being transferred out of activities for the popular slot machine game House of Fun and will be offered alternative projects.
Despite Western sanctions against Belarus, Playtika continues to employ 600 people there and is encouraging them to relocate to the offices in Warsaw that it set up last year. Since the opening of the Warsaw branch 300 Belarus employees have moved to Poland.
Published by Globes, Israel business news - en.globes.co.il - on May 31, 2022.
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