According to a blog post from the company, the layoffs are the result of 'the huge downturn in the economy' requiring 'staff reductions and other operating cost cuts as [they] head into an uncertain 2009.'
'While we are still anticipating a healthy upcoming year, we're going to grow less than we originally expected,' the post continues, 'and we have to adjust costs to reflect the new realities.'
The post concludes that the company has 'raised a lot of money from investors a few years back'—indeed, as recently as this July—and as a result does 'not need to make as deep a headcount reduction as most other internet companies.'"
Its hardly surprising they have a big head count and have had massive investment, they have achieved great things but do need to have a plan to survive.
I don't think its anything to do with a down turn in the economy especially as they reported and increase in spending on virtual items. It will be purley the realiseation that the money they got is the last they will get and so they better use it wisley and start to make a profit. It shouldn't be too hard for them to do they have the players and a really great product.
Read the upcoming profile on Gaia in the first of a series.
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