Video games mega-publisher Activision Blizzard announced yesterday that the company would be laying off 8% of its current staff, or 800 employees, following a record-setting year financially. Later that afternoon, after earnings were reported, management began to notify workers who were getting “the axe”, eliminating numerous positions that were no longer needed.
During their earnings call, CEO Bobby Kotick informed investors that Activision Blizzard had “once again achieved record results in 2018”, even if revenues fell short of company estimates and analyst expectations. Still, earnings per share (EPS) were higher than predicted, and 2018’s earnings were an all-time high for the publisher, leading many consumers to become upset over the layoffs – especially since the company’s new CFO Dennis Durkin just received a $15 million signing bonus.
And when taken at face value, it’s easy to see why so many people are upset. Activision Blizzard had its best year ever, rewarded executives with huge bonuses, and STILL fired employees.
It’s enough to make Americans swear off capitalism altogether, right?
Over the last few days, many of them did, including games industry “journalists” (and I use that term loosely here) and other concerned citizens:
My personal favorite, however, is a post from Reddit, a content aggregation platform popular with millennials:
That number in the upper left, 91.9k, is the current number of “upvotes” the post has received. The more that Reddit users like a post’s content, the more they will upvote it. This submission from StuartGT is currently one of the most upvoted posts for the week in “r/gaming”, Reddit’s most popular video game subreddit, leading me to believe that at least 90,000 people think Kotick and his company are “SCUM” as the post’s title suggests.
Sadly, the legions of gamers sharpening their pitchforks in protest are grossly misinformed about how corporations work, and even more mistaken about why Activision Blizzard decided to layoff workers in the first place.
While it’s true that the games publisher is firing people after logging a record year, it’s also true that management’s guidance for 2019 was highly negative. The company doesn’t have many new products coming down the pipe for the current year, and in anticipation of slowed growth, they were forced to part ways with 8% of their employees – all of whom were not involved with any upcoming projects.
Simply put, if Activision Blizzard held on to these folks, they would be paying them for nothing, as company funds are currently fully leveraged in the pursuit of producing several ambitious “mega-hit” games for the 2019 holiday season and early 2020. Despite record earnings, Activision Blizzard held on to a few underperforming titles in 2018, “going down with the ship” by continuing to support the games (at great cost to the company) well past their expiration date.
By ending development on projects that were digging into the publisher’s bottom-line, the company had to let go of many employees as part of a restructuring process – one that comes at the start of what could be a lean 2019.
In the end, the decision to lay off workers was purely a financial one, made in the interests of investors and Activision Blizzard’s long-term health. It had nothing to do with “corporate greed”, a phrase that gets thrown around a lot these days, or the impish CEO’s evil, anti-consumer agenda (another fabrication by enraged gamers).
Yes, it’s sad to see people laid off. It’s even worse to see so many of them get trimmed in one fell swoop – even if their bosses offered them highly generous severance packages.
But ultimately, it had to be done to ensure that the other 92% of the folks employed by the company kept their jobs.
The vicious backlash from critics, in this case, serves as a cautionary tale of what can happen when people take complex issues at face value. We’ve seen time and time again that Americans are uninterested in exploring the real cause of the inflammatory headlines they see in the news, and this is yet another shining example of that.
The users of Reddit who upvoted “Activision-Blizzard Management = SCUM” don’t want to understand the layoffs, they just want to be outraged – blaming corporations and figures in the spotlight for their own shortcomings.
It didn’t surprise me one bit, honestly, to see this kind of reaction after discovering headlines like the one below being plastered all over the internet:
In my opinion, this kind of faux-journalism is extremely dishonest, if not dangerous, and represents precisely what is wrong with our soundbite, “CliffsNotes” driven society – a place where readers with the attention spans of hummingbirds are ready to crucify nearly anyone that goes against the media’s clumsy narrative.
Provided they have an article (intentionally missing all the important details) to back up their position, of course.
