Why Do the Activision Layoffs Matter?

The workers on the chopping block aren’t taking this lying down.

Three weeks ago, on February 9th, news that had been expected by some for months was finally confirmed: Activision Blizzard plans to lay off nearly 800 people, a plan which is by now underway. This makes up 8% of its staff, culled from nondevelopment and admin parts of the business.

Let’s break down the business side of things first. The American video game company announced this alongside the news that they made $7.5 billion in net revenue in 2018. From one point of view, this is a record-breaking success; from the company’s perspective, it fell 3% short of their ambitious goal. Meanwhile, the severing of its deal with Destiny 2 developer Bungie left Blizzard with little releases to offer in 2019. Though the company said they parted ways with Bungie on good terms, it left its release schedule bare. This was worsened by the decreasing player counts for Overwatch and Hearthstone. So, they’re lowering their 2019 outlook to $6 billion and laying off approximately 775 staff, calling the move a “de-prioritising of initiatives that didn’t meet expectations.”

Or, more specifically, they will lay off some people and hire others. Activision Blizzard will boost by 20% the number of developers working on its major franchises: Call of Duty, Overwatch, Warcraft, Hearthstone, Diablo, and that most hardcore of games: Candy Crush.

The workers on the chopping block and their sympathetic peers aren’t taking this lying down. Grassroots labour organisation Game Workers Unite is calling on Blizzard to fire Kotick using the hashtag #FireBobbyKotick.

“Upending 800 workers’ lives while raking in millions in bonuses for you and your c-suite buddies isn’t leadership, it’s theft,” Game Workers Unite said on Twitter. “We, the workers of Activision and their friends, have had enough.

“It’s disgusting to hear Kotick boasting about record revenue for the company then announcing an 8% staffing cut in the next breath.”

This sort of remark from Kotick can be seen in his earnings report statement. “While our financial results for 2018 were the best in our history, we didn’t realise our full potential. To help us realise our full potential we have made a number of important leadership changes. These changes should enable us to achieve the many opportunities our industry affords us, especially with our powerful owned franchises, our strong commercial capabilities, our direct digital connections to hundreds of millions of players, and our extraordinarily talented employees.”

They also compared Kotick unfavourably to the late and beloved Satoru Iwata, former CEO of Nintendo, who “cut his own pay during times of trouble to ensure no employees would lose their jobs. And Activision saw record profits this year! They have no excuse… If we divided Kotick’s obscene annual pay… it alone could pay full salaries for all 800 laid off workers.”

Blizzard also awarded new chief financial officer Dennis Durkin a $15 million bonus for taking the job, a move that Game Workers Unite also took issue with.

“The cycle of layoffs continue (sic) to derail our industry because of the prioritisation of shareholder profits over workers lives and quality game development,” it added.

A couple of weeks after the layoffs were announced, Blizzard was called out for overpaying Kotick, who receives $28,698,375 a year. This is, according to non-profit shareholder advocacy group As You Sow, an overpayment of almost $13 million, although I’m sure some readers would argue it’s an overpayment of quite a bit more depending on your worldview. Kotick ranked 45th in As You Sow’s annual report on the 100 most overpaid CEOs to call out “excessive compensation.”

As You Sow has been releasing these reports for five years. What has changed in that time? “Quite a bit, and not enough,” the report states.

“More large shareholders are voting against more CEO pay packages. Those who are not are more isolated and defensive.”

This isn’t the only controversial business decision that Activision Blizzard has made recently. Much has been made in the games industry about the problems with loot boxes, both for their intrusion in game design and for being ethically dodgy. Just this month, Call of Duty: Black Ops 4 had an update that quietly added loot boxes to the game, angering many players. Referred to in-game as ‘reserve crates,’ these loot boxes cost 200 COD points (just shy of €2) and contain three “cosmetic” items each. Loot boxes are often considered a form of gambling and these reserve crates are a great example of why: they don’t display probabilities, don’t let you look at what’s inside, and they contain duplicates. Not all these cosmetic items are very cosmetic; many boxes contain “signature weapons” which grant players extra XP, an obvious gameplay advantage that people will pay for. What follows will be a familiar story for lots of gamers: those with money to spend on loot boxes will have an advantage, creating a kind of class inequality within the game. Likely, this is part of the company’s plan to boost revenue – by taking advantage of gamers with compulsive personalities susceptible to gambling. As well as this, there’s the game’s baseline price tag of about €50-55, the €88 Digital Deluxe Edition, the €114 Digital Deluxe Enhanced Edition, the additional €44 Black Ops Pass, paid ‘Special Order’ battle passes, paid tier skips for Contraband battle passes, and various cosmetic items that can be bought individually.

Some loot boxes contain special ‘Blackout battle royale’ characters, which previously could only be unlocked through missions and quests. Players on Reddit dug up an old interview with Black Ops 4 design director David Vonderhaar in which he said that those special characters would only be locked behind missions and quests. Surprisingly, up popped Vonderhaar in the comments to defend himself, saying he had no power over the decision to put in loot boxes. “At the time this interview was conducted, which was previous to shipping the game, that’s precisely and exactly how it worked. Things change along the way… and not all of them are design decisions.

“I can tell you what we have done and what we plan on doing, but things change that I can not predict or I didn’t know about. Doubly true with the business side of things which have (sic) little insight into and even less control over.”

Unfortunately, as we’ve seen time and time again, gamers as a community are generally not capable of forming a systemic analysis. So, Vonderhaar’s comment currently sits at -97 points. “Grow some balls stand up to activision and make this game great,” reads one response.

If you were an alien, you’d expect better from gamers. After all, even though they’ve been around for decades, video games are still mainly associated with the youths and millennials such as I, the first generation to grow up with personal computers. Aren’t we supposed to all be entitled narcissists? Or, to put it more truthfully, oughtn’t our relatively strong self-esteem and sense of community match up with the ideas that unions have always stood for? Shouldn’t gamers stand for an equal voice for everyone and new ways to solve problems?

This is especially true when you consider – to zoom out from video games to consider what this mess says about society – the shrivelled-up husk of a job market that twenty-somethings are faced with. I’ve written previously that college is worth it, and I stand by that, but college degrees don’t guarantee a good job. I’m genuinely interested in my studies but the main reason I’m taking a Masters is that I want a good job. Entering the job market with only an undergrad degree would leave me with a 50-50 chance of going nine months or more with no job at all. The popular discourse around this problem revolves around tired complaints that Arts courses are useless (yet everyone wants good films) or that college isn’t for everyone (a broadly true idea that almost always comes with heavily implied classism and resent for working class people who rise above their place). So, third-level education isn’t the answer to shared prosperity that many once thought it was, and the (third-level-educated) mainstream commentariat is proving no help at all.

In this dire state of affairs, what help are unions? Well, the point of a union is to balance the overwhelming power of those reaping the gains with those who are creating those gains. That’s what Game Workers Unite is working to do: balance Kotick with the workers he’s screwing over. If you’re concerned that unions are seeking to undermine the success of those at the top, that’s not what’s happening here. They’re only saying that success ought to be shared among all who deserve it.

If you’re a Kerblam!-minded commerce student concerned that unions are bad for business, worry not. In ‘The Good Jobs Strategy,’ Prof. Zeynep Ton of the MIT Sloan School of Management argues that “even the most cold-hearted, money-hungry capitalists ought to realise that increasing their workforce, and both paying them and treating them better, will often yield happier customers, more engaged workers, and – surprisingly – larger corporate profits.”

This tracks when you consider the state of many AAA games over the last decade or so. On the off-chance one of those Reddit gamer types is reading, consider this: do you think there’s no correlation between so many games being glitch-ridden, flavourless dreck and game development being a horrible working environment with zero job security or incentive to do more than the bare minimum? Do you think it’s a coincidence that Nintendo, well-known for their better working conditions, usually put out much more polished games? That’s not the result of magic dust. It’s simply a straightforward result of Ninty treating their workers well.

Place yourself in Vonderhaar’s position or the position of anyone working on the development of a Blizzard game. Would you commit the full force of your creative energy to that company knowing that the bosses have posted record earnings and mass layoffs in the same week? Isn’t it common sense that if games workers had a union watching their back, they’d do better work because they weren’t panicked by potential job-loss, homelessness, or medical needs?

If gamers want better games, they should support the people who make the games. Who knew?

Thanks for reading! If you want to support, please consider throwing some money in my hat over on Patreon or following on Twitter.

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