Paizo lays off 12 employees in the fallout of Diamond Comics’ bankruptcy

Paizo Inc. announced that it plans to lay off 12 workers as a direct result of Diamond Comics’ painful and exacting bankruptcy. In a June 8th post on the official Paizo website, Jim Butler, CEO of the Pathfinder and Starfinder publisher, explained how the year-long battle of attrition with its former distributor left the company with no recourse but to reduce staff.

Butler stated that Paizo leadership has been coordinating with the United Paizo Workers union on the layoff process, giving those affected 20 days’ notice and proposing alternative cuts wherever possible. According to Butler, Paizo employees could voluntarily accept layoff; otherwise, the process selected the “least-senior employee in each impacted business unit.” Layoffs are expected to be finalized by the end of June.

Editor Lynne M. Meyer announced that she had been laid off, along with Pathfinder Society developer Shay Snow and Starfinder 2E designer Aras Tazgan. Rascal reached out to Paizo for a full list of affected positions but did not receive a reply prior to publication.

Anyone laid off will receive a minimum of two weeks’ severance, plus another week for each year of service. Paizo will also maintain 18 months of recall rights, which allow affected employees to be hired back to their old positions if Paizo’s financial situation improves such that the old job (or an equivalent job) becomes available again. These protections and assurances are likely thanks to UPW’s advocacy on behalf of Paizo’s workforce. The union formed in late 2021 as a response to underpayment and crunch conditions within Paizo. Butler and other leadership voluntarily recognized the union shortly after (as opposed to another notable tabletop RPG publisher), and the two have since worked amicably together.

“These decisions affect people we care about deeply,” Butler wrote. “We are doing everything we can to support them through this transition.”

Diamond Comics declared bankruptcy in early 2025 after many years of financial difficulty. JP Morgan Chase and other lenders claimed large swaths of Diamond’s business and stock, including the unsold inventory of tabletop RPG publishers such as Paizo and Green Ronin Publishing. Since that stock was provided on consignment, the publishers would only be paid when books were sold out of Diamond’s warehouses. Butler claimed the distributor was holding nearly $10 million in RPG books, games, and other inventory when bankruptcy proceedings began. 

A bloody legal fight over JP Morgan Chase’s rights to liquidate consignment stock from dozens of publishers in order to pay back loans has been playing out in court for months (among many other complicated claims). The lenders are now appealing a judge’s ruling against their actions, including an exclusive contract that has reportedly stopped Paizo from moving to a new distributor.

Butler said the effects on Paizo’s business have been “devastating”. The publisher reportedly lost roughly $2 million in sales through 2025 and were forced to write off another $500,000 in sales that were covered by the Diamond Comics bankruptcy. Alongside sinking time and energy into court proceedings, Paizo management have attempted to redouble efforts on direct sales from their webstore and to hobby shops. Butler said those avenues have grown, but not enough to offset such significant losses. “Book trade sales remain far below historical levels,” he wrote.

Other announced changes include a reevaluation of Paizo’s free PDF policies, which include no longer granting digital copies of non-Society products to volunteers starting July 1, and a “pause” on developing Foundry VTT modules for organized play once the current season wraps up. Butler explained that the company “believes strongly in the power of organized play” but sales have not adequately covered development costs. The implication seems to be that VTT support operated at a loss for Paizo, and, according to Butler, must end “until we can either reduce costs or increase revenue.”

Paizo will work with Independent Publishers Group going forward to distribute Pathfinder and Starfinder material along traditional channels, but the loss of access to major US retailers will likely be difficult to reclaim — that access kept the trundling Diamond Comics alive even as its ability to properly service its partners atrophied. “Sales are still recovering, but we are in a better position than we were in 2025,” Butler wrote.

Rebuilding Paizo’s previous capacity will seemingly take time and isn’t arriving without consequences for the workers who create its games, but Butler ended his announcement on a note of optimism. A recently updated Paizo webstore will launch a direct-to-retail program in the next few months that will allow hobby stores and other small retailers to order from a complete backlist catalog of RPG material. Butler urged players wanting to support Paizo to check out the publisher’s website and urge their friendly local game stores to open a retailer account when the service launches.