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Activision Blizzard Q4 2018 Earnings Call & Layoffs

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Layoffs at Activision Blizzard have been confirmed during the earnings call earlier today. The company plans to eliminate 8% of its non-development employees according to Activision Blizzard's CEO Bobby Kotick, who told investors that the main focus in 2019 is stabilization and restructuring due to missed expectations in 2018.

UPDATE #2: President of Blizzard, J. Allen Brack, posted about the layoffs and Blizzard's future in more detail.

Blizzard LogoBlizzard (Source)

Blizzard Community…

Over the past few months, I’ve met with many people throughout Blizzard, talking about how we create our future. One thing that remains constant: we are committed to creating epic games and entertainment experiences. 

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. 

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. 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. These people are members of the Blizzard family—they’ve cared deeply and contributed greatly to our work here and we are extremely grateful for all they’ve done.

As difficult as some of these organizational changes are, I am confident in Blizzard’s future and we will continue working hard to live up to not only our mission, but your expectations. We look forward to sharing everything with you when it’s ready.

J. Allen Brack

UPDATE #1: Community Manager Ythisens has been laid off.

Placeholder for tweet 1095450053001371649

In an effort to reinforce the foundation for growth, the plan is to invest more for their biggest, internally owned franchises and de-prioritize games and initiatives that are not meeting their expectations by reducing certain non-development and administrative-related costs across their business.

Quote

"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."

Bobby Kotick

Activision Blizzard CEO

Blizzard had 35 million MAUs in the quarter (down from 37 million MAUs in Q3 2018), as Overwatch and Hearthstone saw sequential stability and World of Warcraft saw expected declines post the expansion release this summer.

Building on a 11-year partnership, Blizzard extended its joint venture with NetEase to publish its games in China through January 2023.

Activision Blizzard plans to increase development resources by 20% for Diablo, Hearthstone, Overwatch, and World of Warcraft.

Destiny did not meet financial expectations of the company, so they transferred publishing rights for the game back to Bungie.

Call of Duty was the #1 selling console franchise worldwide in 2018, a feat accomplished for nine of the last ten years. Full-game downloads for the game were over 40% of console sell-through. A mobile Call of Duty title is planned for the franchise.

(Source)

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"We're producing more profit than ever before, so it's a perfect time to reduce our rank and file employees, starting with customer service and tech support!"

Sigh.

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I mean, if Bloomberg posted it before, this was sure to be confirmed in due time.

40 minutes ago, Stan said:

The company plans to eliminate 8% of its non-development employees

 

40 minutes ago, Stan said:

the plan is to invest more for their biggest, internally owned franchises and de-prioritize games and initiatives that are not meeting their expectations by reducing certain non-development and administrative-related costs across their business.

I do feel sorry for the people that are let go, but both of these sound sensible. internally owned franchises -> after all, if Blizzard manages to release a great game every couple of years, they are good, just like their usual model of operations. I could not care less for all the other (i.e. non-Blizzard) brands, such as Destiny.

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I was picking up some soda late one night on the way home at a 7-11 and the clerk recognized my classic "?" baseball cap and OWL hoodie and asked me about playing Blizzard games.  We ended up having a long chat about WoW and it turned out his wife used to work for Blizzard as a CM but got downsized a while back.  It's a shame.  Still, with most big corporations it's the often the "little guy" that gets let go in droves.

I am glad that they're keeping their core talent intact and that overall WoW and their other core games are doing very well, apart from Heroes, and know this to be true because my youngest brother works at Blizzard in Irvine and so even the vocal minority of "subs declining" has been largely much ado about nothing, as actual sub retention has been at its highest since Wrath with this expansion.  

 

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This wouldn’t indicate that the sky is falling if the flagship franchise wasn’t riddled with so much contentious decisions with systems and gameplay, unsatisfactory player reviews, communication mishaps, etc. 

 

That whole “focus on development” wall of text is just corporate speak for “we’re going to layoff mostly people that deal with our customers so that people like ion can continue to make awful decisions that negatively affect the bottom line, since as a company we now refuse to accept any way except the microtransactional and rng casino based models”

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36 minutes ago, Migol said:

"We're producing more profit than ever before, so it's a perfect time to reduce our rank and file employees, starting with customer service and tech support!"

Sigh.

As a business, you don't make decisions on your past performance, but based on what awaits you in the future. Their projections for 2019 are far below their 2018 performance. Even if the outlook for 2019 had been great, it's still only normal that they would downsize departments like community management or customer support for WoW when the number of players has dropped so much.

And don't forget that they said that they were going to increase their dev power. I'm curious to see the effects on WoW and Diablo.

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"Activision Blizzard plans to increase development resources by 20% for Diablo, Hearthstone, Overwatch, and World of Warcraft."

No resource for heroes of the storm.

They really dun want to improve it to attract more players and rather waste resource for phone game.

Overwatch, diablo and hearthstone got too many stong competition. Now outside got so many fps battle royal and it is more attrctive than overwatch, ppl switch to those.

 

Too many new and interesting card game out and hearthstone limit in gameplay compare to others.

 

Diablo -3rd person action game already captured by other title that done better than diablo

 

Only heroes of the storm got own mechanism and special gameplay, talent compare to other moba.

They not improve this special gem rather than go other

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36 minutes ago, gerbercage said:

"Activision Blizzard plans to increase development resources by 20% for Diablo, Hearthstone, Overwatch, and World of Warcraft."



No resource for heroes of the storm.

its cuz they are taking the devs from hots and moving them to the other games ???

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42 minutes ago, gerbercage said:

"Activision Blizzard plans to increase development resources by 20% for Diablo, Hearthstone, Overwatch, and World of Warcraft."

No resource for heroes of the storm.

They really dun want to improve it to attract more players and rather waste resource for phone game.

Overwatch, diablo and hearthstone got too many stong competition. Now outside got so many fps battle royal and it is more attrctive than overwatch, ppl switch to those.

 

Too many new and interesting card game out and hearthstone limit in gameplay compare to others.

 

Diablo -3rd person action game already captured by other title that done better than diablo

 

Only heroes of the storm got own mechanism and special gameplay, talent compare to other moba.

They not improve this special gem rather than go other

LOL, name one 3rd Person action game that has performed even close to Diablo. There isn't one. There are plenty that "do it better" but they don't. And it shows. hate Diablo's current state all you want but its maintained leaps and bounds ahead of its competition.. and will continue to even though people cry on these forums about it all day. I would further venture to say that even the current Action games... don't even shake a stick to the popularity of Diablo II even.

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4 hours ago, VegaPl said:

I mean, if Bloomberg posted it before, this was sure to be confirmed in due time.

 

I do feel sorry for the people that are let go, but both of these sound sensible. internally owned franchises -> after all, if Blizzard manages to release a great game every couple of years, they are good, just like their usual model of operations. I could not care less for all the other (i.e. non-Blizzard) brands, such as Destiny.

you're like that robot who will back stab you for the greater good, instead of thinking of alternatives

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46 minutes ago, greatCraft said:

you're like that robot who will back stab you for the greater good, instead of thinking of alternatives

I'm not sorry for that

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I am a bit curious about there being no releases this year...does the (re)release of the updated Warcraft III not count?     Or pushed back?

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Call of Duty was the #1 selling console franchise worldwide in 2018, a feat accomplished for nine of the last ten years. Full-game downloads for the game were over 40% of console sell-through. A mobile Call of Duty title is planned for the franchise.

 

 

Again the pushing of mobile games....I'm sorry my cell phone and data plan do not revolve around gaming.  I game on either PC or console that is it.  It's not appealing even in the slightest to play such titles on a small screen surface that will drain your electronics battery within the hour while on the go.  Not to mention service drop in select areas or no access to wi-fi on pending locations.

Edited by Ragingwolf
typo
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Activision says 'We made more money then ever before this past year'. They give a new CFO a 15 million dollar 'sign on bonus' and then lay off 800-1000 people from the company and it's subsidiaries. Cause you know, where do you think that 15mil for that exec is coming from. It sure as hell out coming out of the other execs pockets. Hell even if any of the current execs were to get fired today they would leave with a nice golden parachute 'severance package' of several million dollars at the least. Yeah... Not to mention the ridiculous 'expectations' of year over year over year over year revenue of ever increasing profits. Cause remember to these corporations like Activision and EA and their ilk it's not ok to just make some of the money... you have to make ALL of the money or you're 'below expectations'...

 

 

 

Edited by CyberDVonaven
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3 hours ago, SleepySheepy said:

Someone told me that merging contract for Blizzard Activision ends in 2020. 
Record sales, mass lay-off. Gets your noggin' joggin', am I right?

Yeah all the events of the past few months (no long-term planning, key managers leaving, mass reorganisation of products and company) are the hallmarks of a company looking to get in shape for a buyer. I think Blizzard is going to be for sale soon.

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10 hours ago, Comet said:

I think Blizzard is going to be for sale soon.

EA - Ooooh did someone said "Blizzard is for sale"?
ÐаÑÑинки по запÑоÑÑ rapeface

Edited by Steveson

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On 2/12/2019 at 5:48 PM, GorditoLOL said:

That whole “focus on development” wall of text is just corporate speak for “we’re going to layoff mostly people that deal with our customers so that people like ion can continue to make awful decisions that negatively affect the bottom line, since as a company we now refuse to accept any way except the microtransactional and rng casino based models”

From what I've been reading of investor analysis around the web, you're spot on.

Investors are nervous about Activision-Blizzard lacking a "Fortnite-like" F2P game.  Even Take-2, who had a huge quarter with Red Dead 2, saw a decline in stock price because they didnt have a Fortnite F2P type game on the market.

Lay-offs are tragic, but sometimes with growth your costs grow too fast and you have to reconfigure.  While I cant say these decisions are the wrong ones, I do feel shareholders should be asking more questions about executive compensation at Acti-Blizz because it looks heavily inflated. It shouldnt just be the workforce taking a hit.

Market pressure along with Morhaime leaving has me worried.  These decisions wouldn't worry me as much if I felt like someone from the old guard was there holding the line and preserving the culture, sovereignty and focus.  I'm not sure that's going to be the case anymore.

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Rare Patron

Businesses are frequently run like dictatorships, because the company does not operate as if value comes from the people, and so if the people are not how a leader gains or retains their position of power, the happiness and well-being of the people is simply not important in the dynamics of remaining on the throne, or staying a CEO, or remaining in office.

The Rules for Rulers

This is also why Sylvanas' actions, while appearing nonsensical to both real people and characters in the game, are entirely predictable based on IRL human history when a leader comes across a valuable natural resource within their borders, because the value of the people within those borders is rapidly reduced to how well they collect such a resource on behalf of their leader.

That said, how much magical power would the Val'Kyr need access to in order to raise Azeroth itself from death? Certainly wouldn't be a solution that the Alliance would abide regardless.

For Blizzard, we can certainly hope that, since they cannot draw on vast sources of magical power, that the choices they are making reflect a wisdom that is not immediately apparent, and that they do not continue to stumble and fall in pride.

Edited by chronoblip
Don't know how to embed YouTube, may as well make the link prettier.

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