Activision reports ‘record results’ as it lays off almost 800 staff

Rumours that Activision Blizzard would announce "hundreds" of redundancies during its investors call were proved correct last night as Activision announced it would be laying off almost 800 staff in order to "centralise functions and boost profits" – almost 8 per cent of its global workforce.

The layoffs – which affect business outside of core game development, such as publishing – impact staff across Activision’s whole portfolio of studios and subsidiaries, including the complete closure of King’s Seattle mobile studio, Z2Live at the cost of 78 jobs. However, the company said it would be hiring more developers throughout 2019, looking to boost its development teams by 20 per cent.

As yet, there’s no word on how the redundancies may impact European offices.

The 775 layoffs come despite CEO Bobby Kotick confirming the company "once again achieved record results in 2018", but given the company had missed its 2018 expectations and has had to lower those for 2019, it would be consolidating and restructuring, including revising the line-up at senior levels of the organisation.

"While our financial results for 2018 were the best in our history, we didn’t realize our full potential," Kotick said in the investors call. "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."

"Over the last few years, many of our non-development teams expanded to support various needs," wrote Blizzard president J. Allen Brack in a note to staff around 1pm PT that was later obtained by Kotaku (via ArsTechnica). "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 goes on to say all staff affected by the cuts would receive a "comprehensive severance package", continuing health benefits, career coaching, and career placement assistance. All Blizzard staff will also still secure their yearly bonus, too. "There’s no way to make this transition easy for impacted employees, but we are doing what we can to support our colleagues," Brack said.

The expected net revenue across Q4 was $2.38 million – up from its $2.24 million projection, and total revenue across the full year also came in higher than expected at $7.5 billion. Activision-Blizzard also saw record net bookings of $7.26 billion, although this was a little lower than the projected $7.48 billion anticipated.

Looking ahead, Kotick suggested Activision Blizzard will be focusing on Call of Duty, Candy Crush, Diablo, Hearthstone, Overwatch, and World of Warcraft, for which it will be expanding the resources dedicated to these franchises. It will also primarily invest in live services, Battle.net, and esports. It is anticipated that King’s revenue will remain flat in 2019, despite further investment in the Candy Crush franchise, and as Blizzard has "no major frontline release" beyond Diablo: Immortals this year, Activision’s full-year 2019 forecast is down year-over-year: $1.175 billion in revenue for Q1 2019, and $6.03 billion in revenue for the full year.

There’s been a lot of change at Activision recently. Activision Blizzard recently parted ways with its CFO, Spencer Neumann, and re-appointed its previous CFO, Denis Durkin, to the position instead. In the wake of Blizzard’s reveal of mobile game Diablo Immortal, Activision-Blizzard’s shares tumbled, and Blizzard experienced an unprecedented backlash when it closed BlizzCon with the news that Diablo was coming to mobile. Almost 45,000 fans added their names to a petition calling on Blizzard to cancel the project.

Activision has parted company with Destiny developer, Bungie, with the latter assuming full publishing rights. In its Q3 earnings call, Activision COO Coddy Johnson explained that Activision’s MAU were "up sequentially from Q2" thanks to the good performance of Destiny 2’s expansion Forsaken, but "while Forsaken is a high-quality expansion with strong engagement and new modes of play, it did not achieve our commercial expectations, and there’s still work to do to fully re-engage the core Destiny fan base".