By Allison Economou
Activision Blizzard cut 8 percent of its staff despite posting “record-setting” revenue in sales for the 2018 year. The news comes from a fourth-quarter earnings call with Activision Blizzard’s investors. The layoff will affect hundreds of workers at the company who fulfill what Activision Blizzard CEO Bobby Kotick calls “non-development roles.” Despite having a strong presence in Southern California, with corporate offices and studios in Los Angeles, Santa Monica, El Segundo, Encino, and Woodland Hills and a headquarters in Irvine, Collister Johnson, the president and chief operating officer stated, “we saw weaker than anticipated retail demand.”
Activision Blizzard is not the only video-game company to experience problems. Electronic Arts Inc. and Take-Two Interactive Software Inc. stocks plunged last week after they released earnings. A series of executive departures have added to Activision’s turmoil. Eric Hirshberg, the executive chief officer of Activision Publishing, and Mike Morhaime, the long-time head of Blizzard, both stepped down in 2018. Activision fired Chief Financial Officer Spencer Neumann in January 2019. Neumann took the same position of CFO at Netflix Inc. two days later.
According to the fourth-quarter earnings report, the company made $7.26 billion in physical and digital sales, as compared to $7.16 billion in 2017. Despite this, Kotick noted the numbers failed to meet expectations. The company said that in November key games like Overwatch and Hearthstone had suffered a slowdown. Activision also severed its relationship with game maker Bungie after disappointing sales of the Destiny franchise.
Despite the challenges, Blizzard has indicated that it plans to expand its development teams on internally owned games by 20 percent. According to its fourth-quarter fiscal earnings release, funding will come through “deprioritizing initiatives that are not meeting expectations and reducing certain and administrative-related costs across the business.” The team will be eliminating non-core positions to rededicate resources to development.
Current Blizzard president J. Allen Brack offered his condolences in response to the layoff.
“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.”