Activision-Blizzard Day 14: Brack and Meschuk exits, fraud lawsuit, proto-union, and Q2 financials

    
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Point.

It’s been a helluva Tuesday in the swamps of the Activision-Blizzard sexism scandal: The day opened with the departure of J. Allen Brack from Blizzard and closed with the Activision-Blizzard Q2 2021 investor call, which showed Activision revenues up but Blizzard revenues and monthly active users down, in spite of the release of WoW Classic’s Burning Crusade expansion and the World of Warcraft 9.1 patch during the quarter.

But of course, the bad news just keeps rolling, and we’ve got a few more updates this evening.

First, Bloomberg broke the news that Brack isn’t the only one departing; Jesse Meschuk, the former head of human resources at Blizzard, is also out. “Jesse Meschuk is no longer with the company,” was apparently the extent of Blizzard’s comment on the topic. Axios notes that Meschuk has been with the company since 2009 but hadn’t been head of PR since January; the site also chronicles cases from several Blizzard employees who say they took their complaints about harassment and even assault directly to the HR team and were all but ignored. Employees describe a “surprising lack of paper trail” when it came to reports, a lack of privacy in reporting, and a distressingly high turnover rate in the HR department.

And second, an Activision-Blizzard shareholder has begun a class-action lawsuit alleging that the company had been misleading investors ahead of the California sexism lawsuit. Gary Cheng asserts that Activision-Blizzard knew about and failed to fully disclose the DFEH investigation and the allegations and effectively did damage to investors as the company’s stock fell.

“The statements contained in 16-30 were materially false and/or misleading because they misrepresented and failed to disclose the following adverse facts pertaining to the Company’s business, operations and prospects, which were known to Defendants or recklessly disregarded by them. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) Activision Blizzard discriminated against women and minority employees; (2) Activision Blizzard fostered a pervasive “frat boy” workplace culture that continues to thrive; (3) numerous complaints about unlawful harassment, discrimination, and retaliation were made to human resources (“HR”) personnel and executives which went unaddressed; (4) the pervasive culture of harassment, discrimination, and retaliation would result in serious impairments to Activision Blizzard’s operations; (5) as a result as a result of the foregoing, the Company was at greater risk of regulatory and legal scrutiny and enforcement, including that which would have a material adverse effect; (6) Activision Blizzard failed to inform shareholders that the California Department of Fair Employment and Housing (“DFEH”) had been investigating Activision Blizzard for harassment and discrimination; and (7) as a result, Defendants’ statements about Activision Blizzard’s business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times.”

The shareholder seeks a jury trial and damages. As we type this, ATVI’s stock is down 14% over the last six months, with the most significant drop coming in the last few weeks, though of course it’s perking back up after close on the news that Activision-Blizzard saw a large revenue jump in the second quarter.

Finally, as we noted this morning, not only has T-Mobile apparently pulled out of sponsoring Activision-Blizzard esports leagues, but a coalition of Blizzard workers have expressly rejected Activision’s response to the initial civil rights lawsuit. The group, ABK Workers Alliance, says it represents workers from nine different Activision-Blizzard studios: Activision, Beenox, Blizzard Entertainment, High Moon Studios, Infinity Ward, King, Sledgehammer Games, Raven Software, and Vicarious Visions. The workers are already organizing “employee-driven initiatives” including mentorships and community meetings.

“Our goal is for the executive leadership team to address their response to the California DFEH lawsuit, acknowledge the reality of working conditions across our organization, and commit to meaningful change at Activision Blizzard,” they write, reiterating their four demands: an end for forced arbitration, inclusive hiring and recruitment, pay transparency, and a legitimately third-party audit. While Activision CEO Bobby Kotick had announced that law firm WilmerHale would review the company’s policies, the worker group has rejected it on multiple grounds: that the firm has pre-existing relationships with the company and therefore isn’t a neutral third party; that the firm has a well-earned reputation as a union-buster that makes it presence disingenuous; and that the lead partner from the firm specializes in corporate defense – “protecting the wealthy and powerful” – rather than employees.

“We call on you and your executive leadership team to do better, and to fully address our list of demands. We will not abandon our cause. Our ranks continue to grow across multiple Activision Blizzard studios.”

If you want a full recap of the Blizzard situation from the last two weeks, we’ve got one in the financial report from earlier today, or you can check out all of our coverage so far piece by piece:

Source: Complaint via Polygon, Bloomberg, The Verge, Axios. Thanks, Keldyn, Jwillo, Stefan, and Theryl.
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Ken from Chicago

For anyone who has seen the INVINCIBLE season finale on Amazon Prime, this Blizzard scandal is like the “subway scene”. It’s shocking and keeps going and going and going. 😱😱😱

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wjowski

I haven’t on the WoW train for a few months now but for what it’s worth I do know several people that were happily playing through Shadowlands when the allegations hit. They’re in XIV now.

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Ashfyn Ninegold

Yes, yes. Between the shareholders beginning to see that Kotick lied to them, the ABK Workers Alliance formed with apparently, from their response to Kotick, a good lawyer, and the moral outrage penetrating the outer rings of gamers, change may be coming.

Lighthope
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Lighthope

which showed Activision revenues up but Blizzard revenues and monthly active users down

Where did they say Blizzard revenue was down? I thought they said it was up double-digits.

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Bryan Correll

https://investor.activision.com/static-files/3187ab6b-6547-4f8d-bfbd-d709cdcd48a0

Page 8 breaks the performance out between Activision, Blizzard, and King.

For the second quarter Blizzard’s net revenues from external customers were $411 million in 2021 compared to $433 million in 2o20. For the year to date they are up $2 million from 2020.

Lighthope
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Lighthope

Thanks for that.

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Ken from Chicago

To be fair, corporations love to bury or obscure bad news / losses in reports to make it hard to see. 😭

It’s why Blizzard stopped talking about subscriptions to make it hard to decipher those numbers–for most folk but not the intrepid investigative reporters of MOP! 👍😀

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Sorenthaz

This is probably a bad thing that Brack is leaving, since it just means they’ll likely replace him with an Activision stooge. There’s no real other big names left in Blizzard at this point unless they somehow manage to bring someone back to steer the sinking ship. But maybe that’s a good thing, because it just shows that Blizzard is no longer what it once was.

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Greaterdivinity

Sorta kinda? Former head of Vicarious Visions (Activision owned, but by all accounts pretty solid) turned Blizzard employee Jen Oneal, and Mike Ybarra, formerly a big name at Xbox who has been at Blizzard for just a few years. So, folks “outside” of Blizzard more or less.

Honestly, I don’t know enough about higher level Blizzard folks to know if there was anyone that fit the bill internally, especially not someone they’d be worried would find themselves in the crosshairs of the lawsuit and this fallout sooner rather than later.

Din Djarin
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Din Djarin

Considering the accusations against Activision Blizzard, it’s likely a good thing for “outsiders” to take over the reins of Blizzard. And from what I hear, both the co-leads are solid people in their own right.

Both Blizzard and the games they produce have been on a steady decline in recent years. “Fresh minds, fresh ideas” might be just what is needed to right the ship.

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Bruno Brito

But maybe that’s a good thing, because it just shows that Blizzard is no longer what it once was.

Considering everything we learned from them? It’s clear that they were never worth shit.

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IronSalamander8 .

This. Exactly this.

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Ken from Chicago

What could an Activision “stooge” possibly do to make matters worse? 🤔

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Bruno Brito

Is that even possible? Will we see this story become a noir movie about someone being killed?

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Greaterdivinity

The employee collective is an interesting and potentially great development! Organizing is the first step towards potentially unionizing, and it seems like the ATVI employees are pretty committed to forcing meaningful improvements and not just reshuffling a few folks and calling it a day.

Next quarters report is gonna be interesting, since that will include the fallout from the lawsuit not present in this report (quarter ended before the lawsuit, I believe). Given everything the company has done so far, though, I can’t say I’m optimistic that any meaningful action will be taken short of employees formally unionizing and demanding change with the threat of a protracted strike.

Really not a good thing with a half dozen+ live-service games out there that need continual work and upkeep, so the workers would have quite a bit to bargain with. Also not terribly easy to find scabs on such short notice, and likely not a ton of experienced devs looking to work as scabs temporarily for the company.

The Weeb formerly known as Sray
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The Weeb formerly known as Sray

Even if someone in software development was interested in being a scab, it would take potential scabs weeks of intense training to get caught up on how Blizzard’s software works anyway. Due to the fact that it uses Unity, they might be able to get up to speed on Hearthstone fairly quickly, but it would probably take months before they’d have a team of scabs competent enough for basic maintenance mode of the rest of Blizzard’s line up.

Andy McAdams
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Andy McAdams

Can you imagine the how much absolutely non-sensical, batshit code has to be sitting in WoW? Almost 2 decades of tech debt *shudder*

EmberStar
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EmberStar

“What is this? What does this code even do? None of this makes any sense, it doesn’t point to anything and nothing else in the entire program seems to direct to it. This needs to go.”
*Deletes code*
*Italy ceases to exist.*
“oh. crap.”

Andy McAdams
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Andy McAdams

Scab manager: “what happened? Why are there sirens?
Scab dev: “I think I just caused the second fall of Rome.”
Manager: “but we have back-ups of production right?”
dev: “…..”
Manager: “RIGHT?!”

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Bryan Correll

The backups were in Rome….

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Ken from Chicago

LOL IRL 🤣🤣🤣

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Bryan Correll

Reminded me of this:

comment image

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Utakata

In the anecdote tonight, I speaking with my closest friends who have been playing WoW faithfully for years I knew that if I wanted to speak and hangout with them, I’d just log into my account. After a 11 days of them not playing they told me they could not in moral consciousness log onto it anymore with all the shit they’ve been hearing about developer side…

…the game will be a very lonely place for me to play if I do decide to log back on now. I can’t though…for the reasons they can’t. For what that’s worth.

Alyn
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Alyn

Utakata, I must say that over the years, I have found your comments very refreshing and in many ways hopeful. I’m so sorry that you and your friend(s) are in this dilemma. I am at the point I simply can not read any more about what is left of Blizzard.

World of Warcraft we started so long ago, seems like a distant, but truly warm memory. I have missed what is left of my guild. I still think about the handful of people that talked myself and another game friend away from lineage 2, back when that was extremely hard-core and full loot pvp, to come and join them in Azeroth. It was truly refreshing and fun. It was really fun, back then.

It’s not now, at least for me. Again Utakata, I do hope for the best and my warm wishes are there. We have our memories and we had some truly good times. I shall always remember them, and miss those people I played with oh so long ago-

“It doesn’t matter. You are what you are. I am what I am. We are the same-when you take the time to remember me.”
Christopher Pike

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Utakata

Thank you for sharing that. /deeply bows

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Ken from Chicago

That’s always the dilemma. I remember when CITY OF HEROES issued their Going Rogue expansion that introduced a mirror universe where another Earth was ruled by a Lawful Evil tyrant. The moral dilemma missions was do you fight for an uprising and long-term gains but overthrowing the tyrant knowing it innocent bystanders would suffer short-term, or even long-term, pain?

You’re horrified by Blizzard management horrific treatment of many of it’s workers yet how do you punish them without inflicting further pain on the workers who were victimized or had not harassed workers or even covered it up?

Or to put it on Star Trek terms: Do the long-term needs of the Victims outweigh the short-term needs of the Victims?

Most folks agree change needs to happen but what, where, when and how? The devil is in the details. 🤔🤔🤔

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Utakata

With all due respect…

“You’re horrified by Blizzard management horrific treatment of many of it’s workers yet how do you punish them without inflicting further pain on the workers who were victimized or had not harassed workers or even covered it up?”

…I don’t subscribe to that dilemma. At least no more than I do for Chick-Fil-A, *rump Hotels, JK Rowling and the government of China. If a company…or an entity of such crosses the line with me, that means I can no longer morally, ethically, mentally stomach in dealing with them. And instead, I look else where with the wallet in hand and pigtail.

So here it is up to Acti/Blizz to make the changes necessary and proactively in order for me to want to go back to them and support them. And my list is very, very high and demanding here in light of what has happened and happening of late. As it is also the responsibility of government to move in and pick up the slack to those being let go because of this so they don’t fall threw the cracks. Therefor, I have no guilt in leaving this game in this manner.

But to be clear though, it wasn’t the reason why I posted my anecdote. Rather it was about dealing with a fundamental change in my gaming life…and my life, where the old shoe of WoW I wore almost everyday for last 16 years is becoming no longer wearable or tenable for me. So consider this a personal documentation of me letting go of this game…because the changes I was hoping to see out this crises is simply not happening now or for the for see’able future. Time for the pigtails to pack it in and move on…

…and thanks for all the fish.

So I hope you don’t mind me explaining all of that. It was a bit of a mouthful. But at least thanks for inquiring. /bows

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Ken from Chicago

And yours is arguably the “correct” choice, rationally, long-term. It’s like the age-old saying, “We don’t deal with terrorists / hostage-takers”. By not doing so, you discourage repeats of these horrors in the future and save the current victims from long-term continuation of the trauma.

The catch is the emotional, upfront, short-term, visceral reaction to the victim’s losing jobs, homes, reputations, quiet anonymous lives and medical insurance (during a global pandemic that’s still ongoing). It’s battle to ignore your heart to heed your head.

Or to quote Thanos, the hardest choices require the strongest wills.

But he was a psychopath who ultimately wanted to commit cosmic genocide rather than simply increase resources at the snap of his fingers.

Vulcans, on the other hand, would be proud of your logical thinking winning out over the typical human tendency to be overly emotional and irrational. 👏👏👏

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Bruno Brito

The catch is the emotional, upfront, short-term, visceral reaction to the victim’s losing jobs, homes, reputations, quiet anonymous lives and medical insurance (during a global pandemic that’s still ongoing). It’s battle to ignore your heart to heed your head.

Maybe that’s just me, but it isn’t. I feel absolutely not a single shred of guilt for not giving money to Activision. None. Nada. Zilch.

I’ve been telling myself, for what is years now, and thank god, most of my artist peers also agree with me here: That capitalism and capitalists love to twist responsability around. That it’s my obligation to keep giving money to shitty companies so that these companies holding their employees hostage can keep paying them ( badly ).

Do i feel sad for people suffering? Absolutely. Of course i do. I want them to land better jobs, to be happy. But for me to then make the jump that i should feel guilty for not helping a company that will fire people if they want under the auspices of their most profitable year, and pretend that i have any sort of power in changing that? Fuck no.

This rethoric is crafted by them and sold to us as cheap philosophical posturing, and i’m honestly tired of it. These fucks rather spend billions telling me to guilt-trip myself 15 bucks a month than to actually use that money to make better offices, give better wages, improve morale and overall make a better product.

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Ken from Chicago

Exactly. I’m not saying you should feel guilty.

I’m just saying that some people would. It’s the old “With great power comes great responsibility” quote. If you have the power to stop a criminal and don’t, are you responsible for their actions? Most people would probably say no. Peter Parker said yes.

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Utakata

That’s not my responsibility. Nor should it it ever be considered so.

It’s the same deal in choosing between Mars Bar and a Kit Kat in the example. There is one set of employees who are not going to benefit my decision if I chose one over the other.

Therefor, there is no point in feeling guilty about that. Nor should I ever. And not to mention, whatever decision I make will most likely have negligible difference to those employees. As it is the same if I chose an EA game over one put out by Blizz. Or even simple drop Blizz’s games altogether.

This is the problem with this type of false dilemma argument, as there is no real concern here of the consequences, because there really isn’t any when I chose to leave to begin with.

Instead, the ones who gain to lose the most will likely be on upper management, because it’s their duty to sell me the game and keep me interested it. It is their utter /fail for not doing so. Even more so if they are doing things to make it unpalatable and/or ethically/morally bankrupt.

So the question becomes why don’t you ask this of the employers and not the players instead? As it should their responsibility to not fuck their workers over when they make bad decisions or enable/allow rot in their workforce to exist. And that should never be placed on shoulders of the consumer. Ever.

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Ken from Chicago

I’m not saying you should. I’m just saying some people would.

It’s practically the basis of the Arrowverse tv shows where pert near every hero takes the blame for every bad thing that happens, ad nauseum.

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Utakata

Fair enough then! Just making sure peeps understood that.

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IronSalamander8 .

I have to concur with Alyn here. You’re one of my favorite posters and the pink pigtails add a little extra positivity and fun to these discussions. We may have not played WoW together and I’ve never had that connection to it that you do, but it’s still sad to see someone lose or leave a beloved game for whatever reason, and the scandals at Actiblizz are among the worst reasons to find yourself having to leave over.

I know you play other games too, and hope you can find that home somewhere else, especially if it has pink pigtails for you!

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Utakata

Thank you so much for that. /deeply bows again.

MariedeGournay
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MariedeGournay

Thanks for all your work weaving all the threads together. Helped me keep track.