We announced today that we’re in the process of cutting a number of active positions, mostly non-development, throughout the company. I’m sure this announcement has sparked some questions from all of you, so I want take this opportunity to address those as best I can. Over the past several years, the company has grown rapidly and evolved to better serve you and the rest of our global community. Thanks to all of your support, we continue to serve by far the biggest subscription-based MMO community, as well as the most passionate eSports and online gaming communities, in the world.
In order to keep making epic game content while serving players effectively, we have to be smart about how we manage our resources. This means we sometimes have to make difficult decisions about how to best maintain the health of the company. We’re in the process of making some of those hard decisions now.
After evaluating our current organizational needs, we determined that while some areas of our business had been operating at the right levels and could benefit from further growth, other areas had become overstaffed. As a result, we need to scale down some of our departments and part with some of our colleagues and friends here at Blizzard. I know that you all understand how difficult this type of situation can be for anyone who might be affected, so I want to assure you that we’ll be offering each impacted employee a severance package and other benefits.
I also want to emphasize that we remain committed to shipping multiple games this year, and that our development teams in particular remain largely unaffected by today’s announcement. We’re continuing to develop, iterate, and polish Blizzard DOTA, Diablo III, StarCraft II: Heart of the Swarm, World of Warcraft: Mists of Pandaria, as well as other, unannounced projects. We’ll have exciting news to share in the coming weeks regarding Diablo III’s release date, and will soon be holding a private media event to showcase the latest work on Mists of Pandaria. It goes without saying that we’re working hard to get all of these games in your hands as soon as possible.
You’ve all come to expect Blizzard to live up to our mission statement with every game, and deliver the most epic entertainment experiences ever. You can continue to expect that and nothing less from us as we move forward.
That was the post from Mike Morhaine in 2012
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.
And today’s from J. Allen
Never a good day when a company has record profits, but feels the need to cut jobs. They have a vision for the future of the company, and are cutting costs. I don’t necessarily look at it as 800 lost their jobs, but 8800 were able to keep theirs. It’s not a consolation to those now unemployed, but it is a sad reality of the state of big business. With the closing of some companies I am sure there are a lot of people that are in similar positions. I wish all those that received the news today the best. For those in the CM department, thank you for the interactions. You all will be missed.
The troubling comments from the earnings call to me were these.
For 2018, we generated record GAAP revenues across all three platforms and both Activision and King achieved record segment financial results. While we had record performance in 2018, it didn’t quite live up to our expectations.
We’re reducing or eliminating investment in games and initiatives that weren’t living up to player expectations, where our leadership teams have determined may not live up to player expectations in the future.
Blizzard was a more nuanced story in Q4. On the one hand, we grew Q4 segment revenues to $686 million and operating income to $241 million. And Blizzard had 35 million monthly active users in the quarter, as Overwatch and Hearthstone saw sequential stability and World of Warcraft saw expected declines post the expansion release this summer.
On the other hand, the relatively consistent monthly active user trends for Blizzard’s communities were not matched by in-game net bookings, which continue to soften. In particular, Overwatch and Hearthstone, both experienced sequential declines in net bookings from players making in-game purchases.
Now I have not read these reports in the past, but I noticed that they did not say Blizzard in the divisions that were profitable. And it is concerning that they may start cutting dead weight. Could Warcraft, even as successful as it has been for over a decade have slipped to a point where they may say it is continuing to slide, so lets just rip the bandage off and be done with it?
Turning to Blizzard. We expect materially lower financial performance this year. 2018 benefited from the release of World of Warcraft: Battle for Azeroth, whereas we are not planning a major frontline release for Blizzard in 2019. And Blizzard exited 2018 with softness for its in-game revenues that will take time to stabilize and return to growth. While these factors will weigh on Blizzard’s financials this year, looking further ahead, Blizzard’s pipeline of PC, console and mobile content is richer than ever and we expect a significant addition of development resources to accelerate the pace of delivery over time.
So it sounds like the faster releases is back on the table, or at least they are planning on trying to make it work. I guess they are seeing that they need to keep pushing new in front of us to keep us engaged.