Paizo Lay-offs Due To Diamond Comics Fallout

Paizo, publisher of the Pathfinder and Starfinder tabletop roleplaying games, has announced an internal restructuring in the wake of Diamond Comics’ collapse in January 2025. The bankruptcy proceedings resulted in JP Morgan Chase taking possession of nearly $10 million in Paizo inventory. After reporting losses of almost $2 million for the year, Paizo worked with the United Paizo Workers Union to implement a round of layoffs affecting 12 employees.

Paizo is by no means the only tabletop gaming company affected by Diamond Comics collapse, and dozens of publishers have been in court for over a year fighting to claim back their product which, under US law, can be claimed by Diamond’s creditors as it was in their warehouse as the time of bankruptcy even though it was never paid for by Diamond.

This is not the first time that gaming companies have been plunged in to difficulty due to distributors collapsing. In the RPG industry we saw the collapse of Wizard’s Attic in 2004 followed by Osseum Entertainment in 2005, both of which left many independent game studios in financial difficulty at the time and led to several, such as Citizen Games, Gaslight Press and Pulsar Games closing their doors. Other companies barely survived at the time, with Chaosium losing control of their Pendragon RPG to creditors due to being unable to keep loan repayments going. Another company, Bastion Press, ended up selling all their IP to another company and closing their doors due to their exclusive trade distribution deal with Osseum.

Jim Butler, CEO of Paizo, posted the news of the companies restructuring and ongoing difficulties late on the 8th June 2026. You can read the full statement on Paizo’s Blog Post “Paizo Restructuring: A Difficult Update About Our Future” which covers the layoffs, future of their Organized Play programs (Pathfinder Society and Starfinder Society), Foundry VTT support, and Paizo’s next steps Some highlights include:

• Diamond‘s exclusive contract prevented Paizo moving to a new distributor, even after their collapse. A judge terminated ther contract earlier this year, but Diamond have appealed delaying the resolution.

• The 12 layoffs will come initially through volunteers, followed by the least-senior employee in each impacted department.

• Anyone laid-off will have 18-month recall rights.

• Paizo will be adding a dedicated area to their webstore for independently created Pathfinder and Starfinder products created by fans under the Pathfinder Infinite and Starfinder Infinite programs.

• Foundry VTT support for Organized Play scenaerios is being paused after the current season as sales have not covered development costs.

• Paizo are launching a direct-to-retail program enabling local game stores to order direct with Paizo, allowing stores to access their complete back catalog which is not always stocked by distributors and previously could be hard for stores to get hold of.

The response from many in the industry, including a number of those dirtectly affected by the layoffs, has been very positive, with Paizo being praised by the way they engaged and worked with the United Paizo Workers Union in handling the situation.