The accounting charges associated with Blizzard's reduction in workforce are not anticipated to be material to Activision Blizzard, Inc. and were included in the 2012 financial outlook that was provided on February 9, 2012.
There is a lot of hassle with firing a single employee at a BigCo, even if that person contributes very little, is a detriment to the team, or is abusing corporate policy. There is however an upside to getting rid of a bunch of people at once, especially when it is around the time of the anual report, and it mitigates a lot of the downsides you have when firing just one person.
Except in the cases where an entire department was eliminated, I would say about 85% of the people who were let go during a large layoff were not really a surprise.
This means Blizzard management is thinking that they're running out of ideas for developing new areas.
This is the beginning of the end for Blizzard, which is fine with me - WoW is basically electronic crack as far as I'm concerned. I know that's narrow, but they're public enemy #1 in terms of habit-forming online behavior.
WoW's fluctuating subscriber numbers reflect the natural state of a 7 year old game that is in a down period between expansions, so I'm not worried about that. Instead what I think is going on is that they've spent so much time growing their staff to accommodate WoW, the new Battle.net and new projects like Diablo 3 and the unannounced MMO project that they've come to a point where they've decided to take a good hard look at who's working for them, how they can optimise their workforce, and how they can cut down on the bloat.
It's likely a matter of reducing overhead and improving internal communications as opposed to any "bad news" that they need to get rid of people in order to keep the ship afloat.
As the CEO says, this is something that happens when you grow a lot: you need to make some changes every now and then. Instead of viewing this as a cutback, I'd view this as a fundamental step towards stabilising themselves as a developer that handles multiple projects simultaneously, whereas before they really operated in serial.
Taking 600 off the top of 4700 employees still leaves them with over 4000 people working for them, which is about as many as Nintendo employs, to give you an idea of what kind of sizes we're talking about in the games industry.
Customer service is emerging from a major generational change at Blizzard. Understand that Blizzard went very quickly from a company of mostly developers to a company whose headcount was overwhelmingly focused on customer support. They had (before these layoffs) about 3,000 customer service employees worldwide. They hired a huge, huge amount of people, put together systems and tools as fast as they could, yet even so have only in the last few years been able to get their head above water. There was a lot of inefficiency, bad solutions, poor procedures and lack of automation. Todd Pawlowski was hired from Virgin America two and a half years ago to be Blizzard's VP of customer service and has been directing a huge amount of much-needed change. This is basically the latest step in Blizzard getting their act together and providing great customer service efficiently. It sucks for all the GMs that got laid off, though.
As for development, I think this doesn't indicate a whole lot, as you suggested. Maybe Cinematics is wrapping their work for Diablo 3, but the "development-related" jobs could very well be all QA positions. There is more than enough work in development for Blizzard to keep recruiting aggressively at GDC next week. The speculation elsewhere about this meaning something is changing for their future projects is far-out and wrong.
[1] http://www.theverge.com/gaming/2012/2/29/2833313/blizzard-la...
Also, a slow trickle of firings is just horrible for everyone. You have no idea if you are next, etc. A big layoff followed by a company meeting of "hey, we did a layoff because of X. There will be no additional layoffs as long as we hit our current goals."
The interesting bit is that to make that count they really need a good operational plan with respect to their infrastructure.
I got a peek at their infrastructure early on because the company where I worked (Netapp) was trying to sell them filers for their Oracle instances which were running the game. And the game is essentially a ginormous database being updated constantly based on player actions. What we saw was a very complex (and expensive) infrastructure which was clearly built expediently. I would think that over time they would have been working to refine this to something more manageable (and cost effective).
Ultimately, there is a 'killer' persistent world infrastructure architecture for this sort of traffic. Would be a good research topic for a thesis I suspect.
So my guesstimate at $10 per was a 'blended' rate. Pessimists seem to put it closer to $7, not sure why though.
However if you consider the larger online gaming market I would consider WoW's main competitors the likes of Zynga. Farmville alone has 28.4M monthly active users.
Also, in China for example, Blizzard licenced WOW to some other company (The9 ?). I'd be interested to know how much money Blizzard gets from WOW china.
Here's a very old (2005) link with some interesting financials.
(http://www.gamingsteve.com/archives/2005/11/with_all_the_ta....)
I would like to see a documentary filmed inside of the WoW studio, if it's at all possible. Like, it could be really Serious Business, which would be hilarious, or it could be a more relaxed-artists type of story, which could be a fun romp. And maybe we get to see a sysadmin saying, "those are the Legacy Systems, they're from the Early Days, basically the entire World of Warcraft is held together with duct tape and a prayer." It would be great, man.
3 Major Projects in the Pipeline, 1 Untitled Project, and it lays off 600 people? It's a money printing machine with it's stranglehold on subscription based MMO (as opposed to freemium), I'd hate to think they're laying off people to appease the shareholders and maximize profit.
Many larger companies do this; I suspect it minimizes dismissal-related lawsuits.
Starcraft 2 and WoW are in more of a maintenance cycle with the expansions coming out this year. Neither probably need as many developers as the new projects at this point.
The layoffs are probably due to WoW losing subscriptions over the last few years, and Diablo 3 nearing completion. The majority of the 540 non-developer positions are probably level 1 support or low level IT related positions because they don't need as much support personnel. The developer positions are most likely contract employees for Diablo 3 that aren't getting their contracts renewed.
Testers are technically development, so some of the "60 development staff" may have been from that department, but they tend to be very overworked (I'm not sure they would consider that to be the same thing as understaffed) so unless they realized there is no way they will have new products nearing completion for a good long time I find it hard to imagine this is testers.
I'm not sure that the Diablo team really uses contracted developers rather than proper employees. It doesn't feel like the Blizzard way of doing things where developers have a very low churn and company loyalty is well rewarded.
All guesses and speculation on my part. I was shocked to see this news because it isn't something the Blizzard I know would have done except as a last resort, and it's hard to imagine the company being near any "last resort" situations—the worst case scenario right now seems to be lower profit sharing for the higher ups, and I've never seen any of those guys as in it for the money rather live of the games. I know the company line at Blizzard is that Activision has no control or say in operations. I hope that's still the case, but this move, lacking any specific details, does smell like Activision all the way.
And to be fair, an ideally managed company would actually have this happen every once in a while. A company like Blizz that has no problems hiring really should drop the bottom 10% of employees periodically and find replacements if needed. I doubt that's the real motivator here, but cutting 10% of employees isn't a bad thing at all as long as the people were picked properly.
It might be because I never want to work for a company that thinks of me as dead weight. It wouldn't be a good environment to work in.
I would guess that you might see different kinds of decisions from an independent Blizzard, even if it were public (though it would also have more risks in that case).
I'm not sure "struggled" is the word they were looking for there.
A ~20% decline is seemingly quite a massive hit if you ask me and would definitely warrant a few layoffs.
[1] http://www.gamasutra.com/blogs/EdwardHunter/20090924/3179/Wo...
Surely they know nothing lasts forever, which is why they are working on that other MMO. I have to believe they are smart enough there that this eventual dropoff was too expected to be "scary".
Also, it isn't like WoW is the only thing they have going on. Starcraft 2 was a big hit, and Diablo 3 likely will be too.
http://massively.joystiq.com/2011/11/07/rumor-senior-titan-d...
There was rumor that it was more than just 1 lead designer was being cut, but nothing substantial.
I don't think those 60 developer staff were just "QA people" etc.. I bet they killed or scoped down the whole project.
It still sucks though. It seemed like Blizzard was just printing money.
Also it sucks to hear about the lay-offs.
Personally I quite enjoyed the beta, a lot more than I enjoyed the same period of the D2 game. I'm anticipate spending many, many hours enjoying D3.
Major buzzkill for a lot of people but the handwriting was on the wall with the release delays, the annual pass giveaway, word of mouth on the beta, etc.
I'm not sure I understand this comparison at all.
Keyword at the end there, "D3 beta". No one expect you to spend thousands of hours into a beta.
Diablo 3 needs to be released like yesterday!
Maybe I'm naive, but I would happily give up any yearly bonuses and possibly even a slight pay deduction (as a single guy I don't have many expenses) in order to keep a fellow teammate from being laid off.
I'm sure not everyone agrees with this line of thinking, and there must be some legal mumbo jumbo out there that prevents this from happening... Anyways, I'm sure those laid off developers are talented, and hope they'll rebound quickly to a greater opportunity.
I talked them into letting me the severance package and I went looking around elsewhere. I relocated for a better salary in a bigger city and the company I left was able to retain a couple of other staff (including a single mom!)
I don't want to make it sound like I was more noble than I really was -- it was the right move for me at the time.
I would happily give up any yearly bonuses and
possibly even a slight pay deduction (as a single
guy I don't have many expenses) in order to keep
a fellow teammate from being laid off.
You can either let them go or I guess cut their salaries, but cutting someone else's salary doesn't really solve the problem that you're paying someone more than what you're getting from them.
This is easy to say when your publishing schedule is, as it has always been, "When it's done".
http://techcrunch.com/2010/12/10/leaked-blizzard-roadmap-sho...
(Diablo 3 has already deviated from that, of course) However, even if the cuts are not going to cause schedule changes, that doesn't mean they do not reflect scope changes.
Still, the 4 million or so North American and European monthly accounts still makes it huge.
Not a reasonable way to estimate potential demand.
Maybe something closer to "Some percentage of established MMO gamers who now play WoW or Star Wars Online will try it according to how appealing it looks and how well it's marketed and priced."
I somehow doubt this is THAT rare an occurrence.