Activision Blizzard Annual Net Revenue Up; Workforce Restructured in Wake of Game Cancellations

By Xav de Matos, Feb 09, 2011 5:30pm PST Activision Blizzard has confirmed that a wave of job losses will sweep through the company after revealing multiple titles in its catalog have been canceled.

In a Form 8-K report released to investors (and publicly) to announce major changes, Activision Blizzard notes that the company's board of directors have approved a restructuring plan which includes the "separation of approximately 500 employees." The plan--which the company anticipates will be implemented in the quarter ending March 31, 2011--will result in a "net pre-tax charge in the first two quarters of 2011, which is expected to total between $35 and $50 million, comprised of severance costs, the costs of other separation benefits and other exit costs."

The plan is said to focus on the "development and publication of a reduced slate of titles on a going-forward basis, including the discontinuation of the development of all music-based games and the closure of the related business unit and the cancellation of other titles then in production, and a related reduction in studio headcount and corporate overhead." Activision Blizzard has not named which developer it references will be closed as part of the plan.

Its music-based gaming titles include the Guitar Hero and DJ Hero franchises. Vicarious Visions was named as the successor to Neversoft for the Guitar Hero franchise following the release of Warriors of Rock, while FreeStyleGames has developed both DJ Hero titles. Job losses will hit a total of 7 per cent of Activision's total workforce.

Shacknews contacted Activision Blizzard for clarification on which developer would see closure, but the publishing giant declined to comment. When asked to clarify whether downloadable content would still be released for the Guitar Hero and DJ Hero franchises, Activision Blizzard, again, declined to comment.

During its investor call earlier today, COO and CFO Thomas Tippl said Activision will be making "significant investment elsewhere." He also added, "Our net head count at the end of the year is probably not going to be materially different given that we're ramping up development teams around Blizzard's new MMO and around the Call of Duty initiatives."

Activision Blizzard announced a new internal group dedicated the Call of Duty franchise, dubbed Beachhead Studio, focusing on the creation of "an online community and suite of services for fans." Activision Blizzard previously developed an internal group to oversee the Guitar Hero franchise; however, today the company announced that group has been dissolved.

Though the company announced in its financial report that GAAP net revenue in its fourth quarter for fiscal year 2010 (ending December 31, 2010) was down to $1.43 billion versus $1.56 billion last year, Activision Blizzard posted an overall increase in GAAP net revenue for the year. The publishing company jumped up to $4.45 billion in 2010 versus $4.28 billion in 2009.

The report reveals that $1.5 billion of annual revenue came from digital sales, which has jumped 20 per cent versus last year and totaling 30 per cent of the company's net revenue. Digital standouts were quite obviously tied to the company's two major properties: "Our revenues from digital channels, which now account for over 30 per cent of our overall revenues, were driven by increased sales of Activision Publishing's Call of Duty map packs and value-added services for Blizzard Entertainment's World of Warcraft," Activision Blizzard boss Bobby Kotick said.

Proving the power of World of Warcraft, "PC" was only 8 per cent of non-GAAP net revenue, but "MMORPG"--a separate category in the report--was 30 per cent. In total, Blizzard made up for 37 per cent of the company's segment net revenue.

While Activision Blizzard is restructuring to focus on releasing fewer titles per year, the company did make some announcements. The company announced a new Spider-Man title is in the works, along with licensed games based on the television shows Family Guy and Wipeout. The Spider-Man game will see release by the end of this calendar year. Activision Blizzard also announced plans to reveal an "innovative new universe" at the NYC Toy Fair later this week; presumably focused on a broader audience.

If you've made it this far into the article, feel free to list this under: "Books I recently finished."

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