Game publisher Activision-Blizzard will lay off 8 percent of its work force, or around 775 people, CEO Bobby Kotick announced on the company's earnings call today. The move is being made in an effort at "de-prioritizing initiatives that are not meeting expectations and reducing certain non-development and administrative-related costs across the business," Kotick explained.
The layoffs, which will mostly be in non-game-development areas like publishing, will impact Activision, Blizzard, and King. In one case, an entire studio of 78 people was shut down—Seattle-based mobile game studio Z2Live. This is in spite of Kotick saying that the company achieved "record results in 2018." Activision made a statement about exceeding its expectations, but other market-watchers clearly had higher numbers in mind.
The implication is that the positive results reported came thanks to a fairly narrow bench of franchises, with many of the company's efforts outside those franchises not meeting expectations.
It's also worth noting that Destiny developer Bungie ended its relationship with Activision. While Destiny 2 did not perform up to expectations, that move likely left many in marketing and other areas at Activision without a major franchise to work on. This followed the decline of the highly lucrative Skylanders and Guitar Hero franchises as well.
In the future, Kotick said Activision-Blizzard will invest primarily in live services, Battle.net, and esports, with a focus on the following franchises: Candy Crush, Call of Duty, Overwatch, Warcraft, Diablo, and Hearthstone. For those franchises, Activision actually expects to increase, not reduce, development resources in 2019.
Kotaku acquired a company note sent by Blizzard president J. Allen Brack to employees that also acknowledges that the layoffs are part of an effort to focus the business on what's working best while cutting what's not:
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 in the US today. In our regional offices, we anticipate similar evaluations, subject to local requirements.
According to Kotaku, the letter also indicated that those being let go would receive a comprehensive severance package, continuing health benefits, and career placement assistance, though it is not clear how robust these offerings will be. In a more public note on Blizzard's website, Brack said Blizzard plans to add development resources through the year and that it will continue to focus heavily on Overwatch League, its biggest esports brand.
The changes follow a series of executive departures at Blizzard, as well as reports that Activision leadership has become more involved at Blizzard, which previously operated more independently. Blizzard did not release a new game in 2018 apart from expansions and remasters, and it is not expected to in 2019, according to the earnings call. However, the company operates several internal studios that are working on multiple live games. Job listings suggest development on Diablo IV is continuing, as well as an as-yet-unannounced first-person shooter project.
The Call of Duty franchise is as strong as it has been in a while; Black Ops IIII received favorable reviews, and its battle royale mode Blackout has proven popular. But it's notable that the majority of the franchises Kotick said the company plans to focus on are under the Blizzard umbrella, not Activision.