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."

 

[Parmandur]

I'd heard at least some of the publishers were being prevented from selling through the channels for which they had been contracted with Diamond, which is why new books from some of the companies were not appearing on, say, Amazon at certain points. That could have changed and was likely the subject of additional motions and counter-motions.

This was another way in which Zombie Diamond/Chase was maximizing the damage to the publishers. The most certain way for the publishers to get out from all that was for the exclusivity windows in the contracts to end. Otherwise, there was always the chance Zombie Diamond would keep fighting to keep the contracts in force for as long as possible, arguing theoretical future value, no matter how much additional damage it did to the publishers.

Kafkaesque absurdity.

 

[ruemere]

There are several severe issues at play:

1. Someone signed on Paizo's behalf exclusivity-clause contract. This indicates not just a lack of foresight, or weak contract reading comprehension - this means that company-wide contract was not run past decent business lawyer.

1.1 This applies to all other companies who signed such contracts.

2. US legal does not recognize properly cases of handling of on the clock goods (I.e. goods that lose value or severely impact their vendors if they are not moved to the client). The case is complicated, but the system allows itself to be played like this.

2.1 The affected companies seem not to have proper insurance for such cases. There are also reports of documentation of the goods not being filed properly. This indicates that affected companies lack specialists that secure company assets for such cases.

3. Diamond is evidently playing the system. Just like JP Morgan. That said, a bank is skilled in such things - otherwise one would be afraid to trust them. On Diamond side, I fully suspect intentional foul play. If I had a stake in this case, I would try to make a deal with JP, using argument of both goods losing value and storage costs going up hoping for a united front and saving whatever can be saved.

sigh

The bottom line here is:

• never sign exclusivity-clause contracts
• engage specialists when selling stuff
• do not let go of your goods without insurance
• diversify your distribution channels

 

[Parmandur]

The bottom line here is:

• never sign exclusivity-clause contracts
• engage specialists when selling stuff
• do not let go of your goods without insurance
• diversify your distribution channels

I mean, easy to say that, but Diamond had basically cornered a monopoly here, and this is less about the publishers not do it ng the right thing and more about the dangers inherent in a monopoly within a given field.

 

[Thomas Shey]

• diversify your distribution channels

From what I understand, the number of channels retailers would engage with in the U.S. was, prior to this, extremely limited. For many places and products Diamond was nearly the only game in town.

 

[Morrus]

From what I understand, the number of channels retailers would engage with in the U.S. was, prior to this, extremely limited. For many places and products Diamond was nearly the only game in town.

For TTRPG publishers? I think there were only three TTRPG publishers with Diamond, IIRC. Paizo, Green Robin, and Roll For Combat. I don’t know anything about the comic book industry, but that’s what most of the companies affected by Diamond are.

 

[abazaba]

For TTRPG publishers? I think there were only three TTRPG publishers with Diamond, IIRC. Paizo, Green Robin, and Roll For Combat. I don’t know anything about the comic book industry, but that’s what most of the companies affected by Diamond are.

As far as I know, the entire comic book industry was with Diamond.
And we (now) have Lunar and Penguin Random House. Not sure if these were large players in the comics space (or players at al) before the Diamond situation though, now I think about it.

 

[Parmandur]

For TTRPG publishers? I think there were only three TTRPG publishers with Diamond, IIRC. Paizo, Green Robin, and Roll For Combat. I don’t know anything about the comic book industry, but that’s what most of the companies affected by Diamond are.

For the comic book retail industry, Diamond basically cornered the market: to get into comic book stores, where US comics sales are mainly, they had to go through Diamond.

 

[Thomas Shey]

For TTRPG publishers? I think there were only three TTRPG publishers with Diamond, IIRC. Paizo, Green Robin, and Roll For Combat. I don’t know anything about the comic book industry, but that’s what most of the companies affected by Diamond are.

I'd heard the statement about both.

 

[ruemere]

I mean, easy to say that, but Diamond had basically cornered a monopoly here, and this is less about the publishers not do it ng the right thing and more about the dangers inherent in a monopoly within a given field.

My post is intended to be a sort of lessons learnt item.

I hope that at some point someone from the affected publishers will do a thorough post-mortem review of happenings so that at some point in the future indie industry people can benefit.

 

[JLowder]

1. Someone signed on Paizo's behalf exclusivity-clause contract. This indicates not just a lack of foresight, or weak contract reading comprehension - this means that company-wide contract was not run past decent business lawyer.

No, this means it was a pretty standard distribution agreement in this end of the publishing market and you're offering a hot take with little practical understanding of the market or the companies involved.