Record results but a social plan. At the end of an exercise that is excellent from an accounting point of view, Activision Blizzard will proceed with major budget cuts. As announced by Bloomberg in recent days, the publisher of video games will lay off 8% of its workforce, about 800 people.
The heavy weight of the video game paradoxically totals $ 7.5 billion in revenue from January to December 2018, while generating nearly $ 2 billion in annual profits. Never seen. But "even though our results for 2018 are the best in our history, we have not realized our full potential," says group boss Bobby Kotick, quoted in the release of results.
Disappointments include sales of some key titles such as "Call of Duty", "Overwatch" or "Hearthstone". The publisher also notes the weakness of its revenue from downloadable content, additional content purchased by players to improve the base of games that make the fortunes of some.
The admission is symptomatic of the shift that a part of the industry is making. Like other heavyweights like Electronic Arts (which has just launched the popular "Apex Legens") or Take-Two, Activision Blizzard is suffering from the competition of online games like "Fortnite", owned by Epic Games .
Unlike a classic game, "Fortnite" is available on all media (mobile, PC and consoles) and relies on free-to-play – free access but paid bonuses, but only cosmetic.
The competition of this cardboard planet weighs on the revenues of Activision Blizzard: its turnover of the last quarter, that of the holidays, is well below the expectations (2.84 billion dollars against 3.04 billion expected). The company also registered in January the divorce with the studio Bungie, which took its independence and carries with it "Destiny", one of the main franchises of the firm.
Stock market tips
So many signals that lead him to be more pessimistic than analysts in his forecasts, the publisher expecting to garner $ 6 billion in annual revenue in 2019. An accumulation that logically weighs on the stock market price: the title today is trading around 41 dollars, half as much as in October. Hence the announcement of a plan to turn things around.
To do this, Activision Blizzard refocuses on its hits. "We felt we needed to focus our best resources on our most important opportunities," says COO Coddy Johnson.
The number of developers allocated to star franchises ("Call of Duty but also" Candy Crush "," Warcraft "or" Diablo ") will gradually increase by 20%. An effort made by layoffs, reduced investment in "initiatives that are not successful enough" and reduced "administrative or non-developmental costs," details Activision Blizzard.
The maneuver should lead to the release of a new album of "Call of Duty", whose marketing was confirmed for 2019. Before, perhaps, to tackle as Electronic Arts to his own "Fortnite".