Activision Blizzard to cut headcount by around eight per cent following "record revenue"

Activision Blizzard to cut headcount by around eight per cent following "record revenue"

We now have a better idea of what those rumoured layoffs at Activision Blizzard look like.

The publishing giant's CEO Bobby Kotick revealed - speaking to investors as transcribed by Seeking Alpha - that not only had the company seen record revenue, it is also making an eight per cent reduction in headcount as the firm looks to focus more on development.

In the press release for its financial results, the top exec said that while 2018 was a record year for the company, it "didn’t realise our full potential".

Activision Blizzard has spun this as saying that on average, there are going to be 20 per cent more developers working on its Call of Duty, Overwatch, Warcraft, Hearthstone and Diablo franchises, as well as its mobile Candy Crush IP.

An actual figure hasn't been placed on the number of people losing their jobs, but given that Activision Blizzard employs around 9,600 people, it looks like close to 800 workers will be affected. The company has set aside $150m to compensate those who are being made redundant.

According to Kotaku, Blizzard, King, Activision's publishing arm as well as its studios such as High Moon, are affected by these cuts. Those who are to lose their jobs were notified around the time the company's financial call took place.

The Blizzard cuts seem to be in its publishing and esports arms - not from game development as previously suggested - not hugely surprising given that investment has already been pulled from Heroes of the Storm esports.

“Over the last few years, many of our non-development teams expanded to support various needs,” Blizzard's newly-appointed president J. Allen Brack said in a message to staff 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 organisation. 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.”

With the new management taking over and old dogs leaving, it's incredibly likely that the higher-ups at Activision Blizzard have been evaluating just what it is spending its money on and seeing what is making enough to continue to be worthwhile.

Focusing on development is going to be a priority, especially for Activision, given that this arm of the publishing giant doesn't have the clout it used to. The company - that is famous for saying it wants to focus purely on billion-dollar franchises - only has one IP that meets that high mark - Call of Duty - compared to the plethora of mega-hits, including Skylanders and Guitar Hero, that have disappeared. The breakup with Destiny developer Bungie means it no longer can lay claim to the millions that game brought in, too, but there's also a reduction in operating costs as a result. 

The piece of the puzzle to keep an eye on right now is Blizzard. That company is famously patient with its developers, with projects such as Overwatch being born out of the ashes of games that its employees spent years on, such as its Titan MMO, but never came to fruition. Though development across the company is seeing an increased investment, what appears to be a more penny-pinching attitude might have an impact in how - and what - games are made.

The pressure seems to be on Blizzard, too, with just one Activision brand - Call of Duty - named when talking about increased investment in development. No doubt the firm is looking into making or acquiring new IP, but that isn't a stated objective here.

"We are investing more in development for our biggest internally owned franchises across upfront releases, in-game content, mobile and geographic expansion," Kotick told investors. 

"Second, we are deprioritising initiatives that are not meeting our expectations and reducing certain non-development and administrative-related costs across our business. Third, we are integrating our global and regional sales and go-to-market partnerships and sponsorships capabilities across the business, enabling us to better leverage talent, expertise and scale on behalf of our business units.

"Our restructuring plan sheds investment and less productive non-strategic areas of our business and will result in a net headcount reduction of approximately eight per cent while also driving a significant increase in investment, focus and capabilities around our biggest franchises. We're confident that over time this plan will enable our teams to accelerate the delivery of high-quality content to our communities."

Activision Blizzard's stock price rose - ironically - eight per cent when its results were announced at 17:30 ET, likely due to the fact that the company increased its shareholder dividend by nine per cent to $0.37 - despite a lower fiscal forecast for the year -a as well as the fact it's conducting a $1.5bn stock buyback.

PCGamesInsider Contributing Editor

Alex Calvin is a freelance journalist who writes about the business of games. He started out at UK trade paper MCV in 2013 and left as deputy editor over three years later. In June 2017, he joined Steel Media as the editor for new site In October 2019 he left this full-time position at the company but still contributes to the site on a daily basis. He has also written for, VGC, Games London, The Observer/Guardian and Esquire UK.