Activision Blizzard 2018 Financial Report - Company Layoffs, Profits & Future

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Activision Blizzard 2018 Financial Report - Company Layoffs, Profits & Future

A few hours ago, he concluded one of the most moving financial reports that Blizzard had in years.

In the following points we will see some summaries of the most important points. If you want to know all the details of the financial report, you can read it at in this PDF.

Summary

• 2018 was the most profitable year in the history of the company, but it did not reach the established targets.
• Activision Blizzard's virtual sales reached a record 7,26 billion, compared to 7,16 billion in 2017.
• Blizzard's fourth quarter was nuanced, with 35 million monthly active users in the quarter. Warcraft saw the expected declines after the expansion's launch, and Blizzard saw declines in virtual purchases for Overwatch and Hearthstone.
• Blizzard has a contract with NetEase to publish its games in China until 2023.
• The forecasts for 2019 do not assume that Blizzard will improve monetization as it did 2018.
• 2019 is a transitional year with fewer major content releases than ideal.
• The company will invest more in development. They are also de-prioritizing initiatives that do not meet expectations, as well as in administrative areas.
• About 8% of the staff were laid off.
• Warcraft, HS, OW and Diablo will see a 20% increase in their development teams in 2019. WoW also has an established content channel of regular releases.
• Blizzard is investing in more Warcraft games, as well as Esports leagues and partnerships.
• Diablo's staff will increase substantially as the team works on more unannounced projects.
• They are aggressively hiring talent in the coming quarters and scaling the business for future growth.
• There are no major new releases for Blizzard in 2019, with expectations of poor financial performance.
• Blizzard believes that expectations look promising beyond 2019, on PC, consoles, and mobile devices.
• The increased investment in development meant reducing spending in other areas, which led to layoffs.
• Activision transferred Destiny's publishing rights to Bungie earlier this year.

Important point

While our financial results for 2018 were the best in our history, we did not realize our full potential. To help us reach our full potential, we have made a number of major leadership changes. These changes should enable us to realize the many opportunities our industry provides us, especially with our powerful franchises, our strong business capabilities, our direct digital connections with hundreds of millions of players, and our extraordinarily talented employees.

With the year ending December 31, 2018, Activision Blizzard's virtual sales reached a record $ 7,26 billion, compared to $ 716 billion in 2017, below our previous outlook. Virtual sales from digital channels were a record $ 5,72 billion, compared to $ 5,43 billion for 2017, and virtual sales within games were a record $ 4,2 billion.

For the quarter ended December 31, 2018, Activision Blizzard virtual sales reached a record $ 2,84 billion, compared to $ 2,64 billion for the fourth quarter of 2017, below our previous outlook. . Virtual sales from digital channels were a record $ 1.88 billion, compared to $ 1.62 billion for the fourth quarter of 2017, and in-game virtual sales were a record $ 1.200 billion.

In 2019, the company will increase development investment in its largest franchises, allowing teams to accelerate the pace and quality of content for their communities and support a number of new product initiatives. The number of developers working on Call of Duty, Candy Crush, Overwatch, Warcraft®, Hearthstone, and Diablo® will increase by approximately 20% over the course of 2019. The company will fund this increased investment by de-prioritizing initiatives that did not deliver. with expectations and reduce certain administrative and non-development costs across the enterprise. The company is also integrating its global, regional and merchandising sales, partnerships and endorsements capabilities. As part of these restructuring actions, the company expects to incur a USGAAP of approximately $ 150 million, the majority of which will be incurred this year.

What really happens with layoffs?

According to Forbes magazine, Activision Blizzard has a total of 9800 employees. Therefore, after the announcement of the layoffs, Activision Blizzard will lay off a total of 784 people, leaving a workforce of 9016.

It was also communicated that all the layoffs will be from the sections that did not meet the annual expectations and none were for development. Just a few minutes ago, Blizzard President J. Allen Brack wanted to make it clear that The 784 people will not be left homeless after the layoffs, promising a severance package that includes additional pay and company support for their new jobs and careers.

And there is another important point. The report makes 2 things clear:

• That they are not really "layoffs" (explained below).
• Although many jobs have remained, it is planned to increase the workforce throughout 2019.

What is this about non-layoffs? The report does not use the term "fired" but rather "lay off". Although both result in dismissal, the difference is that "fired" is a permanent dismissal and no return to the company, "lay off" is a cessation of activity with possible return to your job.

Hopefully it is like that and these people do not have to go through the bitter pill of going back to look for work during these weeks. The video game community, after the report, have shown solidarity with these people and have created a Drive with all job offers in the videogames sector around the world.