Yesterday, after months of speculation, which ramped up in the last week thanks to a report from Bloomberg, Activision Blizzard announced a massive staff layoff of about 800 people. Eight percent of their workforce – across the entire company, focused in part on divisions in Blizzard like esports, and a lot of Destiny support staff. Jason Schreier over at Kotaku has written a few articles before, during, and after the layoffs that paint a dismal and depressing scene. Tension bubbling as workers knew what was coming, but couldn’t be sure if it’d affect them or somebody else. Anxiety, as the news started spreading rapidly, knowing that the axe would fall on Tuesday, with some getting told a week early if they promised to sign an NDA. Finally, there was heartbreak when the announcement came, not only because the number of people let go was larger than expected, but because of the messaging surrounding the layoffs.
As part of an earnings call yesterday, Activision’s CEO Bobby Kotick made it abundantly clear that the company made bank – Schreier quotes him in his article during the layoffs, saying they “once again achieved record results in 2018.” However, they didn’t make quite enough in their last quarter to reach their expectations. As Imran Khan at Game Informer puts it, “[they] set their target of $3.09 billion dollars extremely high, and failed to hit it to the tune of a billion dollars short.” Because of this failure to meet such lofty expectations, despite making “record results” in the billions, about 800 people were fired.
Some people might say that that’s the way business works. Businesses exist to make money, and need to cut costs and keep spending low in order to gain the most profit. That may be true, but it’s also bullshit. Far be it from me to claim to be an expert on business, but this is a humanitarian problem I just can’t ignore. Firing so many people doesn’t look good, no matter how it’s sliced. The only people it benefits are the elite few who make money from the company and especially their investors. It’s support for their wallets on the heads of hundreds who helped push that company toward record growth.
I’m not saying that layoffs shouldn’t happen, or that there weren’t areas where there was justification for reducing the workforce, because there was. After Bungie separated from Activision last month and took the Destiny franchise with them, that left a publishing team on the Activision side with nothing to do, and internal development studios that were helping Bungie’s game with less work than they had before. Schreier, in his report on what happened after the layoffs hit, mentions that some of these employees “were moved to Call of Duty or other teams,” but this is one area where I can at least see an argument for laying some people off.
However, 800 people? Across all studios? Something doesn’t add up. Even if you consider other factors, like Blizzard being told to cut costs because they haven’t released a new game since Overwatch, and former Blizzard CEO Mike Morahime leaving the company for good in a few months, disrupting 800 lives (technically thousands, if you consider their families too) while announcing record earnings at the same time leaves behind a bitter taste. Especially when Activision gave their former CFO Dennis Durkin $15 million on top of a $900,000 salary to come back to his old job just last month.
This is a move that reeks of greed, and it’s a new development in a larger trend. Electronic Arts recently commented on the sales of Battlefield V, saying that even though the game sold 7.3 million units, this was still a disappointment because they wanted to sell a million more than that. Last year, Activision themselves had reported investor disappointment with Call of Duty: Black Ops 4, despite the game making $500 million in the first three days, even though this is in line with what Call of Duty: WWII made at the same point in 2017. Before Bungie split from the company, Activision also claimed to be unhappy with Destiny 2 sales, despite the game’s continued popularity and positive critical reception, especially for the Forsaken expansion. Even the Switch, despite how successful and popular it is, still didn’t sell well enough for it to match Nintendo’s high expectations, causing them to cut their sales estimate.
The problem is that success just isn’t enough. It’s not enough to turn a profit, to make a hit game, or to have two Call of Duty titles among the top 20 best selling games of the year (at least according to the NPD), like Activision. Unless companies like Activision Blizzard are making untold mountains of cash, nothing is good enough. Success doesn’t even matter; it’s meaningless, because the question is not whether or not a title will be successful, but how successful it will be, and whether that success can be replicated and expanded upon for the next year, and again for the year after.
I’m reminded of the time back in 2013, when Square Enix announced that a number of their games, like Hitman: Absolution, Sleeping Dogs, and the first installment of their Tomb Raider reboot were all disappointments, despite each being million-sellers, because they also didn’t meet the ridiculously high expectations they had. As if Tomb Raider only selling 3.4 million instead of the 6 million Square Enix wanted (though it eventually hit that number), somehow makes the game less of a success. At the time, they were roundly criticized for suggesting something so inane, but this is the business trend consumers live in, where companies cannot be satisfied, and we as the common public aren’t affected by their (still good) sales, but are supposed to care anyway.
Still, it’s one thing for Square Enix, EA, and Nintendo to cry disappointment, but it’s another to take action like Activision Blizzard has. Firing 800 people may make their investors happy, but it appears reckless. It’s a bad PR move, and frankly kind of evil when they’re making so much money. Even with decent severance pay, and the option for some employees lower on the totem pole to leave voluntarily, there had to be another way. Short of taking the time to literally find each person affected a new job, it’s hard to point to another option they could have taken when they have just so much money. The best thing would be to go to Activision’s executive board, cut their salaries by significant percentages, and retain many of the jobs that were lost. Or convince them to not worry so much about short term gain when it’s long term profit that matters more. These are solutions that make sense to me, but I doubt they’ll happen.
It’s worth remembering that Nintendo president Satoru Iwata and other Nintendo executives made the move to cut their salary – twice. First when the 3DS didn’t meet their expectations, and then again when the Wii U failed to perform as well. They also refused to lay developers off, choosing to actually believe in them instead, and not treat them like disposable cogs in a machine. It’s hard to think of other major publishers willing to make that kind of sacrifice, but it’s worth asking why Activision Blizzard president Coddy Johnson and the rest of their board won’t give it a shot. The obvious answer is money, however, we as consumers should make it a practice to hold these companies up to a higher standard. If Nintendo can do it, so can they.
Until something changes, “success” will continue to be a word that’s lost among these big league publishers. I’m very curious to know what this means for the industry going forward. I would expect these layoffs to put everyone on edge – especially within Activision Blizzard – because it means that, no matter how successful a company gets, they still will see the need to make even more money by saving it, and in saving it, they’ll shave off more jobs.
My biggest hope is that this situation pushes the gaming industry to finally unionize, so that it’s harder to get away with massive layoffs like this, and that employees have better options when the axe falls on them. Between these layoffs and the 250 people that were suddenly without a job when Telltale Studios closed last year, the need for unionization is hard to ignore. If you add in the number of other layoffs and studio closures that have been happening everywhere recently, that need becomes even higher. Employees need to take action and protect themselves so they can’t get hurt so easily again. Especially when the executives on high won’t take responsibility and recognize their success for what it is: something that all employees should be able to enjoy.
I wish everyone affected by the layoffs good luck, and that they can hopefully find another job quickly.
If you want another perspective on this issue I highly suggest giving this letter to Activision Blizzard from ex-employee Jordan Mallory a read, as it goes into similar actions Activision Blizzard has taken in the past.
If you want to contact me, you can reach me on Twitter or by email at dcichocki(at)tiltingwindmillstudios.com.