Activision Blizzard sees "record year," plans to lay off hundreds

During today's Q4 and full-year earnings call for Activision Blizzard, it was announced that despite a "record year" of profit, the company would be reducing its headcount by a net total of 8% in 2019 - approximately 800 people based on employee figures as of last summer.

In a letter to staff sent earlier today and acquired by Kotaku, Blizzard president J. Allen Brack promised that those laid off would receive "a comprehensive severance package," health benefits, career coaching, and job placement help.

"Over the last few years, many of our non-development teams expanded to support various needs," the letter reads. "Currently staffing levels on some teams are out of proportion with our current release slate. This means we need to scale down some areas of our organization. I'm sorry to share that we will be parting ways with some of our colleagues in the U.S. today. In our regional offices, we anticipate similar evaluations, subject to local requirements."

During the earnings call today, CEO Bobby Kotick offered further context for the layoffs, saying that they were part of a larger plan to restructure the company and focus on core franchises while removing unnecessary spending in other areas. The layoffs, Kotick said, would be focused on back office, commercial operations, and consumer marketing areas as the company works to reduce admin expenses and underperforming intiatives, de-prioritize games and intiatives that don't meet expectations, and reduce non-development costs.

Meanwhile, Kotick also said the company would be hiring more developers in 2019, with a 20% increase in developer resources overall both to core teams and to incubation teams. As another part of the company's restructuring, Activision-Blizzard plans to invest in its core franchises and development, especially its larger, internally-owned franchises. That means more upfront releases, in-game content, mobile games (including a number of unannounced projects), geographic expansion of existing games, and investment in esports leagues.

The dramatic restructuring at the company somewhat flies in the face of Activision Blizzard's record year and solid Q4. For the quarter, the company saw net revenue of $2.38 billion - above its guidance of $2.24 billion. By segment, Activision brought in $1.41 billion in revenue, Blizzard was responsible for $686 million, and King saw $543 million.

For the full-year, total revenue was $7.5 billion, above the guidance of $7.35 billion. Also for the year, Activision Blizzard saw a record net bookings of $7.26 billion, though this was below the full-year guidance of $7.48 billion. By segment, Activision's net revenue was $2.46 billion, Blizzard's was $2.29 billion, and King's was $2.09 billion.

In addition, Activision Blizzard will increase its shareholder dividend by almost 9% to $0.37/share.

Despite the company's record performance, Kotick said its performance in 2018 "didn't quite live up to our expectations." He said that the company hadn't achieved the goals it set for itself, and that its "outlook for 2019 falls below what is possible in an industry filled with growth opportunities." As a result and in tandem with the aforementioned layoffs and restructuring, Activision Blizzard anticipates 2019 to be a "transition year" with less content to be released.

For 2019, Activision will focus on Call of Duty with its usual new release planned for Q4 as well as its already-announced Call of Duty mobile game developed by Tencent. The segment will also be supported by the releases of Crash Team Racing and Sekiro: Shadows Die Twice. Activision anticipates no meaningful income from Destiny in the coming year.

King's segment is anticipated to remain flat in 2019 while the company invests further in the Candy Crush franchise.

Finally, Blizzard will drive a lower forecast for 2019 as the company anticipates "no major frontline release" for the year, leaving it with only the already-announced Diablo: Immortals on its slate.

With Blizzard contributing little, the company as a whole anticipates revenue to be down year-over-year, predicting $1.175 billion in revenue for Q1 of 2019 and $6.025 billion in revenue for the full year.

For the record: This article previously reported Activision Blizzard's net revenue in millions rather than billions. The copy has been amended accordingly.