Activision Blizzard is reportedly planning to lay off hundreds of employees on Tuesday following poor sales data and dropping share prices. Shares dipped by as low as 2.5 percent on Friday, which has capped off a rocky 12 months (in relative terms and according to the publisher) for the company.
According to a report from Bloomberg, the company is looking to boost profits while giving more jobs to fewer people by laying off an as of yet unconfirmed number of employees. Insiders who spoke to Bloomberg put the number somewhere in the hundreds with the planned cuts to be enacted on Tuesday, February 12. It is rumored that the date was chosen to align with the company’s quarterly earnings call, allowing for some news of cost-cutting to be relayed to investors.
News of the layoffs accompanies a relatively turbulent year for Activision Blizzard, which ostensibly operates as two separate corporate entities under the same C-suite of executives. Reports emerged in November of 2018 that the merger between the two gaming giants had some Blizzard employees concerned about the potential influences brought on by Activision’s involvement.
These concerns appear to have been warranted, given that Blizzard spent much of 2018 looking to cut costs while also being expected to develop original games on the newly restricted budget. While these expectations of a new Blizzard title are not unreasonable, considering that the company’s last new release was Overwatch in 2016, the decreased spending has been criticized given executive salaries.
Activision Blizzard also hired Dennis Durken as its new Chief Financial Officer this year, reportedly offering Durken an exorbitant benefits package. The CFO position carries with it a salary of $900,000 with a target bonus of $1.35 million, as well as millions of dollars worth of company stock. However, even these numbers pale in comparison to CEO Bobby Kotick’s salary of approximately $28.6 million. Despite these impressive benefits, Activision Blizzard has had a rough time holding on to executives with two major corporate departures during 2018. These huge executive numbers combined with the proposed layoffs have been yet another call for critics to call for unionization.
Activision Blizzard’s financial woes don’t stop at salaries either, as user engagement numbers and sales have both reportedly dipped over the past year. During a conference call in November, it was revealed that player numbers for Hearthstone and Overwatch had become stagnant and even begun to decline. Meanwhile, Activision and Destiny 2 developer Bungie parted ways over Activision’s disappointment with the game’s overall numbers, a move which could see Activision’s revenue drop by up to $400 million.
It is rumored that this split left many employees at Activision without a game to market or manage, which is a potentially large number of workers who will undoubtedly be concerned about the guillotine currently suspended over the company. We will report back on the layoffs (if they happen) as soon as new information emerges on Tuesday. But for now, there is little to do but wait for Activision Blizzard’s official announcement.
