German game developer Bigpoint, most prominently known for Battlestar Galactica Online which began open beta early last year, has laid off 120 of its approximately 800 employees. More than 40 of these are in their San Francisco office; the rest are from the Hamburg office. CEO Heiko Hubertz also told GamesIndustry that the company will cease development of games in the United States:
We have seen that developing games in the US is not really the most efficient way for us at the moment. The games that we have developed in the last two years haven’t been that successful, and the San Francisco area and Bay Area is quite a competitive market. San Francisco is, after New York, one of the most expensive cities you can live in in the US, so the people are quite expensive.
Earlier in the year, Bigpoint also closed its mobile division, laying off 29 employees in the process as well as cancelling numerous titles. The San Francisco studio was opened less than three year ago, back in early 2010. The studio was to be overseen directly by Hubertz himself and was the second U.S.-based office for the company. The first was New York.
Hubertz also stated that he will be stepping down as CEO at the end of the year and will move to being the supervisory board executive chairman. He stated this was unrelated to the layoffs and was instead for “private reasons,” pointing out that he had tried to step down a year and a half before, but his planned successor Arthur Bastings didn’t work out. Finally, Hubertz assured that none of the company’s current projects will be affected by the layoffs.
Analysis: Bigpoint was actually doing rather well with Battlestar Galactica Online last year, drawing in 2 million users in the game’s first three months. However, this was apparently an underperformance, indicating that they may have placed their expectations too high. I believe this to be indicated in Hubertz’s statement referring to last year:
We think we’re going into a situation that we would call consolidation, and this will be a very rough time over the next 12 to 18 months. We saw this coming last year, and for that reason we started to change the company, to reorganise the company, to bring very senior people on board who know exactly what to do if a market starts to consolidate.
I think it’s important to note that 15% is a pretty large cut of employees, and I’d be surprised if this truly has no impact on their titles currently planned for or in development. Hubertz does have a point, though: San Francisco is indeed one of the most expensive places to live. This results in necessitating a hefty cost-of-living locality increase to an employee’s base pay. Failing to do this would result in a failure to attract talent.
Personally, I think the company overreached and expanded a little more quickly than was prudent. This tends to happen a lot with smaller studios that experience a decent amount of success.