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I read that as they have negative cash flow and need to fix it ASAP.

by mdorazio 3y ago

jachee 3y ago
…in order to appease shareholders and/or hit earnings numbers, right?
- kyrra 3y ago
  One possible reason is due to Section 174 tax issues. See: https://www.axios.com/2024/01/20/taxes-irs-startups-section174 https://www.axios.com/2024/01/20/taxes-irs-startups-section1...
  - gamblor956 3y ago
    Given that the layoffs are hitting artists and content developers more heavily than the programmers, it is unlikely that Section 174 is the motivation for these layoffs.
Spellman 3y ago
Similarly. And why is that bad? Because once you run out of money everything is cooked
stevage 3y ago
If that's true, then this is the weaseliest way to express that: > The adjustments we're making aim to focus us on the areas that have the greatest impact on your experience while reducing investment on things that don’t.
BlackjackCF 3y ago
I wonder if it actually had to do more with esports pulling back quite a bit this last year. Riot was leaning into that pretty hard for League. That had to factor in for a large chunk of the headcount for layoffs. I just can’t imagine they’re cash flow negative given how popular League and Valorant are, but maybe they’re seeing enough of a dip in their numbers that they’re trending in that direction.
- SmallDeadGuy 3y ago
  I thought LoL and Valorant e-sports was breaking records year on year? At least in Europe and Asia, I know the LCS is on the decline.
  - 0x500x79 3y ago
    Breaking records does not mean profitable, having first hand knowledge of the situation esports (for Riot) is still very unprofitable -- the way that they try to measure esports profitability is by player increases/purchases after the events occur and leading up to the events and sponsorships of course. esports does not bring in new players, it mostly brings back churned players or excites current players. The financial model for existing players versus new players is very different. When you look at some of the sponsorship conversations over the past couple of years it makes sense why they needed to make some of the bets (https://www.polygon.com/2020/7/29/21347587/riot-games-saudi-arabia-neom-partnership-league-european-championship-lec https://www.polygon.com/2020/7/29/21347587/riot-games-saudi-...).

I read that as they have negative cash flow and need to fix it ASAP.

jachee 3y ago

…in order to appease shareholders and/or hit earnings numbers, right?

kyrra 3y ago
One possible reason is due to Section 174 tax issues. See: https://www.axios.com/2024/01/20/taxes-irs-startups-section174 https://www.axios.com/2024/01/20/taxes-irs-startups-section1...
- gamblor956 3y ago
  Given that the layoffs are hitting artists and content developers more heavily than the programmers, it is unlikely that Section 174 is the motivation for these layoffs.

Spellman 3y ago

Similarly. And why is that bad? Because once you run out of money everything is cooked

stevage 3y ago

If that's true, then this is the weaseliest way to express that: > The adjustments we're making aim to focus us on the areas that have the greatest impact on your experience while reducing investment on things that don’t.

BlackjackCF 3y ago

I wonder if it actually had to do more with esports pulling back quite a bit this last year. Riot was leaning into that pretty hard for League. That had to factor in for a large chunk of the headcount for layoffs. I just can’t imagine they’re cash flow negative given how popular League and Valorant are, but maybe they’re seeing enough of a dip in their numbers that they’re trending in that direction.

SmallDeadGuy 3y ago
I thought LoL and Valorant e-sports was breaking records year on year? At least in Europe and Asia, I know the LCS is on the decline.
- 0x500x79 3y ago
  Breaking records does not mean profitable, having first hand knowledge of the situation esports (for Riot) is still very unprofitable -- the way that they try to measure esports profitability is by player increases/purchases after the events occur and leading up to the events and sponsorships of course. esports does not bring in new players, it mostly brings back churned players or excites current players. The financial model for existing players versus new players is very different. When you look at some of the sponsorship conversations over the past couple of years it makes sense why they needed to make some of the bets (https://www.polygon.com/2020/7/29/21347587/riot-games-saudi-arabia-neom-partnership-league-european-championship-lec https://www.polygon.com/2020/7/29/21347587/riot-games-saudi-...).