Pleitika offices in Herzliya. Source: Pleiatica
According to information obtained by Gigtime, the Israeli gaming giant Playtica is embarking on an extensive round of cuts, one of the largest in Israeli high-tech, which includes the layoffs of nearly 200 employees in Israel and hundreds more overseas. The current move comes only six months after the company made a significant round of cuts, during which it fired 250 employees (about 6% of the company’s total employees). However, the previous move mainly involved employees at sites in the United States, England and Canada – and transferring activity from the centers in London and Montreal to Israel and Poland.
It also appears from the information we have, that in addition to layoffs, the company decided to cancel 2 new games that are in different stages of development.
A mountain of cash alongside a tough year
As with almost all high-tech companies, the year 2022 did not brighten the face of Playtica shares either, which fell on Wall Street by more than 50% this year (and close to 75% since its issuance in early 2021), and the company’s quarterly reports failed to surpass or meet analysts’ forecasts. In its last quarterly report in August, it reported that it recorded an operating profit of $91 million (a 50% decrease compared to 2021) – a figure that is especially problematic after the company’s operating expenses rose by 10% during that period – a situation it is trying to prevent as mentioned in the round of cuts the current However, it is important to remember that the company’s coffers have over 600 million dollars and according to estimates, this particular step, however difficult it may be for the employees, will be sympathetically received by the investors. Last November, Playtica invested about 25 million dollars in the mobile game company Ace Mobile and took a number of notable marketing steps such as sponsoring the Tel Aviv Marathon as well as recruiting the American actress Drew Barrymore to promote her “Bingo Blitz” game. In June 2022, investor James Lu’s Joffre Fund purchased the holdings of Chinese investor Yuzhou Xi at a value of $8.5 billion.
Playtica currently employs approximately 4,100 people worldwide, with approximately 1,000 employed at the company’s headquarters in Herzliya – so this round of layoffs is one of the largest, relatively speaking, that we have seen in Israel of a large Israeli tech company.
The following response was given from Playtica: “As a leading company in the industry and as an employer of 4,100 employees worldwide, Playtica takes seriously its commitment to be ready for several business scenarios. Playtica has not made an announcement regarding its organizational structure.”
Hundreds of millions of dollars a year and control of the casual and social sphere
Just a few months ago, a new report on the Israeli gaming industry was published, which explained that the gaming industry in Israel experienced unprecedented growth with revenues of approximately 8.6 billion dollars per year and the employment of 14,000 workers. The report revealed that the majority of the Israeli gaming industry – approximately -75% – based on games from the “social” and “casual” genres, short and simple games with viral and addictive elements. Playtica is one of the biggest companies in the field of social gaming with the game Solomania which became a huge hit. The lion’s share of Playtica’s revenue in the third quarter of 2022 came from these genres: about $350 million from casual games and about $310 million from social casino games – a 10% increase compared to the corresponding quarter last year.