FaZe Clan, the esports organization that went public at a $725 million valuation last year, has laid off 40% of its staff amid broader financial turmoil facing the professional video game industry.
According to Digiday, FaZe Clan CEO Lee Trink wrote in an internal email to employees that the layoffs were due to the company’s “heavy focus on our costs and redefining our structure to set us up to not only survive in this increasingly challenging macroeconomy, but prepare for the best possible future.”
It is the second round of job cuts this year for FaZe Clan after roughly 20% of staff were let go in February. After debuting last year at $13 per share, FaZe Clan’s stock has plummeted to around 59 cents per share and is at risk of being removed from the Nasdaq.
FaZe Clan reported a $52 million loss last year. The company’s enormous social media following has led to content deals with NFL star Kyler Murray and Bronny James and sponsorship activations with the NFL, McDonald’s, and DoorDash.
Elsewhere in esports, Team SoloMid (TSM) announced it is selling its slot in the League of Legends Championship Series with a reported asking price of $20 million, according to The New York Times. Forbes valued TSM at $540 million last year as the world’s most valuable esports company.
Riot Games’ League of Legends Championship Series, the most prominent esports league in the U.S., has seen its viewership drop 13% this spring season compared to 2022. Viewership has declined 32% since 2021, according to Esports Charts estimates cited by the New York Times.
Traditional sports owners have cooled off on their investments in esports, including James Dolan’s Madison Square Garden Company. In 2017, MSG spent over $10 million to purchase a majority stake in esports team Counter Logic Gaming. After being unable to find a new buyer, MSG Sports decided in April to merge Counter Logic with NRG Esports, whose CEO is Sacramento Kings co-owner Andy Miller.