Activision Blizzard slashes workforce by 8 percent after announcing record earnings

Activision Blizzard slashes workforce
Image: Activision

Right after boasting about its record-breaking profits, Activision-Blizzard announced that it will be reducing its workforce by 8 percent by laying off nearly 800 workers.

The AAA holding company posted its Q4 2018 results on Feb. 12 and revealed that it brought in a record $7.5 billion in net revenue last year. Soon afterward, the corporation revealed that it will be slashing its workforce throughout its subsidiaries, including Activision, Blizzard, High Moon Studios, and King.

During Blizzard Activision’s Q4 2018 earnings call, CEO Bobby Kotick noted that the consolidation is taking place because, in spite of its recent success, the company missed its 2018 performance expectations. Kotick also offered weak guidance for 2019, saying that shareholders should expect earnings of $2.10 per share with revenue of $6.30 billion rather than earnings of $2.54 per share with revenue of $7.25 billion.

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Back to Basics or Giving Up on Innovation?

Although it’s hard to be optimistic when a company practically decimates its workforce, there were some potentially positive aspects to Blizzard Activision’s recent moves.

Kotick painted the staffing cuts as necessary to free up money to make its most successful products better. The gaming executive noted that the company plans to increase the number of developers working on popular titles like “Call of Duty,” “Overwatch,” and “Candy Crush” by 20 percent.

On its face, Kotick’s decision seems incredibly reasonable. If a company isn’t meeting financial expectations, reducing overhead and rededicating focus to its core products makes a lot of sense. It’s a strategy Steve Jobs employed when he regained control of Apple.

On the other hand, at the moment it seems like blizzard Activision is more interested in cashing in on its legacy brands rather than developing new ones. While the back to basics approach makes sense in terms of bolstering short-term profitability, it makes the company’s long-term outlook more ambiguous.

At a time when gaming giants like Epic Games, Nintendo, and Niantic Labs are making billions by taking gaming in bold new directions, putting innovation on the backburner seems ill-advised.

WWE Star Does Not Like the Look of a Black Ops 4 Character

While Blizzard Activision might be facing some existential challenges in the future, the company is currently faced with a slightly smaller scale problem right now. On Feb. 12, WWE Hall of Famer Book T. Huffman filed a lawsuit against the gaming giant for copyright infringement.

The six-time world champion is claiming that Blizzard Activision based the appearance of “Call of Duty: Black Ops 4” character David “Prophet” Wilkes on G.I. Bro, a comic book character Huffman created in the 1990s.

The character was drawn to resemble Huffman and was featured in a title called “G.I. Bro and the Black Dragon of Death.” Huffman also wrestled under the G.I. Bro moniker in the World Championship Wrestling promotion in the early 2000s.

While it seems monumentally unlikely that a billion-dollar games developer ripped off an obscure 20-year-old wrestling/comic book character, that doesn’t mean Huffman will not be able to get a payout.

After all, “Fresh Prince of Bel-Air” Alfonso Ribeiro, rapper 2 Milly and viral video star Backpack Kid Russell Horning are all suing Epic for allegedly using their signature dances in “Fortnite” without authorization or compensation. If the “Fortnite” case goes to trial, Blizzard Activision might settle just to avoid the hassle.

Also, with everything else on his plate, it is hard to imagine Bobby Kotick is up for a “likeness rights on a pole” match.