By Staff Writer Thomas Griffin.
Activision-Blizzard made the decision to lay off nearly eight percent of their total workforce last week, following what was reported to be the company’s most monetarily successful year in its history.
Dropping nearly 800 workers from their total staff, the publisher reportedly cut loose many non-developmental positions to create room for more hires in game development.
After raking in a gross $7.5 billion in 2018, including $1.8 billion in raw profits, the company had found unparalleled success as a publisher in a year where publishing games wasn’t really the modus operandi. Sure, they released the heavily anticipated Spyro remakes to high acclaim, and churned out the annual edition of the Call of Duty franchise (Black Ops 4), but a handful of successful games can’t singlehandedly carry an organization to the pinnacle of industry success.
Supplementing Activision-Blizzard’s perceived success was a combination of two attributes – advertisement revenue and microtransactions. While Overwatch, Blizzard’s three-year-old breadwinner, is far from a new product, the team-based shooter turned out to be the gift that keeps on giving for the publisher’s finances. Overwatch’s largely successful professional league arranged multi-million dollar sponsorship deals with companies such as HP, Intel, T-Mobile, Toyota, and even Sour Patch Kids.
Overwatch also managed to tap into the dreaded market of “loot boxes”, or, for shorthand, the potential to gain in-game items in exchange for real-world money. This is a practice that Activision-Blizzard is familiar with, employing (or, if you prefer, exploiting) the system in many of its other products to increase the total revenue that one game can generate.
Where Activision-Blizzard tends to see “potential” in loot boxes, many major institutions and governments tend to see “gambling” instead.
In the case of Belgian law, the publisher was found to be using loot boxes in a way that was manipulative of its customers, ultimately leading to the nation banning their sale and use altogether. With Belgium’s opposition serving as a landmark case, other nations, most notably the Netherlands, would follow suit.
As the market for loot boxes faded, so too did its reliability as Activision-Blizzard’s moneymaker – sooner or later, the well for microtransactions would, hypothetically, dry up.
From a business standpoint, the restructuring of Activision-Blizzard from a publisher that manages games to a publisher that publishes them shows insight toward the company’s future well-being. But what about the 800 newly jobless employees?
In order to understand Activision-Blizzard’s woes, it’s important to know Bobby Kotick. With a net worth of $7 billion, Kotick, the publisher’s CEO, claimed a $28.7 million salary from the 2018 fiscal year. This was in spite of the fact that, despite the massive revenue for the year, the company was technically struggling without the aid of microtransactions and was in dire need of a restructuring.
Rather than accepting a cut in pay for his struggling business performance, Kotick reportedly took a $2.8 million congratulatory bonus and passed the buck to his lower employees.
It is important to note that the decline in Activision-Blizzard’s monetary success stems from an issue in company goals and culture, rather than the wrongdoing of any number of individual workers. Coming off of a 2017 fiscal year that saw $4 billion worth of revenue stem from microtransactions, the publisher valued microtransaction expansion as a priority for company growth.
Decisions made at the executive level led Activision-Blizzard to pursue loot boxes and microtransaction methods that were aggressive enough to be made illegal in two countries.
In a year where Activision-Blizzard employees exceeded expectations beyond anything the company had previously accomplished, 800 of them were fired for doing the best job they could.
Suffice to say the outrage leveled against the publisher and its CEO spiked following the news of mass layoffs. Former Activision-Blizzard staff and game industry critics alike called for the termination of Bobby Kotick’s CEO tenure. For some time, the hashtag #firebobbykotick was even trending on Twitter. Despite the backlash, Kotick is slated to serve as Activision-Blizzard’s CEO for the foreseeable future. As for whether or not the rest of his tenure will be prosperous for the company – time will tell.