6waves Lolapps, the social gaming company that was formed out of a merger just half a year ago, shed most of its employees on the development side today to focus on publishing other studios’ titles.
The decision today seems to undo some of what that merger agreement created last July and we hear it had to do with a limited runway of cash. Last summer, social gaming company Lolapps merged with game publisher 6waves to form a new entity that was a dual producer and publisher. They then raised funding from Korean gaming giant Nexon and Insight Venture Partners. The amount they raised was undisclosed, but an SEC filing showed a $35 million round.
The company insists, however, that the merger is still in place and Lolapps is not being spun out. They didn’t disclose how many people were laid off.
“6waves Lolapps will now focus on working with independent developers to launch and grow their mobile and social games,” said chief executive Rex Ng in a statement. “As a result, we have restructured the company to focus on key functions which include developer outreach, product advisory, user growth initiatives and our publishing platform.”
Going forward, the company will focus on publishing. Its existing titles will continue to work and 6waves Lolapps is looking for a third-party team to service them. Escalation Studios, the Dallas-based gaming studio it acquired recently, will still continue to do mobile development and Smartron5, the other company it acquired in China, will still focus on that market.
Not everything is being lost from the merger. When 6waves combined with Lolapps, it picked up the company’s infrastructure and platform technology. 6waves had some technology that could predict how games would perform financially.
The titles that were still in development including Ravenshire Castle will still come out. 6waves Lolapps’ chief product officer Arjun Sethi and one of Lolapps’ original co-founders Kavin Stewart will personally fund a spin-off to make that happen.
All in all, the layoffs are just another sign of how challenging the environment is for gaming companies on Facebook. If Zynga has been showing progressively slower revenue growth on the Facebook platform, you can imagine how the smaller game developers are feeling the pinch.