Activision-Blizzard posted another record-high quarter and year, layoffs begin anyway

    
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Activision-Blizzard’s financial reports have been rather dull affairs for MMO gamers over the last few years, ever since the company stopped reporting World of Warcraft subscriptions and switched over to “monthly active users” to quantify its giant and ever-growing piles of money. Today’s report, however, has a much more somber tone, coming as it does during a week when rumors indicating the company will be slashing jobs to defray investor panic over the quarterly report actually seem to have caused the stock to sink even lower – its lowest in two years – before the report even came out.

The thing is, now that the results are in? It wasn’t a bad quarter or a bad year – just the opposite. Net revenues for 2018 were a record $7.5B (up YOY), and fourth quarter revenues were also a record $2.38B, up significantly over the same quarter in 2017. Operating cash flow is lower than in 2017, however. Bobby Kotick is quoted in the PR: “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.”

As for Blizzard itself? The companies are characterizing Overwatch and Hearthstone’s performance as “sequential stability” with declines for WoW after BFA.

“Blizzard had 35 million MAUsC in the quarter, as Overwatch® and Hearthstone® saw sequential stability and World of Warcraft® saw expected declines post-expansion-launch. Fourth quarter segment revenues grew 15% year-over-year to $686 million and operating income increased 51% year-over-year to $241 million. Building on an 11-year partnership, Blizzard extended its joint venture with NetEase to publish its games in China through January 2023.”

The press release also confirms that reorganization is in the works, though it also says it will increase the number of devs working on core online titles. In other words, it looks like the company will be trimming that 8% – we’ve heard on the order of 800 people – from other games and support staff to bolster game development of these top titles as well as mobile titles.

“The number of developers working on Call of Duty, CandyCrush, Overwatch, Warcraft®, Hearthstone and Diablo® in aggregate will increase approximately 20% over the course of 2019. The company will fund this greater investment by de-prioritizing initiatives that are not meeting expectations and reducing certain non-development and administrative-related costs across the business.”

According to Kotaku, the layoffs have already begun and are affecting “non-game-development departments such as publishing and esports.”

“Currently staffing levels on some teams are out of proportion with our current release slate,” Blizzard president J. Allen Brack reportedly told staff in a memo. “This means we need to scale down some areas of our organization. I’m sorry to share that we will be parting ways with some of our colleagues in the U.S. today. In our regional offices, we anticipate similar evaluations, subject to local requirements.” Apparently, those laid off will receive a “comprehensive” severance deal, as well as extended health benefits and job placement aid.

Brack also posted a lengthy missive to Blizzard’s players, vowing that the company is still “committed to creating epic games and entertainment experiences” but admitting to the layoffs.

“Our development pipeline is strong, and we have the largest lineup of games that we’ve ever had. At the same time, Blizzard tries to have a level of craftsmanship and excellence in all that we do. Maintaining those standards as we continue expanding these worlds takes both time and talented developers. With that in mind, we have plans to add to game development. We are dedicated to bringing you more content across existing game franchises and bringing our unannounced projects to life. Esports and the Overwatch League are also important priorities, and we will continue to produce great competitive content.”

In fact it sounds like the layoffs will continue over the next few months: “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.”

Get caught up on the Activision-Blizzard saga of the last few months:

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DargorV .

“Guys guys!! We found the cure for cancer! But we’re gonna keep it to ourselves.”
~Actiblizz

Serrenity
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Serrenity

There’s actually speculation that this exact scenario has already happened and the big pharma buried it.

probably a bit of /tin-foil-hat scenario, but Big Pharma are about as close to objectively evil as you can get to today.

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Reggie Jackman

I’d be more surprised if it was a false conspiracy theory than if it were true.

The evils of capitalism have gotten to such insane levels of corruption and greed that even brainwashed capitalist morons (Americans) are beginning to notice and actually now collectively despise the oligarchs who they refuse to even acknowledge as oligarchs (and oddly still worship them) yet recognize their greed, destruction, and illegal levels of wealth and hate them for it.

Studies show even brainwashed capitalist morons are beginning to seethe with hatred and anger against capitalism.

That is how bad things have gotten.

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MikeInTheLab

I think I’m doing an Activision-Blizzard boycott starting today. Would rather give my time and money to something less PROFIT focused. All businesses need to remain viable of course but I’m so tired of ‘profit before people’ ideology that has gripped corporations. I truly believe a company’s cost saving strategies should come from top down not the other way. Top executives need to take the hit in place of dozens, hundreds, or thousands of lower level employees. I MIGHT still play some HoTS but I won’t spend money in there.

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Dankey Kang

Remember when Blizzard was a lil’ old company knocking out kickass games like Warcraft 2 and Diablo 2: Lord of Destruction? I remember.

Look at the absolute state of it now lmao

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DargorV .

Thats because “Blizzard” has been gone for nearly a decade. Its dead & gone, Actiblizz wears the blizzard nametag as if sporting that trophy from that big hunting trip way back

PurpleCopper
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PurpleCopper

I’m pretty sure that Dota 2 Auto Chess is hurting Hearthstone. Even on Twitch, Dota 2 Auto Chess seems to rival Hearthstone in viewer count.

Dota 2 Auto Chess is what Artifact should have been. How sad is it that a fan-created mod game is more popular than a Valve created game?

Also, looks like Blizzard MAUs are still declining. From 46 to 35 million MAU in one year.

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Kayweg

So much for the “trickle down effect” theory, eh ?
Disgusting.

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Bob Smith

So not a single comment about hiring more developers? If anything that’s positive news.

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Nathan Aldana

dependfs on what the dev hiring is for, and it really doesnt change the fact a lot of innocent people lost their jobs just to pad the pockets of some executives.

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Ssiard

They are fast tracking Diablo 4 and making sure WOW classic reproduces WOW from 2005. I also wouldn’t be surprised if they try to push for next WOW expansion to be much sooner.

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Nathan Aldana

all of which will just result in shoddy products.

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Ssiard

You also might want to look into the massive sales of that carried 2018 that won’t exist in 2019, such as the massive WOW BFA sales that resulted in high subscribers but later ended up with a nose dive in subscribers that will kill profits in 2019.

The fact of that matter is that 2019 does not look good for Blizzard. They have nothing but WOW Classic and Warcraft 3 remastered coming, which is meh.

But lets understand one thing that you would see if you played WOW BFA and Heroes of the Storm or watched their internal projects fail: The layoffs were necessary due to poor decisions and poor implementation across the board by the worker bees.

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IronSalamander8 .

Repugnant. I know companies exist to make money but you can make money without being a complete monster like that. All those layoffs while the upper management, which don’t actually do very much, get extra cash and stock options? Makes me glad I don’t even login to my Battle.net account anymore.

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feleran

No need to call them “monsters” because of lay-offs. Employees do get paid for getting laid off after all.

Serrenity
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Serrenity

That’s a small consolation when you realize you your ability to survive suddenly has an expiration date. Moreso when you realize the only reason you are in this situation not because the company was trying to stay open, but rather that just wanted to be able to say they generated profits.

The emotional and mental stress from a layout far exceeds the compensation of an extra month of pay.

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Nathan Aldana

depends on the where. I like where I work but when they do seasonal layoffs the only pay they give me is not contexting my unemployment filings. And these arent temporary layoffs for these guys

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Chosenxeno .

“This was an extremely difficult decision…”

I think this was in reference to Yatch Length.

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Carebear

The new cfo who got 15 millions made his calculations and 800 people need to be fired (to make up for his salary… among others)

Thats life…

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Chosenxeno .

Nvm