Photo : Michael Buckner ( Getty Images ) Publisher Activision Blizzard has begun its long-rumored layoff process, informing employees this afternoon that it will be cutting staff. On an earnings call this afternoon, the company said that it would be eliminating 8% of its staff. In 2018, Activision Blizzard had roughly 9,600 employees, which would mean nearly 800 people are now out of work. Advertisement This afternoon, the mega-publisher began notifying those who are being laid off across its various organizations, which include Activision, Blizzard, and King. On the earnings call, Activision Blizzard CEO Bobby Kotick told investors that the company had “once again achieved record results in 2018" but that the company would be consolidating and restructuring because of missed expectations for 2018 and lowered expectations for 2019. The company said it would be cutting mainly non-game-development departments and bolstering its development staff for franchises like Call of Duty and Diablo. Development sources from across the industry told Kotaku this afternoon that the layoffs have affected Activision publishing , Blizzard, King, and some of Activision’s studios, including High Moon. At Blizzard, the layoffs appear to only have affected non-game-development departments, such as publishing and esports, both of which were expected to be hit hard. “Over the last few years, many of our non-development teams expanded to support various needs,” Blizzard president J. Allen Brack said in a note to staff around 1pm PT that was obtained by Kotaku. “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. 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.” The letter also promised “a comprehensive severance package,” continued health benefits, career coaching, and job placement assistance as well as profit-sharing bonuses for the previous year to those who are being laid off at Blizzard. (Blizzard employees receive twice yearly bonuses based on how the company performed financially.) “There’s no way to make this transition easy for impacted employees, but we are doing what we can to support our colleagues,” Brack wrote. Advertisement The news follows months of rumors about layoffs at the publisher, which heated up early last week as word began to spread that hundreds of people across Activision Blizzard’s various divisions might lose their jobs. Leading up to today, some of the publisher’s employees had been coming to work with no clue as to what might happen. One person at Blizzard told me this morning that as employees arrived, they cried and exchanged hugs in the parking lot. Last fall, Kotaku reported that Blizzard’s 2018 mandate had been to cut costs and produce more games, and that as a result, layoffs would likely hit the company’s support departments even as Blizzard continues to expand its development teams. Brack’s email suggests the same. “It’s critical that we prioritize product development and grow the capacity of the teams doing this work to best serve our player community,” he wrote. “We also need to evolve operationally to provide the best support for new and existing products.” Advertisement Meanwhile, in a press release to investors this afternoon, Activision CEO Bobby Kotick wrote: “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.”<doc-sep>UPDATED: Activision Blizzard is laying off approximately 775 people — 8% of its 9,600-person staff — as it refocuses its efforts on its Call of Duty, Candy Crush, Overwatch, Warcraft, Hearthstone and Diablo franchises. Activision called the move a de-prioritizing of initiatives that didn’t meet expectations. CEO Bobby Kotick said that the cuts would come from support staff while the company consolidates its commercial operations and reorganizes its marketing initiatives. Activision will be instead investing more in live services, Battle.net, eSports, and advertising efforts. The company added it would be increasing development resources by 20 percent in 2019 on those franchises it is now focusing on. “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,” the publisher said in its earnings release.” “While our financial results for 2018 were the best in our history, we didn’t realize our full potential,” Bobby Kotick, Chief Executive Officer of Activision Blizzard said in an earnings report statement. “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.” Net revenue for the quarter was $2.38 billion, beating outlook of $2.24 billion. Net income for the year was $1.8 billion compared to $273 million for 2017. Activision exceeded last year’s net revenue with $7.5 billion against $7.02 billion in 2017. Activision Blizzard stock took a hit on Monday after rumors surfaced of the layoffs. Share value has been climbing throughout the day and continues to climb slowly in after-hours trading. It’s not uncommon for investors to react favorably to layoffs, which signal a company taking steps to increase value for shareholders. A sword has been dangling over Activision Blizzard employees since Friday, when Bloomberg reported that the company would be laying off hundreds of employees. In advance of the publisher’s full-year earnings report for 2018, those layoffs are now reality. Activision Blizzard has been signaling a massive restructuring and realignment in recent months. It began innocuously in May 2017, when Bungie and Activision announced that “Destiny 2” would be launching exclusively on Battle.net for PC players. It was the first time that Activision had overtly dipped its foot in Blizzard’s pool. The two companies had functioned largely independently under former Blizzard president Mike Morhaime’s leadership. In March 2018, corporate parent Activision Blizzard seemed to exert more control, installing Amrita Ahuja (former Activision Blizzard senior vice president of investor relations) as Blizzard CFO. A second Activision Publishing title, “Call of Duty: Black Ops 4” was announced as a Battle.net exclusive on PC, signaling that the lines between the two branches was starting to become permeable. “Call of Duty: Black Ops 4” benefitted from the move, outselling “Call of Duty: Black Ops 3” in its opening quarter on PC. Sales of Treyarch’s latest entry in the franchise were soft at retail, though. Morhaime, a company co-founder, announced his departure in October 2018, signaling the end of a 27-year run. A month later, Blizzard enraged die-hard “Diablo” players by announcing a mobile-only game in partnership with NetEase as a key piece of its Blizzcon keynote. As the new fiscal year began for the publisher in January, it suffered the loss of two chief financial officers, Spencer Neumann (who handled finances for Activision Blizzard), and Ahuja. Dennis Durkin, former CFO and chief corporate officer, was tapped to return to his financial role and also take on leadership of the company’s emerging business division. The reinstatement netted him a $3.75 million signing bonus and $11.3 million in performance-based stock grants. Blizzard also splurged on a recent company outing to Disneyland. The company rented the entire park for its employees use. Restructurings take time, and depending on perspective, this was either a lovely send off for employees the company knew would be leaving just a month later or a waste of money that could have been used to retain a few more of those laid off. On the Activision Publishing side, the portfolio has been shrinking. With Toys to Life essentially dead, the Skylanders franchise has gone dormant. Guitar Hero Live has been entirely sunset, with Activision offering refunds for those that purchased the game recently. That left the company with two tentpole franchises (“Call of Duty” and “Destiny”), remasters (“Spyro Reignited Trilogy” and “Crash Bandicoot N. Sane Trilogy”), and the upcoming “Sekiro: Shadows Die Twice” by From Software. In January, right before the company’s legally mandated quiet period, Activision Blizzard and Bungie parted ways. The “Destiny” publishing rights held by Activision Blizzard were acquired by the studio, leaving Activision Publishing with a thin lineup. Blizzard experienced similar layoffs in 2012, cutting 600 jobs. At the time, “World of Warcraft” was in sharp decline. Only 10 percent of the cuts were developers, with the rest of the losses coming from other functions that support the company’s creative efforts. These layoffs mirror the approach taken seven years ago.<doc-sep>Activision Blizzard has announced that it’s laying off 8 percent of its employees — roughly 770 people — as part of the company “de-prioritizing initiatives that are not meeting expectations.” The news came on the heels of announcement of Activision Blizzard’s Q4 and 2018 earnings, where CEO Bobby Kotick gave the company’s “record results in 2018.” Kotick went on to comment that, “While our financial results for 2018 were the best in our history, we didn’t realize our full potential.” As such, Activision Blizzard says that it’ll be focusing more on its biggest franchises: Call of Duty, Candy Crush, Overwatch, Warcraft, Hearthstone, and Diablo, with plans to increase developers across those titles by “approximately 20% over the course of 2019.” (Destiny, another one of Activision’s marquee titles, parted ways with the publisher in January and is now back in the hands of developer Bungie.) On the flip side, Activision Blizzard said that it’ll fund those increases “by de-prioritizing initiatives that are not meeting expectations and reducing certain non-development and administrative-related costs across the business,” resulting in the nearly 800 laid off employees. According to Variety, the job cuts will be coming from support staff as Activision Blizzard reworks some of its commercial and marketing teams. A Kotaku report elaborates that employees were cut across most of the company, noting that “layoffs have affected Activision, Blizzard, King, and some of Activision’s studios, including High Moon,” although Blizzard itself largely saw cuts only to “non-game-development departments.”<doc-sep>
Game publisher Activision-Blizzard will lay off 8 percent of its work force, or around 775 people, CEO Bobby Kotick announced on the company's earnings call today. The move is being made in an effort at "de-prioritizing initiatives that are not meeting expectations and reducing certain non-development and administrative-related costs across the business," Kotick explained. The layoffs, which will mostly be in non-game-development areas like publishing, will impact Activision, Blizzard, and King. In one case, an entire studio of 78 people was shut down—Seattle-based mobile game studio Z2Live. This is in spite of Kotick saying that the company achieved "record results in 2018." The implication is that the positive results reported came thanks to a fairly narrow bench of franchises, with many of the company's efforts outside those franchises not meeting expectations. It's also worth noting that Destiny developer Bungie ended its relationship with Activision. While Destiny 2 did not perform up to expectations, that move likely left many in marketing and other areas at Activision without a major franchise to work on. This followed the decline of the highly lucrative Skylanders and Guitar Hero franchises as well. In the future, Kotick said Activision-Blizzard will invest primarily in live services, Battle.net, and esports, with a focus on the following franchises: Candy Crush, Call of Duty, Overwatch, Warcraft, Diablo, and Hearthstone. For those franchises, Activision actually expects to increase, not reduce, development resources in 2019. Kotaku acquired a company note sent by Blizzard President J. Allen Brack to employees that also acknowledges that the layoffs are part of an effort to focus the business on what's working best while cutting what's not: 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 in the US today. In our regional offices, we anticipate similar evaluations, subject to local requirements. According to Kotaku, the letter also indicated that those being let go would receive a comprehensive severance package, continuing health benefits and career placement assistance, though it is not clear how robust these offerings will be. In a more public note on Blizzard's website, Brack said Blizzard plans to add development resources through the year and that it will continue to focus heavily on Overwatch League, its biggest esports brand. The changes follow a series of executive departures at Blizzard, as well as reports that Activision leadership has become more involved at Blizzard, which previously operated more independently. Blizzard did not release a new game in 2018 apart from expansions and remasters, and it is not expected to in 2019, according to the earnings call. However, the company operates several internal studios that are working on multiple live games. Job listings suggest development on Diablo IV is continuing, as well as an as-yet-unannounced first-person shooter project. The Call of Duty franchise is as strong as it has been in a while; Black Ops 4 received favorable reviews, and its battle royale mode Blackout has proven popular. But it's notable that the majority of the franchises Kotick said the company plans to focus on are under the Blizzard umbrella, not Activision.