Web3 Startup Community Gaming Confirms Layoffs Amid Esports Downturn

Community Gaming, a Web3 esports tournament platform, has laid off 17 employees, the company confirmed to Decrypt on Friday. The Esports Advocate first reported the news. Decrypt inquired about the number of employees that Community Gaming had before the layoffs, but did not hear back by the time of publication.

Community Gaming CEO Chris Gonsalves told Decrypt that broader struggles across the competitive gaming industry—which have forced layoffs at other companies and teams in recent months, as well—led to the decision.

“With the economic downturn in the esports industry, we’ve had to restructure our goals in order to have a stronger future, which came with some roles being eliminated,” Gonsalves told Decrypt. “We appreciate the contributions of all our employees and will support them as they continue to be innovators in the space.”

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In April 2022, during the crypto bull market, Community Gaming raised $16 million in Series A funding from crypto heavyweights like Softbank, Binance Labs, ConsenSys Mesh, Bitkraft, Polygon Labs (then Polygon Studios), and Animoca Brands.

In the past year, Community Gaming has more than doubled its total user base, going from roughly 100,000 in April 2022 to 250,000 today, Gonsalves said. Community Gaming also facilitated more than 600 tournaments last month, he added, with more than 21,000 players participating in at least one tournament during the span.

Gonsalves founded Community Gaming because he believes that the esports industry has a payouts problem—and he wants to offer faster crypto payments to tournament winners. In esports, it can take days or weeks for winners to receive payments after an event, and those payouts sometimes come with a lot of extra steps or fees.

“We want to abstract away all the complexities that are associated with Web3 solutions and bring them a competition platform that does automated payouts,” Gonsalves previously told Decrypt.

Macro challenges

The crypto market may be recovering slightly as Bitcoin surpasses $30,000 and Ethereum rises above $2,100, but it’s no secret that the esports industry is experiencing ongoing pains due to broader market conditions.

“The esports industry is going through a recession,” Gonsalves told Decrypt. “Esports teams are struggling to diversify their revenue streams after being overly reliant on sponsorship [funds].”

There are plenty of examples of such challenges. Esports team FaZe Clan’s stock plummeted sharply in September and has yet to rebound, with the Nasdaq recently threatening to delist the startup after the price fell below $1 per share. The pandemic also threw a major wrench into many live esports plans, potentially impacting expected revenue streams, as well.

Activision Blizzard’s BlizzCon—home to the Overwatch World Cup and competitions for games like Starcraft II and World of Warcraft—was canceled each of the last three years. And the company’s Overwatch League and Call of Duty League were forced to scuttle or significantly streamline efforts to establish a steady stream of live events.

Large team organizations like 100 Thieves and TSM have also laid off staff, and the Los Angeles Times and New York Times reported last year that esports investment and sponsorship opportunities were drying up. Long-running team CLG was recently sold to another team, NRG Esports, while smaller orgs like Moist Esports have admitted that they are operating at a substantial net loss.

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But Community Gaming—which is the official esports partner of the upcoming 3XP Gaming Expo—still sees Web3 as a light at the end of esports’ currently dark tunnel.

“I think Web3 can play a part here for esports orgs to build tech that synergizes well with new games that are more open with their IP,” Gonsalves said.

“For now though, everyone is going through a rough year,» he continued. «The overall games industry is taking a breather after the massive growth we all experienced throughout the pandemic, and companies will need to be more conservative.»

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