Big Fish in big overhaul. Lays off 49 employees in U.S. alone

Big Fish Games — one of Seattle’s leading game companies and larger tech employers — is undergoing a major restructuring, laying off 49 people at its headquarters and closing its European headquarters in Ireland, which had 89 employees.

 

The company also is replacing its president and closing a studio in Vancouver, B.C., according to a letter that founder Paul Thelen (pictured) sent to employees this morning.

 

Big Fish is one of the largest casual game companies in the world, employing 524 people in Seattle and 670 globally and generating annual sales of about $200 million.  But facing intense competition from mobile and social games it’s had to evolve far beyond the packaged and downloadable games that it began publishing in 2002. Over the past two years it has shuffled its leadership, restoring Thelen as chief executive, and invested heavily in online services, mobile titles and casino games.

Thelen said the company is restructuring to sharpen its focus on the most promising opportunities and dropping efforts that haven’t panned out. Notably the company is ending a cloud subscription gaming business that launched last year with high expectations.

“We had to make some very hard choices about these business areas that are not growing or profitable,” Thelen wrote. “I want to stress that our decisions are not based on our company-wide performance or that of the people working on those initiatives – both of which are strong – but because of where the market is growing, and quite frankly, where it is not.”

Despite the adjustments, Thelen still expects the company will have its 11th year of record sales with double-digit sales growth. Especially strong now are its “free to play” games, which are initially free but encourage players to pay for upgrades. Thelen said that business “is in hypergrowth right now.”

Thelen also disclosed that Dave Stephenson, the company’s president since December, is returning to Amazon.com where he worked previously. Big Fish Chief Operating Officer John Holland is being promoted to president.

More than 70 employees in Seattle were reassigned to other positions in the overhaul that Thelen disclosed at a meeting this morning.

In an interview, Thelen said most of the layoffs in Seattle are related to the wind down of Big Fish’s cloud gaming service. In an age when most tech companies simply rent space on servers run by vendors such as Amazon.com or Microsoft, Big Fish built its own system so it could stream casual games with no buffering. It was a significant technical achievement, but one that didn’t make as much money as expected. Thelen said it accounted for only about 1 percent of the company’s sales.

“Cloud delivery was a very expensive way to get our content to customers and required a pretty large scale of customer base to overcome the fixed costs of that delivery,” he said.

Big Fish has applied for several patents related to its cloud service and is exploring whether to productize the technology.

The Big Fish facility in Cork, Ireland, was established in 2009, highlighting the company’s global reach and ambitions. Its foreign-language translation and support services are no longer needed because the company plans to translate its games into fewer languages going forward, focusing mostly on English, German, Japanese and French. The Cork closure is ”subject to a 30-day consultation” with the employees.

The six employees at the Vancouver studio have been offered positions in Seattle, where work on the studio’s current game will continue. A spokeswoman noted that the company is trying to fill eight positions in Seattle and 19 in Oakland, Calif., where it acquired a leading producer of mobile casino games last year.

Altogether, the moves are painful but position the company “to maintain and grow our market leadership as the world’s largest producer of casual games” on multiple platforms, Thelen told employees.

“We are making these adjustments from a position of strength, not weakness, and I am confident that our best days are ahead,” he said.

 

Read more of this article at seattletimes.com

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