Activision is planning to cut “non-development jobs” because it isn’t releasing enough games. This news comes via a Kotaku report that claims new Blizzard boss J. Allen Brack sent a letter to employees detailing the layoffs. GamesBeat has separately confirmed that Activision Publishing boss Rob Kotish sent a message to employees that said layoffs are coming. He did not get into specifics in that message.
And confirming everything above reported above, the publisher is laying off people across Activision Publishing, Blizzard Entertainment, and King. During a conference call with investors this afternoon, Activision said it is cutting 8 percent of jobs, which is about 800 of 9,600 employees.
This reorganization is primarily about taking money away from non-development jobs and putting those resources into its game-creation teams.
Here’s how Brack explained the layoffs in his letter obtained by Kotaku:
“Over the last few years, many of our non-development teams expanded to support various needs. Currently staffing levels on some teams are out of proportion with our current release slate. This means we need to scale down some areas of our organization. I’m sorry to share that we will be parting ways with some of our colleagues in the U.S. today. In our regional offices, we anticipate similar evaluations, subject to local requirements.”
I have reached out to Activision Blizzard for a statement, and I will update this story with any comment. But these layoffs come as the company is also reporting the results of its 2018 fiscal year.
Cutting jobs while setting records
Activision Blizzard generated $2.38 billion in revenue, and the company was quick to point out that was an all-time record. At the same time, the company said that making more money than ever is not enough.
“While our financial results for 2018 were the best in our history, we didn’t realize our full potential,” said Kotick said in the earnings release. “To help us reach our full potential, we have made a number of important leadership changes. These changes should enable us to achieve the many opportunities our industry affords us, especially with our powerful owned franchises, our strong commercial capabilities, our direct digital connections to hundreds of millions of players, and our extraordinarily talented employees.”
Wall Street expected Activision Blizzard to generate closer to $3 billion in revenues, and investors care more about that than company records. The publisher also has a dim outlook for its fiscal 2019, which it is calling a transition year. Overall, the company expects revenues to drop 13 percent year-over-year.
So the company is making layoffs to deal with concerns about its future.
The layoffs are just step one of Activison’s plan to return to growth. It also plans to put more people on its top franchises to increase the rate at which it is outputting content.
“The number of developers working on Call of Duty, CandyCrush, Overwatch, Warcraft, Hearthstone, and Diablo in aggregate will increase approximately 20 percent over the course of 2019,” reads Activision’s quarterly report. “The company will fund this greater investment by de-prioritizing initiatives that are not meeting expectations and reducing certain non-development and administrative-related costs across the business.”
Activision wants this increase in developers to lead to more game releases and more in-game content.
The rest of Activision’s plan is to use its existing infrastructure to better sell games. This likely means advertising more of its games in King mobile titles and putting more releases into Battle.net. But the company leadership did not provide many details about how this will work beyond the following statements.
“[Activision will focus on] integrating our global and regional sales and go-to-market, partnerships, and sponsorships capabilities across the business,” reads the company’s press release. “[And by] enabling better leverage talent, expertise, and scale on behalf of our business units.”
I don’t know what that means, but I’m sure Bobby has it under control.
Correction: This story originally claimed that Bobby Kotick sent a message to employees about layoffs. This was a mistake. Activision Publishing boss Rob Kotish actually sent the message. I’ve corrected and apologize for the error.