Chinese Game Companies Undergo Layoffs as Industry Faces Obstacles

Image Source: Visual China

BEIJING, February 22 (TMTPOST) — Reports of games companies in Shanghai undergoing layoffs have been circulating on the Chinese Internet recently, which have been confirmed by famous game developers such as NetEase (09999.HK), Lilith and IGG (00799.HK).

Lilith has dismissed the team responsible for the development of Japanese anime-style turn-based mobile game E.D.E.N, Hongxing Zibenju reported, citing internal sources familiar with the matter. Some of the team members have been transferred to other positions, sources said. E.D.E.N was still in the development phase and did not enter the market. The project might be axed because of the lack of game publication license numbers from the State Administration of Press, Publication, Radio, Film and Television.

NetEase had already halted the development of a few games in August 2021 after the company learned that there would be a lack of game publication license numbers, an internal source from NetEase told Hongxing Zibenju. Development teams in both Hangzhou and Guangzhou were affected. Most members of the affected development teams were transferred to other projects, while a small proportion of members had left the company, the source said.

An internal source from IGG also confirmed with Hongxing Zibenju that the company has been laying off employees. “The company has laid off some people in Shanghai and Fuzhou. Teams that are making games for the overseas markets are not affected,” the source said. “It is common for companies to lay off employees nowadays in the game industry.”

Perfect World Entertainment (002624.SZ) said earlier in January that the company had streamlined its game development teams in 2021 and scrapped projects that did not align with the company’s business strategy. Perfect World Entertainment laid off several hundred of employees in the fourth quarter last year, according to the company. Perfect World Entertainment said that it will continue to downsize its teams and will lay off several hundred or even around a thousand people.

It is worth noting that sources from NetEase, Lilith and IGG among many others said that overseas markets will be Chinese game companies’ main targets in the future.

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