You’d think it was a good month to work at software conglomerate Activision-Blizzard. Between the interminable Overwatch League and the money-printing machine it calls Hearthstone, the company has made absolute bank over the last fiscal year: a record-breaking total of $7.5 billion gross, with $1.8 billion of that being pure profit.
So you can understand why many, both within and outside the industry, were shocked and appalled when the company announced around 800 layoffs.
The sudden chainsawing of Activision-Blizzard’s bottom line hit an especially sour note in light of CEO Bobby Kotick and CFO Dennis Durkin awarding themselves a combined $5.5 million salary and a $37.3 million potluck of stock options and miscellaneous equity. Confusion is natural. How can the same company be both so lucrative as to give its directors the GDP of a small country but need to leave a decent portion of its ground force jobless?
The true reason for these layoffs is not that Activision-Blizzard was unsustainably growing, but that it needed to grow more.
The “safe” answer is the company’s “re-prioritisation” of its current assets. In a memo released to the affected staff, Blizzard’s president, J. Allen Brack, cited that many of its current branches “expanded to support various needs […] out of proportion with our current release slate.” The implication is that the advancing growth in the first two quarters of the year lead to unsustainable investments, especially after the failure of Destiny 2: Forsaken.
But that cool $1.8 billion profit raises eyebrows about that excuse. The true reason for these layoffs is not that Activision-Blizzard was unsustainably growing, but that it needed to grow more. By artificially shaving cash off the bottom line and improving statistics, Activision-Blizzard’s shareholders see a solid investment, because confidence in the company’s long-term growth has been boosted. Kotick and Durkin took their bonuses because from their perspective they’ve done a good job: these layoffs are just the human cost.