After nearly two years of silence following a pause in its services, Roblox China has finally made headlines again. The gaming giant, in a joint venture with Tencent, recently laid off part of its workforce.
Layoffs in both the US and China
TechCrunch reported that Roblox initiated the layoffs in October. Confirming this, a spokesperson for Roblox stated that 15 positions were affected from both the company's teams in the US and its Shenzhen headquarters. This move was part of an “evaluation of the operational structure in support of LuoBu,” the company's localised platform in China. The affected employees have been informed, and the layoffs are specific to the unique business and operational needs of LuoBu. No other teams within Roblox were impacted by this action.
Shift in focus from expansion to bottom line
The layoffs come shortly after Roblox made significant cuts to its talent acquisition team, signalling a change in its strategy. Instead of focusing on expansion, Roblox is now paying more attention to its financial health. According to a listing on Boss Zhipin, a major recruiting site in China, Roblox China employs between 100 and 499 people.
Challenges of operating in China
In 2019, Roblox and Tencent formed a joint venture to develop a localised version of Roblox's gaming platform. Unusually, Roblox was granted a 51% controlling stake, a rarity for foreign companies operating in China. The primary obstacle in running a platform like Roblox in China is complying with the country's censorship and data regulations. When LuoBu, the localised version of Roblox, paused its services in December 2021, users aware of the regulatory landscape were not particularly surprised.
Despite these challenges and the recent layoffs, Roblox has no plans to abandon the Chinese market. A company spokesperson commented, “We remain committed to our long-term vision and plan for the LuoBu platform in China.”
Roblox is not alone in facing challenges in China. Blizzard Activision also started to scale back its operations in the country after its 14-year license with local partner NetEase expired in January. The California-based gaming publisher is searching for a new publishing partner in China.
