German online gaming giant Bigpoint is letting go about 120 employees, with founder and CEO Heiko Hubertz also set to stand down from the top role.
Bigpoint will no longer be carrying out games development in the US: “The games that we have developed in the last two years haven’t been that successful, and the San Francisco area and Bay Area is quite a competitive market,” Hubertz (pictured above) told Games Industry International. “San Francisco is, after New York, one of the most expensive cities you can live in in the US, so the people are quite expensive.”
“We haven’t had the strong growth we hoped”
About 40 employees in San Francisco will be let go as well as about 80 administrative staff in Hamburg, in a bid to reduce costs – about 15 per cent of the company’s workforce, according to Financial Times Deutschland.
“We need space for other investments in other areas,” Hubertz said. “We’ve doubled our revenues almost every year, and we had a budget for this year of what we wanted in terms of revenue. Unfortunately we haven’t had the strong growth we hoped, but we had hired for this growth.”
Also just announced, Hubertz will be stepping down as CEO to take up a position at the head of the company’s supervisory board. He told media this is a move that’s been planned for a while, and that there is no direct connection to this week’s job cuts.
What’s next in free-to-play gaming land?
Bigpoint, which made its name with free-to-play browser games that entice users to spend on virtual goods and in-game bonuses, and counts titles such as Battlestar Galactica Online among its portfolio, started 2012 with strong growth plans. In January, the company celebrated 250 million registered players and operations in Hamburg, Malta, San Francisco, Sao Paulo, London, France, and Spain, with more scheduled to open this year.
The company went through a refocus in July with media reports of 29 job losses, the scrapping of mobile projects and a shake-up at exec level.
Last night’s news, hot on the heels of social gaming king Zynga’s job cuts, game scrapping and office closures, might be a sign of trouble emerging in the free-to-play “gaming as a service” industry.
Yet, Belarus-based Wargaming, the maker of World of Tanks, is a weight on the other side. Accel Partners‘ Max Niederhofer name-checked the company at the recent IdeaLab! conference as a player with earnings akin to “printing money” and now too big to be acquired.
Image credit: Flickr user Official GDC