February 12, 2019 Activision-Blizzard confirms that it will lay off 8% of its employees after a disappointing financial quarter.
Activision-Blizzard posted its fourth-quarter financial results today, and the company posted the greatest profits in its history. However, that revenue is significantly lower than expected, and the company plans an 8% reduction in headcount – which translates to nearly 800 Activision-Blizzard employees losing their jobs, many of them today. The move comes on the heels of disappointing earnings over the past year and a split with Destiny 2 developer Bungie last month.
The company posted net revenue of $2.38 billion for the year. CEO Bobby Kotick says in the earnings report that “While our financial results for 2018 were the best in our history, we didn’t realize our full potential.” In addition to the disappointment of 2018, the company doesn’t expect growth in 2019 to match industry potential, with a lack of major releases to drive new profits. During a conference call discussing the report, the company says it will be “aggressively” hiring to expand development efforts.
However, layoffs will hit all Activision-Blizzard subsidiaries – including Activision, Blizzard, and King – and will be focused on non-development departments. In an internal memo obtained by Kotaku, Blizzard president J. Allen Brack says “Over the last few years, many of our non-development teams expanded to support various needs. Currently staffing levels on some teams are out of proportion with our current release slate. This means we need to scale down some areas of our organization.”
Blizzard employees in both the US and regional offices will be affected. Those laid off have been promised “a comprehensive severance package,” in addition to profit-sharing bonuses for the prior year and job assistance. Exactly how the 8% reduction applies across other company divisions, or what will be offered to employees outside of Blizzard, remains to be seen.
These results do not come as a surprise. Sources told Bloomberg that Activision Blizzard wants to centralize functions and boost profits, and that part of the plan will include layoffs that could cost hundreds of employees their jobs. Activision Blizzard includes both Activision and Blizzard Entertainment, as well as mobile games developer King Digital.
In January, Activision fired Chief Financial Officer Spencer Neumann, who was then quickly picked up by Netflix. Activision brought back former CFO Dennis Durkin, who had served in the role from 2012-2017, giving him a $3.75 million signing bonus and some $11.3 million in stock, plus a $900,000 annual salary.
It’s been a tough few months at the company. Destiny 2’s Forsaken expansion failed to meet Activision’s sales expectations, and company stock took a significant hit after the ill-received announcement of the mobile-only Diablo: Immortal at Blizzcon in November. Player counts for tentpole titles like Overwatch and Hearthstone have remained flat or are in decline, Bloomberg reported.
Kotaku’s Jason Schreier reported that employees had been anticipating some kind of announcement like this for some time, with rumors of layoffs intensifying over the previous week.
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EA writer Mitch Dyer responded to the early rumours of layoffs by helpfully tweeting a database of game development job listings to help anyone affected by the layoffs find new employment. The list includes links to job boards for hundreds of developers and publishers around the world.