At present, you’re probably unable to log onto Twitter without seeing the pandemonium that has come with billionaire businessman Elon Musk’s $44bn takeover of the company. From paid-for blue tick verification to banned parody accounts, Musk has had a tumultuous reign so far, and it’s only been a week.
But what has hit real people the hardest is Musk’s severe reduction of Twitter’s headcount. At time of writing around 3,700 Twitter employees have been laid off in total – close to half the entire workforce.
Meta – the company behind Facebook, Instagram and WhatsApp – was soon to follow by announcing that it would lay off 11,000 employees from its global workforce.
And there are many more big name tech companies that laid staff off but did not grab as many headlines. Lyft cut around 700 jobs last week and Microsoft announced an undisclosed number. Maybe most worryingly for gaming businesses, payments giant Stripe cut around 1,100 jobs: the business does not operate in gambling payments, but its decision to reduce its headcount by 14% might raise questions about similar businesses that do.
Elsewhere, companies that haven’t announced layoffs yet are still taking smaller steps to reduce labour costs. Last week, a report from Bloomberg stated that Apple had introduced a hiring freeze, and Amazon executives confirmed that a hiring freeze was in motion until the end of 2022.
These seismic examples of well-known companies slimming themselves down have come after months of concerns about rising costs in the gambling industry. Some businesses announced job cuts over the summer, but at the time enough companies were still hiring that the impact was not severe.
But as third quarter results now tumble out, operators and suppliers are pointing to inflation – whether affecting their own costs or customer behaviour – to explain declines in their finances. Could the industry soon face a wave of redundancies that have a much larger impact than any in the summer?
On the out
The great resignation – as it was coined – began in July 2021, at a time when workers appeared to hold all the cards in the labour market and could easily leave for a new opportunity, or simply exit and trust that one would arrive.
But it seems we may be in a time where the tide has shifted back, with job openings once again becoming scarce, with large numbers of prospective employees hoping to fill them.
Although the onset of the cost of living crisis has undoubtedly changed how companies think about their funds, changing business trends have also had a hand in creating a perfect storm for money woes and mass layoffs.
The time beforehand was a great one for investment, characterised by low interest rates and strong investor sentiment. But businesses perhaps got too caught up in chasing hype rather than investing in ideas that may have sounded less exciting but would have left the industry better-prepared for bad times.
Where to next?
One example lies in esports betting. Esports itself has been of increasing interest to operators in the last several years, as spectators began to look for opportunities to bet.
But esports-focused betting ventures that promised to transform how young people interacted with betting have not performed particularly well, leading to a slew of company closures and subsequent job losses. At the end of October, esports betting operator Esports Entertainment Group announced that it would close down its esports sportsbook Vie.gg. In July this year, Vie.gg’s New Jersey operation posted a measly $590 in revenue for the entire month.
Then of course there’s crypto. Little needs to be said of the decline of that sector – one that is again driven by hype – in recent weeks.
Obviously, neither esports betting or crypto gaming are verticals with no future. But in both cases, many who got on board did so because of the hype rather than the fundamentals, and that might have come at the expense of a more resilient industry.
Instances like these are also reflected in mammoth tech businesses outside the gambling industry. Meta has infamously poured billions into the construction of the “Metaverse” and has seen little success so far.
In fact, as Meta layoffs continued to make headlines, Zuckerberg shared a message with employees that blamed Covid-19 along with “macroeconomic downturn, increased competition and ads” as the reasons behind the redundancies. He only mentioned the Metaverse to praise it, calling it one of Facebook’s “high priority growth areas”.
As the industry propels forward from the effects of the pandemic and into the cost of living crisis, concerns that the igaming sector may turn to layoffs are palpable. But if the industry pays less attention to hype, and more to building a sustainable business, the last resort of mass redundancies could be swerved.