Activision Blizzard Q4 2018 Earnings Call and Layoffs

Message from J. Allen Brack
Originally Posted by Blizzard (Blue Tracker)
Blizzard Community…

Over the past few months, I’ve met with many people throughout Blizzard, talking about how we create our future. One thing that remains constant: we are committed to creating epic games and entertainment experiences.

Our development pipeline is strong, and we have the largest lineup of games that we’ve ever had. At the same time, Blizzard tries to have a level of craftsmanship and excellence in all that we do. Maintaining those standards as we continue expanding these worlds takes both time and talented developers.

With that in mind, we have plans to add to game development. We are dedicated to bringing you more content across existing game franchises and bringing our unannounced projects to life. Esports and the Overwatch League are also important priorities, and we will continue to produce great competitive content.

To better support these priorities, we need to reorganize some of our non-development teams. As a result, we will be reducing the number of non-development positions in North America and anticipate a related process in our regional offices over the coming months subject to local requirements. This was an extremely difficult decision, and we want to acknowledge the effort of everyone who has contributed to Blizzard. To assist with the transition, we are offering each impacted employee a severance package that includes additional pay, benefits continuation, and career and recruiting support to help them find their next opportunity. These people are members of the Blizzard family—they’ve cared deeply and contributed greatly to our work here and we are extremely grateful for all they’ve done.

As difficult as some of these organizational changes are, I am confident in Blizzard’s future and we will continue working hard to live up to not only our mission, but your expectations. We look forward to sharing everything with you when it’s ready.

J. Allen Brack
This article was originally published in forum thread: Message from J. Allen Brack started by chaud View original post
Comments 334 Comments
  1. rhorle's Avatar
    Quote Originally Posted by clevin View Post
    The problem is that it never seems to be the senior execs who see their salary cut when results which they're responsible for are under plan. It's particularly galling to fire people because revenue, then toss $15m as a bonus to a new guy. If the company is not performing to spec... why do that? If it's well off enough to do that... why layoff people?
    Because not all layoffs come because of a lack of profit. Some come because you are eliminating that position due to re-organizing the company. Changing around job duties and responsibilities. The executive only got $5 million in a bonus for being hired. They are going to get $11 million in stock options if specific targets are met. It isn't out of the ordinary for a person to have such things at that level of a major corporation.

    Also senior executives at ATVI have been impacted. https://www.gamesindustry.biz/articl...nal-presidents
  1. clevin's Avatar
    Quote Originally Posted by Biomega View Post
    To clarify, by "generate profit" I mean overall contribution to the company's bottom line.
    words have meanings. Be more precise.

    Office managers, accountants, tech support, and so on DO contribute - they may not show directly the way sales people do, but these people exist for a reason - even if that reason is to give other people in the company time to earn MORE profits. An executive without an assistant, for example, would have to take care of things that aren't directly earning money; so by giving them an assistant and freeing up their time, you indirectly increase profits.
    Bad example as execs tend not to actually contribute directly to the bottom line, but I take the point. However, you're missing a class of staff that doesn't assist others like that... accounting, HR, etc. I'm being a shade pedantic, but my point overall is that it's more complex than people who directly create or sell a product and others who support those people.
    Of course, that means it's very hard to correctly identify and objectively assess the "value" of someone. That's up to the management to decide, based on many factors. At the end of the day someone has to make the call why having 2 admin staff is fine, but having 5 is not (or whatever).
    100% agree. My issue is usually... why did you hire 5 if 2 would do? If you don't overhire, you a) have even better results in good years and b) face fewer cuts in bad ones.

    I'm just pointing out that it's not just about the available money. You could cut an exec's bonus by 90%, but that still wouldn't make it a good idea to employ someone who doesn't net you any money
    sigh... see above. Words, meaning and all that.
    In the end, every expense a company makes needs to be justified in some way. Long term, short term, directly, indirectly - but money has to come out somewhere at some point.
    and the justification for a $15m starting bonus to a CFO is....?
  1. Biomega's Avatar
    Quote Originally Posted by clevin View Post
    Bad example as execs tend not to actually contribute directly to the bottom line, but I take the point. However, you're missing a class of staff that doesn't assist others like that... accounting, HR, etc. I'm being a shade pedantic, but my point overall is that it's more complex than people who directly create or sell a product and others who support those people.
    The ones I named were examples taken from the quoted post. The principle applies to every employee - there must be a reason they're employed, and at the end of the day that reason is profit; one way or another. It doesn't matter if you can draw a direct line from the position to the balance sheet. Every employee needs to be justified - sometimes that's directly connected to profit, sometimes it's a more circuitous route. But the principle is the same, whether it's an executive, a sales person, an accountant, or the janitor. For some it's easy to see why they're worth the money, for others it's more obscure; a janitor keeping the building in shape, for example, is not an obvious factor in profit - but running a company out of dilapidated premises influences opinion, which can in turn influence relations with other businesses, which in turn can affect profit. It's far down the line, but the reason is there. And as soon as it isn't, then the janitor is gone. Or the accountant. Or the sales person. Or the executive.

    100% agree. My issue is usually... why did you hire 5 if 2 would do? If you don't overhire, you a) have even better results in good years and b) face fewer cuts in bad ones.
    That's missing an important point, though: market shifts happen, and you might have needed 5 people for a long time; but now it's different and 2 will do. That doesn't mean you overhired when you got those 5 people on board. It was the right decision AT THE TIME. But times change. That's what's happened now with Blizzard.

    and the justification for a $15m starting bonus to a CFO is....?
    ...not really in direct correlation to the layoffs. They could have paid him $1 or $1billion, it wouldn't make redundant positions any less redundant. You can be critical of staggering exec bonuses (and probably should be) but keep in mind what is connected and what isn't.
  1. Eleccybubb's Avatar
    https://twitter.com/GearboxOfficial/...43962800885762

    https://twitter.com/SquareEnix/statu...80812386930689

    Dayum. Square and Gearbox throwing some shade at Blizzard. And rightly so.

    What a damn disgusting response by Brack. It's literally just rubbing salt in the wound. Nothing more.

    https://twitter.com/ArenaNet/status/1095450627721842693

    https://twitter.com/ZenimaxCareers/s...52192387153921 Oh and Zenimax too.

    LOL even Arenanet getting in on this. This is brilliant. ActiBlizz have just dug themselves into a deep mess here.

    Hell with the state of games like GW2, FF14 and ESO I hope those fired find jobs there. Because those are amazing games to be working on from whatever viewpoint. Community relations or a design standpoint. Unlike WoW these days.
  1. Pillerina's Avatar
    Quote Originally Posted by Onikaroshi View Post
    You mean every company in North America. Investors don't want just profits, they want more profits then the year before, everything be damned.
    Investors actually want more profit than they would've gained by investing in other things, it's all about opportunity cost, which is exactly why this decision is rational as fuck and pretty much everyone on every forum is proving their economic illiteracy. And it's a pretty obvious thing, that if say a game like world of warcraft has a significant drop in users (which presumably followed BFA since everyone seems really pissed off about stuff) you don't need as much customer service in that department, and you might want to invest in development to regain those players etc.

    It sucks that people had to be let go, I don't think anyone is happy about it. But CEO/CFO bonuses has little to nothing to do with this.
  1. Eleccybubb's Avatar
    You know what the ironic part about this is?

    Activision back when it formed were former Atari devs who were sick of the way they were being treated by the higher ups because they weren't getting recognition for their work and even the CEO flat out disrespected them. Hell Activision was the first ever 3rd party game dev.

    Now how it's the big guys there treating the smaller ones like dirt so they can line their pockets. Activision of today is literally the same thing it wanted to get away from back then.
  1. prolific1's Avatar
    If you played from Vanilla through Lich King, haven't played since, and are considering coming back for the Vanilla/Classic re-release -- would any of this put pause on that? It's been hard to follow along. From mostly what I've read, Classic will continue to be developed and rolled out as scheduled and with proper backing?
  1. Xalvia's Avatar
    Quote Originally Posted by Eleccybubb View Post
    You know what the ironic part about this is?

    Activision back when it formed were former Atari devs who were sick of the way they were being treated by the higher ups because they weren't getting recognition for their work and even the CEO flat out disrespected them. Hell Activision was the first ever 3rd party game dev.

    Now how it's the big guys there treating the smaller ones like dirt so they can line their pockets. Activision of today is literally the same thing it wanted to get away from back then.
    this is so sad man...
  1. Kaver's Avatar
    Why can't they just admit that the games have lacked quality lately...
  1. Shambulanced's Avatar
    Classic to watch the MUH FREE MARKET CAPITALISM bois come out to defend POOR BIG BUSINESS and "that's just standard practice, broh"
  1. prolific1's Avatar
    Please advise.

    Quote Originally Posted by prolific1 View Post
    If you played from Vanilla through Lich King, haven't played since, and are considering coming back for the Vanilla/Classic re-release -- would any of this put pause on that? It's been hard to follow along. From mostly what I've read, Classic will continue to be developed and rolled out as scheduled and with proper backing?
  1. Muajin76's Avatar
    Quote Originally Posted by Thage View Post
    The FFXIV team fired the decision makers and apologized for fuckin' up. SE and Nintendo remember what responsibility means.
    Squaresoft Japan takes their game failure seriously..unlike Blizzarvision.

    - - - Updated - - -

    Quote Originally Posted by Kaver View Post
    Why can't they just admit that the games have lacked quality lately...
    Honesty is not in Blizzard's vocabulary since merging with Activision..
    It's not like they'd openly say *we apologize for the quality of our recent content and promise to make it our guarentee to improve the gaming experience for our customers* Instead you have an asshat saying that what they are pumping out is "epic" quality.
  1. Thage's Avatar
    Quote Originally Posted by Eleccybubb View Post
    You know what the ironic part about this is?

    Activision back when it formed were former Atari devs who were sick of the way they were being treated by the higher ups because they weren't getting recognition for their work and even the CEO flat out disrespected them. Hell Activision was the first ever 3rd party game dev.

    Now how it's the big guys there treating the smaller ones like dirt so they can line their pockets. Activision of today is literally the same thing it wanted to get away from back then.
    "You either die a hero or live long enough to see yourself become the villain." -- Overused Harvey Dent quote
  1. rhorle's Avatar
    Quote Originally Posted by Muajin76 View Post
    Honesty is not in Blizzard's vocabulary since merging with Activision..
    It's not like they'd openly say *we apologize for the quality of our recent content and promise to make it our guarentee to improve the gaming experience for our customers* Instead you have an asshat saying that what they are pumping out is "epic" quality.
    https://www.destructoid.com/blizzard...n-397543.phtml

    You were saying? But go ahead keep insulting people just because you are ignorant. It was also Morhaim who helped convince Kotick to go ahead with the merger. You keep blaming Activision while putting no blame on Blizzard. That isn't how things work.

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