French flagship Don’t Nod could lose 20% of its workforce

“Despite the actions already taken, the company finds itself forced to consider a reorganization project”. It is with these words that the French group Don’t Nod, creator and publisher of video games (Life is Strange, Jusant, Banishers…), announced on Wednesday evening the imminence of a voluntary departure plan. “This project could impact the workforce in France and could, as the planned project stands, concern up to 69 jobs”or 20% of the group’s total workforce.

“An exchange took place today with the staff representation bodies; an information – consultation process with these same bodies should then be initiated on this project” which aims to “rationalize the number of production lines”, “strengthen the role of the editorial committee in order to better meet market expectations” et “find more agility”. The group had achieved a turnover of 5.2 million euros in 2023 compared to 7 million in 2022, and recorded only 1.8 million euros in revenue in the first half of 2024. “The half-year accounts reflect both the commercial underperformance of certain games and the accounting impact of decisions taken to face an ultra-competitive and selective market”indicates the press release.

“I am fully aware of the impact that this project could have for all employees”CEO and co-founder Oskar Guilbert said in the press release. “However, it is now essential to consider such a path given the need to secure our company’s resources and restore its ability to better compete in an industry that has become much more competitive and selective. »

Lack of commercial success

The Parisian studio announced on September 23 that its latest two productions, the action-RPG game Banishers : Ghosts of New Eden and the climbing game Jusant had made sales “much lower than expectations” of the company despite good feedback from the specialized media. “We are obviously disappointed by our recent performance in an extremely competitive and selective market. Despite an excellent critical reception, Jusant and Banishers unfortunately did not obtain the expected commercial result. the CEO then declared.

The group then decided to sort through all of its projects currently in production in order to “maximize the chances of success of the most promising titles.” Two projects carried out in Paris were thus interrupted “temporarily”while two others, planned by 2027, have been “reoriented to reach a wider audience.”

The September press release also warned: the group “is studying other options that could be considered as soon as possible to secure its operations and improve value creation.” Since January, the value of Don’t Nod’s stock has fallen by almost 70%. It was only worth 1.50 euros this Wednesday morning before the suspension of trading. At its peak, during the summer of 2018, the stock traded for 30 euros.

All of Don’t Nod’s hopes currently rest on the game Lost Records : Bloom and Rage, which was made in Canada by the creators of the Life is Strange saga. This license, the first iteration of which was released in 2015 in the form of episodes like a TV series, was a great international critical and commercial success which transformed the destiny of the French company. It forged its reputation as a specialist in games with a strong narrative dimension, and allowed it to enter the stock market in 2018 and carry out several fundraising rounds. The Chinese group Tencent, which entered the capital in 2021, thus held 40% of the company in 2023.

Don’t Nod was able to increase the number of games in production, recruit (more than 340 employees to date), open a studio in Montreal and launch its publishing activity. “This investment strategy was essential to reach critical size. It must now materialize through a performance cycle”the company said in April. Indeed, Don’t Nod did not find commercial success similar to that of Life is Strange. In addition, the rights to this license are held by the Japanese publisher Square Enix, which financed the creation of the first two parts. It has since handed over development of sequels to other studios.

The latest opus to date, Life is Strange : Double Exposurewas released this October 15. To avoid cannibalization of sales, Lost Records : Bloom and Rage, which targets the same audience, was postponed to February 2025. “It is essential to give these two titles the space necessary to be enjoyed by our players within the great community we have created”explained Oskar Guilbert last June. A new commercial failure would further destabilize the group.

A context of crisis for the industry

At the start of the year, elected officials from the Video Game Workers Union (STJV) said they “concerned about the future of the studio, its productions, working conditions, and noted the absence of social dialogue.” They relayed in a press release the results of the internal Quality of life at work study, to which two-thirds of employees responded. Half said they disapproved of the company’s strategy, and 30% discouraged their acquaintances from applying. Don’t Nod also saw the departure last week of its narrative director Stéphane Beauverger, who has been with the company for 15 years. “Once upon a time there was a narrative director who decided that the time had come to set sail for new horizons”he wrote on LinkedIn.

The announcement of Don’t Nod comes in a context of crisis for the global video game industry, where more than 13,000 employees have been laid off since the start of the year. The sector has been undergoing a severe correction phase for many months, combining difficulties in finding financing and chaotic commercial failures due to overproduction that the market cannot absorb. Errors of assessment that date back to the Covid years, when the consumption of video games soared among confined consumers. Last August, Julien Villedieu, former general delegate of the National Video Game Union (SNJV), warned in Le Figaro: “the wave is arriving in France, and it will cause damage.”