Last week Bloomberg reported Activision/Blizzard planned to cut hundreds of jobs and now the company has confirmed those reports announcing they will lay off 800 employees with the plan to cut more in the coming days during their quarterly earnings call on Tuesday. The planned cuts come after Blizzard announced record revenues in 2018. Their net revenue was $7.5 billion. Their net income was $1.8 billion.
CEO Bobby Kotick began the earnings call on Tuesday stating, “We once again acheived record results in 2018.” However, Kotick noted that “2019 will require significant change to enable us to achieve our long-term goals and objectives. We’re making changes to enable our development teams to create better content for our biggest franchises more quickly.” He indicated that the company “didn’t achieve the reach engagement and player investment goals we set for ourselves.” He added, ” in-game execution was inadequate for some of our franchises and we saw weaker than anticipated retail demand.”
Chief Operating Officer Coddy Johnson would go on to detail that the company will “refocus our best resources on our biggest opportunities, and to remove an unnecessary level of complexity and duplication that is built up in certain parts of the business.” He would go on to detail that this refocus and “restructuring plan sheds investment in less productive, non-strategic areas of our business, and will result in a net headcount reduction of approximately 8% while also driving a significant increase in investment, focus, and capabilities around our biggest franchises.”
An 8% reduction is around 800 employees.
Sources told Kotaku, that the layoffs will not only effect Blizzard, but will also effect King, the developer of Candy Crush, and Activision’s studios including High Moon. Kotaku elaborates that the layoffs at Blizzard “appear to only have affected non-game-development departments, such as publishing and esports, both of which were expected to be hit hard.”
Kotick did indicate the company expects to invest in e-sports:
“We’re staffing up production on our incubation efforts faster and increasing our investment in live services, in our tools, in our Battlenet platform, and in new areas like our fast-growing e-sports and advertising efforts. But all with an intense focus on excellence so we never disappoint our players.”
Johnson also noted they will be adding new developer talent for Call of Duty, Candy, Overwatch, Warcraft, Hearthstone, and Diablo:
“Specifically, as we reallocate resources, and hire new talent, we are planning for the number of developers working on Call of Duty, Candy, Overwatch, Warcraft, Hearthstone, and Diablo to increase in aggregate by approximately 20% over the course of the coming year.”
Kotick indicated the company plans to implement and improve in-game monetization, but it won’t happen as quickly as they would like.
“Our 2019 outlook assumes that we will not improve in-game monetization as quickly as we would like and that it is a transition year where we have less new major content to release than we should.”
In what looks be an attempt to reassure both fans and employees, Blizzard President J. Allen Barck wrote a blog post to reassure fans that Blizzard will continue to push forward with even more development. Saying in part “We are dedicated to bringing you more content across existing game franchises and bringing our unannounced projects to life.“
He also addressed the pending restructure that will involve significant layoffs.
“To better support these priorities, we need to reorganize some of our non-development teams. As a result, we will be reducing the number of non-development positions in North America and anticipate a related process in our regional offices over the coming months subject to local requirements. This was an extremely difficult decision, and we want to acknowledge the effort of everyone who has contributed to Blizzard. To assist with the transition, we are offering each impacted employee a severance package that includes additional pay, benefits continuation, and career and recruiting support to help them find their next opportunity. These people are members of the Blizzard family—they’ve cared deeply and contributed greatly to our work here and we are extremely grateful for all they’ve done.”
CEO Bobby Kotick issued a press release to investors painting a rosy picture for a company that is going to lay off around 800 employees. In fact, Kotick touted his employees describing them as “extraordinarily talented.”
“While our financial results for 2018 were the best in our history, we didn’t realize our full potential. To help us reach our full potential, we have made a number of important leadership changes. These changes should enable us to achieve the many opportunities our industry affords us, especially with our powerful owned franchises, our strong commercial capabilities, our direct digital connections to hundreds of millions of players, and our extraordinarily talented employees.”
It’s no secret that Blizzard Entertainment has had a rough couple of months. The company has seen the loss of multiple CFO’s and senior staff and their announcement of Diablo: Immortal was not met with much fan fare. The company also faced accusations of racism.
Former Team Leader for Vanilla World of Warcraft Mark Kern weighed in on the news of the layoffs.
Call me old fashioned, but how about we keep jobs when a company has a super profitable year?
— Mark Kern (@Grummz) February 12, 2019
It appears that despite a record year, Activision/Blizzard is still laying off employees and drastically affecting their livelihoods because they didn’t meet investor expectations.
What do you make of Activision/Blizzard’s move to layoff nearly 800 employees?