This news comes as revenue growth year-over-year at the company is “well below” what was expected.
Snap Inc., Snapchat’s owner, has announced that it will lay off approximately 20 percent of its employees and cease investing in video games. This news comes as year-on-year revenue growth for the company is “well below” what was expected.
Snap confirmed that it would reduce its global headcount to approximately 20%, as spotted by Engadget. This was also confirmed in a memo it sent to investors.
Snap elaborated further by stating that its three strategic priorities for the future will be “community Growth, Revenue Growth, and Augmented Reality.” Noting that projects that do not “directly contribute to” these areas will either receive less funding or be terminated entirely.
This means that the company’s plans for video games are being put on hold indefinitely. The decision comes three years after Snap launched its gaming platform in partnership to developers like Spry Fox and Zynga.
The memo states that “We have tried thoughtfully and purposefully to find the right balance between focusing on investments and continuing to innovate. We have made the decision not to invest in Snap Originals or Minis, Games or Pixy among other areas.”
Snapchat’s games had as they reportedly had around 200 million users as per May 2021. These numbers suggest that Snapchat users were playing games at over 16 percent.
Snap commented further on the discontinuation and layoffs of certain projects. Snap stated that it was “deeply sorry” for the decision but suggested that the “extent of the reduction should substantially reduce any risk of having to do it again.”