Splash Damage initiates consultation for mass layoffs after acquisition

One of the few remaining large studios in London, Splash Damage has announced the beginning of a consultation process that affects all of its employees in Bromley, anticipating significant layoffs. The announcement, sent to employees today and publicly disclosed on LinkedIn, marks another blow to the game development industry in the United Kingdom.

The company justified the measure as an "unfortunate but necessary step" to "keep the studio agile in a challenging and evolving market". Splash Damage stated that they are "committed to minimizing the impact on employees as much as possible" and exploring available options to retain talent and support those affected.

The news comes after Splash Damage was acquired by unidentified private equity investors in September, retaining the existing leadership team. The studio previously belonged to the Chinese conglomerate Tencent, who acquired it by purchasing Leyou in 2020. Leyou had bought the studio from founder Paul Wedgewood in 2016.

This is not the first round of cuts at Splash Damage: the studio had previously laid off employees early in the year after the cancellation of the online action game Transformers: Reactivate, revealed in 2022, but never publicly shown. In 2023, Splash Damage announced they were working on an open-world survival game codenamed Project Astrid, in collaboration with streamers Christopher "Sacriel" Ball and Michael "Shroud" Grzesiek. The last game released by the company was the multiplayer shooter Outcasters in 2020, developed for Google's Stadia platform.

The context indicates a decline in Western investments from Chinese giants: Tencent and NetEase reduced their expansion in the West in 2024. The Sumo Group, also owned by Tencent, cut 15% of its employees in 2024, followed by further losses in January of this year, and sold the publisher Secret Mode in March.

Founded in 2001 and known for multiplayer shooters such as Wolfenstein: Enemy Territory and Gears of War Tactics (2020), Splash Damage was a regular collaborator with Microsoft on titles like Gears of War 5 and the remasters of Gears of War and Halo. The crisis at the studio adds to the recent layoffs at Square Enix in its Western operations and the closure of Sony's London studio in 2024.

The news is especially bitter considering that CEO Richard Jolly expressed great optimism about the future of the studio after Tencent's acquisition.