Thursday, March 1, 2012

Blizzard fires 600 employees

I don't get this.

There's no need to repeat the links (1) (2), I guess. I'd really like to know what is happening over there ...


  1. 600 * $50,000 = $30 million

    1.8 million * $15 = $27 million.

    Overly simplistic, perhaps, but you get the idea.

    1. You goofed up your units.

      600 people * $50,000 per person per year = $30 million per year

      1.8 million people * $15 per person per month = $27 million per month

      That's more than a tenfold difference.

    2. Yikes. I was way off.

      In my defense, they probably paid more than $50k on average, and the 1.8 million didn't leave all at once.

  2. Clearly WoW took a bad hit in Q1.

    This can't be a surprise - Blizzard announced there would be no new content until MoP.
    What is there left to do after you've cleared Dragon Soul on Raid Finder difficulty?

    1. Sure .. but why? This company swims in money even after they gave almost all to it to their shareholders. They still have some of the most profitable games in history up and running. They are part of an industry that grows with double digits every year and is expected to continue growing for many, many years.

      Why, then, would you fire over 10% of your employees in a way that it requires a press release? It demotivates your current employees, it makes you a less attractive future employer, it proves past organizational mistakes ... Why would you want that to happen? To please shareholders ?? - ah pleasing shareholders isn't that simple ..

    2. Maybe you can look at that as "seasonal jobs"?

      There are times when they need more people (major launches, for example), and times when they need less, and CS people aren't too hard to get and train as needed, so it's easier to let some of them go rather then retain them.

      Are there any bonuses for being in company for long time btw? Existence of those is good incentive to fire people too.

    3. Also, local launches (Brazilian, for example) should mean local Customer Support, and less CS needed for realms from which they transfer.

  3. It may not be performance related. Allegedly they fire a load in Jan/Feb just before they publish their annual financial outlook then rehire once the shareholders aren't looking.

  4. Nils, I've posted this at many blog sites but the revenues for 2011 dropped by 91 million for WOW from the 1st through 4th quarters. In Q1 they were $359 million and were down to $268 for Q4.

    All of these layoffs were announced at the February 9th sharholder meeting. But here is the good news (if you can call it that). 90% of the 600 are in support or customer support roles. Things like customer service, finance, HR etc. Only 10% are in product or game development.

    And this is not that new for Activision/Blizzard. Last year they laid off around 500 IIRC. February is always a slow time for them and they shed customer service jobs in January/February since that is after November/December launches or the Christmas rush.

  5. "ah pleasing shareholders isn't that simple"

    Bad news needs to be counteracted with 'good' news.

    When your major cash cow is in decline you need to be seen to be doing something to compensate. New Product Development is NOT usually the answer that shareholders are looking for because there is nothing to say that Titan will be a success or that Diablo3 players will ever use the RMAH.

    Annecdotal evidence suggests that people are quitting WoW for reason that won't be remedied by MoP - they are tired of the game.

  6. I assume this is just reducing headcount to match lower revenue.

    But some comments on the above.

    When looking at salaries, look up "fully burdened" costs - you usually multiply salary by 200 to 300%. Game companies are not the best employers but the accounting cost of non-gaming senior programmers in California are above a quarter million per annum.

    While you look at revenue, you tend to look at "contribution margin" - so after paying for credit card fees, customer support, servers, networks, etc my guess is a player generates perhaps $50 to $80 per year contribution margin .

    Headcount is not the benchmark it used to be. While usual, it does not have to be that replacing 600 employees with 600 contracts/outsourced employees would negatively effect customers.

    In the world of customer service/support, there is also technology. E.g. [made up #s] say Blizzard spends $500k on PKI Authenticator technology - they can save money (i.e. fire customer service headcount) each month while increasing the customer service (happiness of the customer.) It may be that I would prefer that my vendor spend money on hardware/software rather than headcount. In fact, one would hope that most any company is using fewer employees per revenue $ as time goes on and productivity increases.

  7. What do you think about the decision to drop PvP from D3 rather than delay launch?

    Who's driving the Blizzard car?

    1. I don't really follow D3. My opinion is that Blizzard got burned once with PvP in WoW and doesn't want to get burned again. At the end of the day, the computer games revolution takes place because players can play together (internet) and against an opponent that has no problem with losing (basic AI). Both makes them superior to non-computer games.

      To turn computer games into something competitive turns them into 'normal' games. That's not necessarily bad but it is not where the money is.

      What this also shows is Blizzard's immense fear of releasing an imperfect product. I welcome this.

  8. This would only fail to make sense if you think companies are about having a community between employee and employer. The capitalist system abandoned that as soon as it realised the various ways it fails to make a short term profit.