What’s The News?World’s one of the largest, most influential gaming companies: Activision-Blizzard has decided to terminate employees. Click To Tweet
As per various unconfirmed reports coming in from the US, Activision-Blizzard will fire ‘hundreds of employees’ this week, most probably before the company’s quarterly earnings call, which is due on Tuesday.
Activision-Blizzard has more than 9000 employees, as of 2018. As soon as the news about terminations spread, the share prices of the company dropped by 2.5% to reach $42.88.
What Does This Mean?
As per Bloomberg, the firing of employees from Activision-Blizzard will be done to restructure the existing hierarchy, and to shed away excess employees which are bringing the overall profitability of the company.
Employees haven’t yet been informed about the terminations, and there is visible anxiety and curiosity among the employees. No one knows, who will be fired, and who will be left.
The primary reason for job cuts, as attributed by analysts, is slow sales of their best selling games. Overwatch and Hearthstone, both have reported massively declining users.
The biggest shock for Activision-Blizzard came from the stunning flow show of their newest game: Destiny 2: Forsaken. Such has been the impact that the company terminated their contract with well-known game development company Bungie Inc., which may result in losses up to $400 million for the company.
Share market was abuzz with the news that Activision-Blizzard will report a fall of 2% revenues this year.
Why Does It Matter?
The Bigger Picture: This means that the gaming industry is in deep trouble.
Lethargic sales and dominance of free games such as PUBG and Fortnite are hitting the legends of the gaming industry hard. Within a year, Fortnite amassed 125 million additional users and raked in $300 million+ revenues, a record for a free game.
Electronic Arts (EA), one of the largest traditional video gaming companies in the world, reported a 13% drop in stock prices after the company admitted that their biggest releases last year failed.
Another major gaming company: Take-Two Interactive Software Inc. too experienced a fall in share prices, after their sales numbers were $100 million short of expectations.
Fortnite and PUBG, both are blockbuster hits and backed by Tencent, which have actually disrupted the gaming industry as we know it. EA, Activision-Blizzard, and Take-Two have already received the shock, and other traditional gaming companies will soon understand the changing dynamics of the market.
Layoffs announced by Activision-Blizzard is not a good sign for the video games company, and 2019 may witness more disruptions, as the new order is taking over the industry.
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