In its second round, Wattpad, owned by Naver's Webtoon Entertainment, laid off 30 employees, or 15% of its staff.
Parent Webtoon Entertainment, with subsidiaries Wattpad in Toronto, Naver Webtoon in Seoul, and Line Digital Frontier in Tokyo, is making calculated moves to optimize resources and streamline operations, per TechCrunch.
(Photo : Vivien Killilea/Getty Images for Lionsgate)
Wattpad at "Float" Los Angeles Special Screening on January 30, 2024 in Los Angeles, California.
The report cited sources claiming that the strategic restructuring aims to keep with the financial aspirations of its Los Angeles-based parent firm, which wants to enhance its financial position for an initial public offering in the US next year.
This layoff follows Wattpad's March 2023 employment job cuts of 42 workers or 15% of the team.
Naver paid $600 million to acquire Wattpad in 2021, and since then, it has been expanding its revenue sources. The storytelling platform introduced the "Wattpad Originals" freemium model, allowing writers to gate specific chapters behind a paywall, providing readers with free trial access. Additionally, "Premium Picks" was launched, offering monthly access to five free Wattpad Originals for Premium and Premium+ subscribers.
According to a recent news release, Wattpad Webtoon Studios and Zeta Studios have established a first-look structure to produce Spanish-language web novels in Latin America.
Introducing: Wattpad Originals.
— Wattpad (@wattpad) October 6, 2023
We're giving you the freedom to read what you want, the way you want. Wait to read weekly story part drops for free or unlock them now with coins or Wattpad Premium+. What story are you reading first? ✨⬇️ pic.twitter.com/Xi7VcfXO8i
Tech Sector Faced Difficulty in January
January 2024 has been difficult for the IT sector as a whole, with large layoffs occurring at several large corporations. As part of a strategic restructuring, PayPal plans to cut around 2,500 jobs, equivalent to 9% of its workforce, to bolster competitiveness.
After December's Tidal layoffs, Jack Dorsey's Block announced reductions in force at Cash App and Square, with insiders estimating over 1,000 layoffs. Meanwhile, the weight loss app Noom implements undisclosed layoffs, particularly targeting coaching and engineering roles, as part of efforts to streamline operations and reduce costs.
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Moreover, following the cancellation of Amazon's acquisition, iRobot Corporation announced a significant layoff of 350 employees or around 31% of its workforce. Concurrently, CEO Colin Angle steps down.
January 2024 has witnessed a total of 28,970 job losses across 104 tech companies, reflecting a challenging period for the industry.
What is Happening?
Several factors appear to be responsible for the increase in tech layoffs. Professor Jeff Shulman from the University of Washington's Foster School of Business explained in an NPR report that there is a herding effect, where companies observe that layoffs positively impact stock prices, creating a trend that many are following.
He said that tech firms are "getting away" with the layoffs "because everybody is doing it. And they're getting away with it because now it's the new normal." Schulman added that while smaller tech startups face cash constraints and fundraising challenges, larger publicly traded firms seemingly adopt layoffs to appease investors, indicating a potential continuation.
Moreover, rising interest rates and strategic staff reshuffling for generative AI investments play a role, yet experts argue that these factors alone don't entirely explain the current wave of layoffs.
Despite the downsizing trend, Wall Street has seen record highs, with the S&P 500 reaching new peaks, prominently driven by technology giants like Alphabet, Meta, and Microsoft, the latter now valued at over $3 trillion.
