In a press release reported by GI.biz's Rebekah Valentine, Loot Crate's CEO recognized that the company has been struggling to improve their financial situation over the last 1.5 years. Though evidence of the company's shortcomings can be seen as far back as 2016, where they went through multiple mass layoffs and loan defaults.
One of the suspected reasons for the company's unsustainable financial situation is the addition of alternate themed Loot Crates. Originally, they offered a single "Loot Crate" option, which would send a variety of geek and gamer merch. Now they have as many as 30 different subscription options, ranging from movies and TV shows to clothing packs like "Loot Underwear."
The company isn't collapsing, either. Investor Money Chest LLC has purchased Loot Crate's term loan and offered up to $10 million in funding to sustain current operations. Currently, this is the company's plan.
"Daily operations will continue as usual, unique and exciting fan items will be purchased, crates will be shipped, and all aspects of the business will go on as before the Chapter 11 filing. Our employees will continue to be paid as usual during this transaction."
Well, except for that last part, a report by Gizmodo's Beth Elderkin revealed that the company not only laid off over 50 employees last week, cutting the workforce almost in half but that these employees were given no warning and no severance pay.
Loot Crate popularized the idea of monthly subscription boxes to the modern gamer. But time has passed and people are finding that they don't like overpaying for trinkets and t-shirts that only gather more and more dust.
Subscription models make sense for reusable goods like toothbrushes, razors, or snacks, but not for things like merchandise.