Tech firm Yuga Labs has announced plans for employee layoffs as part of a broader restructuring strategy. The company, known for its popular NFT collections Bored Ape Yacht Club and CryptoPunks, has been facing increasing skepticism about the stability of the NFT market. The decision to downsize the workforce comes as Yuga Labs’ new CEO, Daniel Alegre, takes charge.
While the exact percentage of employees to be laid off is unknown, Alegre explained the decision in a note, citing the need to focus on key initiatives and seek the support of external partners. This pivot away from the company’s split focus between NFT collections and other endeavors is expected to streamline operations and enhance efficiency.
Alegre, who joined Yuga Labs from video game developer Activision Blizzard, took over in July 2023 amidst a significant drop in prices of the company’s flagship NFT collections. This move was seen by many as an attempt to diversify into the online gaming industry. Yuga Labs had already signaled this strategic shift earlier in March 2022 when it first announced plans to develop the metaverse role-playing game Otherside. Additionally, the company acquired the intellectual property rights to CryptoPunk and Meebit NFTs from creators Larva Labs in the same month.
Otherside, described as a community-first metaverse project, allows players to purchase virtual land in the form of NFTs called “otherdeeds.” Similar to Second Life, players can buy and sell private plots of land to use as personal property within the game. This unique concept aims to bring together Yuga Labs’ NFT collections into a single immersive online environment.
However, despite the initial success of Otherside, with over $1 billion generated in secondary-market revenue, a fully-developed version of the game is yet to be released. The project’s dependence on the NFT market and blockchain-based digital land deeds exposes it to the same uncertainties facing the NFT industry as a whole. Nevertheless, Otherside’s success is crucial for Yuga Labs, as the company’s stock has experienced a significant decline of about 50% since March 2022.
Alegre has emphasized the importance of addressing concerns about Otherside’s development and value retention. He believes that updates to the project will help alleviate any uncertainties among users and investors. The company’s restructuring efforts, including the layoffs, are part of a wider strategy to refocus and regain market confidence.
As Yuga Labs navigates the ever-changing landscape of the NFT market, it remains to be seen how the company’s restructuring and strategic shift towards online gaming will unfold. The success of Otherside and the ability to adapt to market demands will determine the company’s future trajectory.