Paizo laying off 12 due to fallout from Diamond's bankruptcy

Paizo is laying off 12 employees, due to losses sustained from Diamond Comics' bankruptcy last year. Paizo announced the news in a post made to their website today, citing losses caused by ongoing litigation surrounding Diamond's bankruptcy. Paizo stated they lost $2 million in 2025, which has necessitated the move. Diamond was Paizo's exclusive bookstore distributor and Paizo was one of several RPG companies caught up when Diamond declared bankruptcy last year. JP Morgan Chase claimed a lien on all product currently held by Diamond after they declared bankruptcy, which included stock owned by Paizo that was held by Diamond for consignment sales. Diamond also appealed the termination of Paizo's exclusive contract, meaning that Paizo hasn't been able to move to a new bookstore distributor.

Paizo is currently working with their union on the layoffs, with severance offered to impacted employees. If volunteers aren't found, Paizo will layoff the least-senior employee in each impacted division.

Additionally, Paizo will reduce their new Pathfinder Society and Starfinder Society offerings to once a month starting in October. Foundry VTT modules for organized play will also be paused until Paizo can find a way to increase profitability. "These changes are not a retreat," Paizo said of the changes. "Paizo believes strongly in the power of Organized Play and always will, but the current publishing model for Society scenarios is not working and we need to slow down, stem the financial losses from a struggling program and evaluate where to go from here."

 

[Blue]

If your stealing someone elses property its stealing, those books don't belong to Diamond, so taking them anyways is stealing.

Woah, we're arguing the same side, or at least adjacent sides. Titanium Dragon said that JP Morgan needed to get repaid first: in other words get everyone's consignments, and that the people legitimately owed like Paizo would be "stealing" if they were higher in the repay order.

I took umbrage at them calling Paizo getting their goods back "stealing".

 

[Parmandur]

My understanding is that the whole thing turns on there being a special document in addition to the above that wasn't filed. It's not enough that there's a contract and ongoing reports about stock, but there also needs to be a UCC-1 (?) document specifying that These Particular Items are stored on consignment and Do Not Actually Belong to the warehouse. That seems like a fault of legislation.

I mean, maybe: but the law tends to be inexorable that way.

 

[Blue]

The way loans work in a bankruptcy/foreclosure, there is an order in which the creditors are paid. This is usually classified by both type of lien (secured vs unsecured), subordinations, and lien order, among other factors.

If you take money outside of that order, you are, in effect, stealing from the people who have higher priority claims, because that money was owed to them before it was owed to you.

You said that without the rule of the bankrupsy lender getting repaid first no one would lend to someone in bankruptcy because those legitimately owed money would "steal" it. So you can't now assume that the rule is also in place to justify your term of "stealing". Nothing you wrote here is in place in the context you called it stealing.

Please, either justify that without the rule, as per the context you called it stealing, or switch your term for those with legitimate debts owed getting repaid from stealing.

 

[BigZebra]

We have 946 officially licensed Paizo products released on our store today and loads still in development. We essentially pioneered the VTT space for Pathfinder, D&D, and many other publishers. It doesn't cost Paizo anything up front when we develop an official product for them, so every sale brings in more revenue for them (and us to a lesser degree) with no costs beyond sending us the raw files to work from.

There was someone within Paizo who really likes Foundry and they formed a team to develop those modules in-house. As a result, I think the majority of the marketing went to those products to try to recoup their costs, or perhaps because their employee preferred that VTT over our platform. Either way, 60% of all licensed Paizo purchases on our platform go back to Paizo.

Yes, and if you're into PF1 there are no other that comes close to FG in that regard. There's nothing on Foundry, and very little on Roll20.

Also you're the only one with license for D&D Classics. Any plans for a license for 3.5 or 4e?

 

[Jeffzilla]

I wouldn't call Diamond's activities 'stealing,' per se, either. The distributor went bankrupt with consignee material in its possession. The consignees were technically a debtor to the bankrupt entity, e.g., they pay that entity and legitimately owed it for services.

Now I would say that attorneys for Diamond's creditors, trying to claim consignee property as an asset of the bankrupt entity so that creditors could dispose of their material for profit, was pretty shady.

And I'd say that refusing to release those consignees from an existing contract for distribution which the bankrupt entity was in no position to fulfill, itself, was pretty shady.

And I'd also say that refusing to return consignee property for months and months and months, and then demanding to be paid for storage for the period of time when those materials were being withheld as leverage, was equally shady.

Those creditors have every right to legal representation to make sure that their interests were protected. Stealing? Nah. But the way their counsel went about things ought to embarrass each and every one of them.

 

[JLowder]

A proper distributor would have insisted the paperwork was all done, IMO, but Diamond didn't get where they did by crossing their t's and dotting their i's.

That's one specific place where Diamond had the opportunity to be a good business partner and failed to do so, shifting the pain of their failure onto others. (The game companies were not cutting corners if they did not know the forms were needed or thought the consignment agreement covered them.)

 

[djotaku]

Yes, and if you're into PF1 there are no other that comes close to FG in that regard. There's nothing on Foundry, and very little on Roll20.

Also you're the only one with license for D&D Classics. Any plans for a license for 3.5 or 4e?

I know WotC has an incentive to move forward and their own platform in dndbeyond, but I really wish they would all/license Foundry to have the 2014 sourcebooks as well. It's not the end of the world and I'm more of a Tales of the Valiant player anyway, but I do occasionally play D&D 5e and would love to have more than just the SRD for playing older modules.

I think system-wise I saw that Foundry has 3.5 and 4e support, but no official modules that I know of.

 

[Parmandur]

That's one specific place where Diamond had the opportunity to be a good business partner and failed to do so, shifting the pain of their failure onto others. (The game companies were not cutting corners if they did not know the forms were needed or thought the consignment agreement covered them.)

IIRC, and I am no expert, is that it was previously determined as part oft his whole mess that companies were perfectly aware that they were cutting corners, but figured it would be OK "because everyone else isn't doing it either" and it helped with margins all around being thin as is. Which is why so many companies are being bit by the fallout here: "everyone" skimping on the required paperwork isn't going to help anyone. Still the blame is largely on Diamond in my mind as a scummy company who basically set up their partners to hold the bag.

 

[smiteworks]

Yes, and if you're into PF1 there are no other that comes close to FG in that regard. There's nothing on Foundry, and very little on Roll20.

Also you're the only one with license for D&D Classics. Any plans for a license for 3.5 or 4e?

I wish. We've been trying since 2015. We had a ton of stuff converted and ready to go for 4E. It actually lends itself really well to online VTT play. 3.5E was my favorite system for a very long time as well, and still holds a place near and dear to my heart. Pathfinder 1E is up there as well.

 

[BigZebra]

I wish. We've been trying since 2015. We had a ton of stuff converted and ready to go for 4E. It actually lends itself really well to online VTT play. 3.5E was my favorite system for a very long time as well, and still holds a place near and dear to my heart. Pathfinder 1E is up there as well.

Ah ok. Well who knows - perhaps some day. Thanks for trying