Why Rooster Teeth is shutting down

Rooster Teeth, the Austin entertainment firm that started in a Buda garage 21 years ago, has been shut down by parent company Warner Bros. Discovery. Why it matters: Rooster Teeth successfully bottled a strain of irreverent, creative Austin, one that blended anime, gaming, fandom, sarcasm and slackerdom with shows that ranged from puppeteering to podcasts.

• The company closure will lead to layoffs of roughly 150 full-time employees — and freeze work for dozens of contractors and content creators as well, Variety reports .

The big picture: The company, arguably best known for its sci-fi satire "Red vs. Blue," launched in 2003 and ultimately fell victim to the upheaval in digital advertising roiling media firms around the country .

What they're saying: "It's with a heavy heart I announce that Rooster Teeth is shutting down due to challenges facing digital media resulting from fundamental shifts in consumer behavior and monetization across platforms, advertising, and patronage," Jordan Levin, general manager of Rooster Teeth, told employees on Wednesday.

• "Rooster Teeth basically kickstarted my interest in pursuing a career in the arts," Eōin J. Leahy, a Canadian actor, wrote on X . "Just a small group of people creating things together because they enjoyed it."

Between the lines: Rooster Teeth had a dedicated fanbase — it hosted an annual get-together called RTX — but in the era of YouTube and TikTok, its content was competing for eyeballs in an increasingly crowded entertainment space.

• Rooster Teeth's subscription video service, First, once had about 225,000 paying members — but that had fallen off to about 60,000 today, per Variety.
• The company ranks had dropped, as well, from a high of about 400 employees.

What's next: Warner Bros. Discovery is aiming to sell Rooster Teeth's catalog of content and intellectual property, including the popular anime-style series "RWBY" and Michael B. Jordan's animated sci-fi streaming series "Gen:Lock," a company official tells Axios.

• The company's Roost Podcast Network will continue to operate, even as Warner Bros. Discovery seeks to sell it off.

The bottom line: "In the coming days and weeks, we will have … the opportunity to work together to implement the best way to wind things down for us and our community," Levin said.

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