Activision Blizzard stated that it is going to lay off 8% of its employees and restructuring its business to concentrate on its top games. The other parameter that has aided this step is upended popularity of Fornite in the video game industry.
In addition to that, Activision is planning to curb its monetary value of around $150 million in order to reduce the priority of games that are not doing well in the market. Activision Blizzard is anticipated to cut down 750 jobs. In the beginning of last year, the strength of employees was approximately or below 10,000 and at that time, the company announced to scale up the graph of employees by 20% (especially developers) for its most popular games.
In the fourth quarter and all of 2018, the company recorded a good sales stated CEO Robert Kotick. He added that the company’s performance has not even failed to live up to the company’s expectations.
“We didn’t execute as well as we hoped to in 2018, and our current outlook for 2019 falls below what is possible in an industry filled with growth opportunities,” Kotick affirmed on a conference call with analysts. “We didn’t achieve the reach, engagement and player investment goals we set for ourselves.”
Activision anticipated 2019 to be a transition year. It is estimated that it may not grow in-game sales as swiftly as it had hoped. Kotick asserted that company requires to make substantial changes to obtain its long-term goals which includes lay off of workforce at poorly performing games, back-office support staff reductions and focus more on live streaming games for customers.
Activision Blizzard owns “World of Warcraft”, “Call of Duty” and “Overwatch” franchises. In the game industry, Activision is not alone to struggle to keep up with the growing interest in free multiplayer games. However, it has been hit harder when compared to its competitors- take-Two Interactive and Electronic Arts.
EA has registered poor results that led the stock to plunge 16%. But, it covered the gap by its debut game Apex Legends, free of charge like Fortnite. This resulted in surged up stock, which is more than 30% this year.
Take-Two Interactive’s weak outlook has disappointed investors. However, the company had a big hit with its latest Red Dead Redemption game. But the stock again fall to 9% with the news of, end of Activision’s relationship with the “Destiny” game developer.
“This industry is very hit driven, perhaps more than ever, and the hits are harder and harder to come by,” said Scott Kessler, an analyst with CFRA. “Activision doesn’t seem to have a big game right now.” He added that Activision’s biggest investment that is acquisition of King Digital (the maker of Candy Crush Saga) is backfiring as the game’s popularity has waned in last years.