Big Fish Cuts Bait on Cloud Service, Lays Off 49 in Seattle
Big Fish Games, despite being profitable and eyeing an 11th consecutive year of record revenue growth, is cutting up to 140 jobs—49 in its Seattle headquarters—and closing some of its international offices to focus the casual games maker and distributor on its best businesses.
To continue the company’s momentum, “we need to realign our resources by increasing investment in the areas that are growing or profitable and eliminating investment in areas that are not on a path to success,” founder and CEO Paul Thelen said in a memo to employees this morning.
The memo outlines 70 employee “realignments” including the layoff of 49 Seattle employees; the closure of its Vancouver, BC, game development studio, with projects there shifting to Seattle; and the proposed closure of its Ireland offices, which could mean 89 jobs lost, according to Siliconrepublic.com.
Prior to the layoffs, Big Fish had 524 employees in Seattle, the majority of a global staff of 670. The privately held company reported 2012 sales of more than $220 million, up 20 percent over the previous year.
In the biggest business change, Big Fish is ending its cloud-based subscription gaming service, Big Fish Unlimited, barely a year after its introduction. The service charged people $7.99 a month to move from one device to another without interrupting play. It was part of a strategy to give customers more options in how they buy and play games, and to make better use of the Big Fish catalog. Thelen, describing the service at the Casual Connect conference last year, said: “This is one glimpse of where we think the future is going.”
It has not turned out that way.
“This service is not growing as fast as we had hoped it would and is not on a path to profitability,” Thelen says in the memo. “This decision reflects the reality that the costs to support streaming cloud delivery of premium games are too high, and the user adoption too low, for us to warrant continued investment.”
The company also plans to focus on its premium game development efforts on the four largest languages—English, French, German, and Japanese—“and will evaluate what amount of new localized content we will provide for our other supported languages,” Thelen says.
The company will continue investing in its free-to-play casual and casino games. Thelen cites the casino games—developed out of the Oakland, CA, studio it acquired last year—in particular as a successful new line of business. Mobile, too, is a major growth area, representing 30 percent of total 2012 sales.
Additional changes include the departure of company president and CFO Dave Stephenson. John Holland was appointed president in addition to his role as chief operating officer. Thelen, who retook the CEO role in 2012, will directly oversee the company’s four business line general managers.
Thelen, who founded Big Fish in 2002, calls the layoffs “painful” and says the company “made every effort to be respectful and to do right by those who are departing wherever possible to minimize the impact this will have on their lives.”
He says Big Fish has a bright future: “We are making these adjustments from a position of strength, not weakness, and I am confident that our best days are ahead.”