On Tuesday afternoon, Activision Blizzard informed about 800 employees that they were being fired.
The company, which includes Callision Duty editions, Activision Publishing, World of Warcraft and Overwatch developer Blizzard Entertainment, Candy Crush King Digital, manufacturer, Major League Gaming and many others have not had a bad year. In fact, it "has recorded record results in 2018," said Activision Blizzard CEO, Bobby Kotick, during a call for investment.
Activision achieved a turnover of $ 7.5 billion and a profit of $ 1.8 billion last year. In the eyes of management, success was not enough to keep the entire company employed.
Save the results. 800 employees without work. These facts are more than a recipe for cognitive dissonance, they create brain frictions that could trigger a forest fire. (And that may be what happened, because the layoffs fueled the debate around the unionization of gaming and executive pay.)
As the call progressed, it seemed that senior executives were largely immortal, with the exception of Blizzard President J. Allen Brack, who had expressed regret over the layoffs.
Social media became a hotbed of rage when Activision Blizzard employees took part in meetings marking the end of their work, their stable salary, their health insurance and their stability.
Activision talked about "costs" and "numbers" when players and developers saw people, reducing their workforce by 8%. Even on a business-driven earnings call, long-term financial health and shareholder investments, compassion can still be considered. Rather, the leaders spoke of hundreds of unemployed people in cold, dehumanizing terms.
So how did Activision Blizzard get here, what went wrong, and what other big publishers can take away from the tragedy this week's mass layoffs?
Bobby Kotick has become the villain in this story. Kotick received a salary of $ 1.75 million, to which he adds about $ 26 million in stock and other share awards in 2017. Dennis Durkin, recently reinstated as director Financial, has also been named as "Emerging Businesses" Manager (determination of silver in the coming years), received a cash bonus of $ 3.75 million and an additional $ 11.3 million in outstanding performance shares . The disparity between executive compensation and the 800 people laid off is enormous.
A number of people pointed out that the former Nintendo president, Satoru Iwata, was taking a pay cut to preserve developer jobs after the company had suffered huge losses in 2014. The feeling is understandable , but the situations at Nintendo and Activision Blizzard are radically different.
As CEO, Kotick's job is to provide ever-increasing value to shareholders. He has done that, and Kotick is doing a good job with investors.
Kotick could have cut his own salary (a small portion of his overall allowance) or canceled some of the stock market incentives he had won, but that would have been performative. It would not have saved jobs. The gesture would have been symbolic, as 800 people would probably have been unemployed.
One of Activision Blizzard's problems is that the company does not have the capacity to handle years of reconstruction without firing. When Bungie and Activision divorced, employees who worked in the fields of public relations, communications, customer support, and other support services Destiny 2 suddenly missed a game to support.
There are no Skylanders team to move them to. Activision's properties like Guitar Hero are now inactive franchises. The licensed game business of the publisher is a dusty dust bed. High Moon Studios, who has made two excellent Transformers titles, argued Destiny 2. Vicarious Visions, one of Skylanders' two studios, works on Destiny 2, also. Toys for Bob, the studio that created Skylanders, developed the Spyro the dragon trilogy that came out in 2018.
From the outside, the Activision pipeline is a thin net. This week's call for results confirmed this increase as sales estimates are significantly lower for 2019.
The Blizzard side of the business looks the same this year. While we are likely to see Warcraft 3: Reforged (a remake) and World of Warcraft Classic (a revival of the game's "vanilla" state), the studio has no new major releases coming in 2019. The company has also canceled its The Heroes of the Storm esports and moved a number of free MOBA developers to other projects.
All of this equates to more people than working to provide them. Activision Blizzard has been building staff for years. The company suddenly finds itself without the product to meet this need.
In addition, Blizzard had divided its publications into two: North America and Global. This has now been considered a botched experiment and their grouping means that many people can make variations of the same job. Not enough work for too many people.
This is a problem that the leaders of Activision Blizzard have created over the years and it is now the core employees who pay the price.
The best workers in the industry can expect Kotick, Durkin, Brack and the rest of Activision Blizzard executives to internalize the way these layoffs take place in the public square. Activision's executives failed to make sound investments that allowed for quick adjustments throughout the process, instead of the mass layoffs we are currently witnessing. There is a place for humanity in business, especially when livelihoods are affected, and this starts with making smarter bets on products and people.
But what about unionization?
Over the past year, the organizing movement of game developers has grown. But unionization, which would undoubtedly create safety nets and give employees a stronger voice, may have to go beyond game developers to protect some of the roles impacted by the Activision layoffs.
It is unlikely that a short-term union would have put an end to the layoffs at Activision Blizzard. It is also unclear whether a game developer union would cover all the posts affected by the layoffs.
The company offered severance pay, but a union would be able to make a counter-offer, leveraging public opinion to improve it. The contractors, on the other hand, would not receive any type of payment. This begins to raise the question of who a potential game developer syndicate would include and protect.
Coddy Johnson, managing director of Activision Blizzard, drew a line among the company's staff, creating two pools. On the announcement of the results this week, he said that Activision "reduced some non-development and administrative costs related to our business", while the company "would invest more in development".
The message seems clear. Artists, programmers, animators, sound engineers and level designers are "developers". Those who contribute to the commercialization of the game, such as public relations staff, community developers and customer support staff, are "non-developers". It is a convenient and calculating method. put people in boxes for investors, translating a shift of resources to the narrowest definition of "game developer" and moving away from what is otherwise considered "administrative". He also ignores that all the operation is necessary to put the games on the market (and then, entice people to spend money over and over).
If a union is to help in such situations, it will have to protect as many roles and people as possible. A holistic view of publishing and development is needed to provide the safety net that many view as the goal of unionization.
The sad truth is that the dice were thrown at Activision Blizzard months or even years before these layoffs were mentioned for the first time. What makes this situation so exceptionally painful is that there is an understandable mental connection between the layoffs and the bad financial results. It is almost impossible to rationalize or justify that 800 people be shown at the door while a company records record sales.
And yet, we are there. Poor planning, an inability to adapt to current market conditions and consumer desires, and excessive investment in trends (like toys in the games of life) have left Activision Blizzard in a place where it has to make drastic reductions. It's a thin cover against the harsh reality that executive pay is broken and hundreds of people are unemployed.