Activision Blizzard Stock Price Falls After Reports Of Layoffs, Lower Sales Projections

Activision Blizzard's earnings report this week will be one to watch.

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Activision Blizzard is set to report earnings for the all-important holiday quarter tomorrow, Tuesday February 12, and things aren't looking good at this stage. The company's share price dropped by as much as six percent on Monday, and that's notable for at least a couple of reasons.

First, Monday was the first full day of stock trading following the reports of "hundreds" of layoffs hitting the company this week. Second, The Los Angeles Times reports that analysts are expecting Activision Blizzard's sales to fall by two percent to $7.28 billion when the company reports earnings on Tuesday. Investors want to see positive growth trajectories, and the prediction of a downturn may have spooked them.

Regarding the rumoured layoffs, Business Insider reported that the cutbacks are "part of restructuring aimed at centralizing functions and boosting profit." Activision Blizzard reportedly employed around 9,800 people at the end of 2017.

Jason Schreier of Kotaku said he spoke to people close to Activision Blizzard on Monday, and they told him that they are still in the dark about potential upcoming layoffs. Schreier also reported that the rumored Activision Blizzard layoffs may primarily affect people in non-development roles, including marketing and sales. One team that could be affected is Activision's Destiny division. Given that Activision and Bungie split up, the internal team at Activision dedicated to Destiny could be hit. Sources told Kotaku that some former Destiny team members at Activision could move into positions at other Activision teams, but the opportunities are described as "limited."

Activision has also seen a handful of executives and higher-ups leave in recent months. In 2018, Activision Publishing CEO Eric Hirshberg left, as did Blizzard founder and CEO Mike Morhaime. Additionally, Activision fired CFO Spencer Neumann on New Year's Eve; he joined Netflix in the same role. Blizzard's CFO, Amrita Ahuja, left the company in January to join Square. Activision's consumer products division boss, Tim Kilpin, left the company this month. Additionally, Activision higher-ups Michael Condrey and Glen Schofield, who founded Call of Duty: WWII studio Sledgehammer, left the company last year. Condrey is now launching a new 2K studio in Silicon Valley.

It's been tough sledding across the video game industry of late, as Electronic Arts recently reported it had a difficult quarter after Battlefield V failed to sell up to expectations. Additionally, Take-Two's share price slid last week after the company offered guidance that was many millions below what analysts were expecting in terms of profit.

GameSpot will have all the important details from Activision Blizzard's earnings report tomorrow, so keep checking back for more.

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Avatar image for Richardthe3rd

The most damning part of this is that these publicly traded mega publishers are essentially being told, by shareholders through stock valuation, that any business model that isnt like Fortnite's is a bad gameplan.

Even successful titles can net a bad market impact for their publisher if they dont fit the mold. That is literally the landscape we're in right now.

The microtransaction rape is poised only to increase further. In fact, games may devolve further into little more than that.

Unless it all crashes and the industry resets. Fat chance of that I say.

Avatar image for Thanatos2k

Making billions from scam microtransactions and loot boxes isn't enough, apparently.

Crash and burn, Activision. You deserve it.

Avatar image for Richardthe3rd

@Thanatos2k: you may be hitting on a wider attitude towards these practices. At least I hope you are.

But investor jubillance over Fortnite and F2P models isnt making me hopeful.

Avatar image for nsa_protocol44

Activision, about time. Another company who follows the philosophy: Minimum effort maximum profit.

By the way, I hate Kotick like the plague.

Avatar image for starjay009

People have been asking for a revamped Warcraft 3 for years !!!! Make it happen and reap the profits that follow.

Avatar image for dlCHIEF58

@starjay009: A remastered Warcraft 3 is in the works, won't be the savior you predict though. Warcraft 4 would be much preferred however.

Avatar image for Thanatos2k

@starjay009: No they haven't. People have been asking for Warcraft 4. They are unable to deliver it.

Avatar image for Pupchu

Pops the champagne

Avatar image for Hagan

Activision has nothing in the pipeline. Expect a new COD for 2019 and call it a year.

Blizz launching Chinese mobile Diablo, and maybe another cash grab WoW expansion. WoW classic and Warcraft 3 might help them a little.

These guys were resting on their laurels too long and weren't thinking about the future, and now they're left in the dust.

Avatar image for REDShadowG

You don't need employees when you're ready to enter the garbage mobile gaming market I guess.

Avatar image for CyberEarth

Am I the only one that reads a headline like this, and thinks... "good"?

Avatar image for Pupchu

@CyberEarth: i doubt many favors this company

Avatar image for agramonte

They have 1 game.

Just get Sekiro out the door. Only thing I care from Activision

Avatar image for caj1986

How long did activision think they milk the cod franchise?

Avatar image for Pupchu

@caj1986: "He [Kotick] has focused on developing intellectual property which can be, in his words, "exploited" over a long period, to the exclusion of new titles which cannot guarantee sequels.Kotick described this business strategy as "narrow and deep" or "annualizable" and cited it as key to attracting development talent who may not be drawn to "speculative franchises.""

Avatar image for bdrtfm

And here I thought all these microtransactions were just raking in the cash. Apparently not. The guys at the top who do nothing but make stupid decisions keep making buckets of money and the guys at the bottom who do the actual work lose their jobs. There's a reason Indies are flourishing while big companies are having a hard time. Indie devs care about their games. AAA developers only care about their games as much as their publisher allows them to care about their games and publishers care only for their shareholders.

Avatar image for lonewolf1044

@bdrtfm: No, you can have all the DLC you want but what matters is how good is the main game Imho. Even though the Devs do have the right to do what they want with thier development of thier products including making DLC, it is the customers that also have an right to do what they want with thier money. Imho there is too much emphasis on certain types of DLC. I like indies because not all indies follow the same drum and do some things that not the norm.

Avatar image for RELeon

Make high quality games that appeal to your fanbase, you will make money and your stocks will rise. Make low quality games that aim to make a quick buck and upset your fanbase, you will lose money and stocks go down. Relatively simple.

Avatar image for zmanbarzel

@RELeon: "Red Dead Redemption 2" and Take Two would argue with that. A high-quality game? Despite some quibbles I have with it, it definitely is. Appeals to its fanbase? Again, yep. Stocks will rise? TT's stock has slid 32 percent since its high, from $137.99 on Sept. 28 to today's close of $93.44.

(If you just want to limit it to the lifespan of the game, it was at $120.70 on Oct. 25, the last day before the game's release, meaning the stock has dropped 23 percent since then.)

Avatar image for Richardthe3rd

@zmanbarzel: this is true, sadly. Stocks are a relatively poor indicator of... anything except the mentality of investors.

Right now, all eyes are on Fortnite. Anything that doesnt replicate this dynamic is received with skepticism. Another reason these mega publishers arent proper stewards of an industry that is in dire need of new ideas.

Avatar image for Bread_or_Decide

@zmanbarzel: Gamers have no idea how business or the stock market works. You shut him down hard.

Avatar image for jinzo9988

Shit feels so bland. I've never ever been more disinterested in AAA mainstream gaming in my entire life than am I now. Battle Royale this (and they're all the fucking same), Live Service that (and they're all the fucking same), iterations of the same old every-year-or-two games reaching the double digits, games and developers that used to be great losing their identities and being reduced to just being the same old templated shit that everyone else is using... this stuff doesn't feel like video games anymore. They feel like products. And when the games are alright, they're under a shitty fucking publisher that does not have my respect and my trust. They're the "pop music" of the gaming medium and they're every bit as manufactured, soulless, uncreative, and shit that pop music is.

Avatar image for attirex

Devs/pubs will make big $$$ again when they don't make games that suck. Hasn't been anything good released in the past ten years.

Avatar image for Richardthe3rd

The plain truth is that these mega publishers are stifling the medium. The most unique offering Acti-Blizz has had in the last several years was, arguably, Overwatch, and that was 2 years ago.

Innovations and trends will find a way, even if you attempt to suppress them with formulaic annual installment IPs. Take risks or become irrelevant.

Avatar image for Bread_or_Decide

@Richardthe3rd: Risks are what close down studios.

Avatar image for Richardthe3rd

@Bread_or_Decide: glass half empty perspective.

Every successful title you play right now has examples of risks taken that succeeded.

Avatar image for Bread_or_Decide

@Richardthe3rd: Those risks were taken long ago and few studios are going to risk thousands of employees and millions of dollars on a hunch. Most of the testing ground is in indie realm these days. If you're waiting for Activision or EA to take a huge risk, don't hold your breath. Heck, even Nintendo is mostly rick adverse, considering they take the most risks with their hardware.

Avatar image for Richardthe3rd


Indies driving "risks." (AKA R&D)

Risk aversion

Pick one.

These large studios are declining because they arent looking forward, just at now. And you're going to say that ceding control of the direction it goes is better in the hands of organisms without the means to actually create something potentially huge? That's like asking Oracle to look under the santa Monica pier for their next sales team.

The next big thing in gaming isnt here and there hasn't been any sign of it for a while. Console gens that are whispers more advanced than the last, Esports, VR, all of it. No one cares because its just reiterations of old ideas.

You just said it yourself, "risks taken long ago." The industry has barely moved and is freeloading off creative ideas from over 15 years ago. Nothing lasts forever, and these guys arent investing in the next thing.

This decline is inevitable, and it will be much more thorough than a few developers closing unless the industry reinvents itself.

Avatar image for Bread_or_Decide

@Richardthe3rd: The next big thing is here, it's called battle royale. Apex Legends has caused EA's stock to shoot back up. Don't speak too soon about declines. All the big games are selling pretty well, like assassins creed still sells. Anthem looks positioned to eat up Destiny's starving audience. Again, you want companies to risk everything, in hopes and prayers, and that doesn't happen. Not until someone else proves it works first, and that's usually another studio that needs risk to even make a name for themselves.

Look at red dead redemption 2 and gow, some of the most derivative generic stuff polished up in nice graphics. Still sold huge. I don't think people want new things at all. They want familiar things with nice graphics that's all.

Avatar image for Richardthe3rd

@Bread_or_Decide: RDR2 sold great... and T2's stock is down.

EA makes Apex Legends (which, yes, is a derivative loot box dispenser as much as a game) and their stock explodes.

Battle Royale may be the next big thing from a design perspective, but the monetization scheme behind it is the moment in time that publishers are focused on and investors are salivating over.

Your opinion has merit, but I still think these kind of trends have an expiration date. And when that time is up you end up like Activision Blizzard.