Blizzard Lays Off 600 Employees


The news broke from a leaflet sent to investor relations, stating that Blizzard had assessed its current needs and decided to reduce its ranks by 600. This sounds bad, especially in light of DiabloWikiDiablo 3‘s imminent release. The good news, however, is that the development teams are largely unaffected and we should expect a release date “in the coming weeks.” While this is old news, it is at least somewhat comforting to the community.

IRVINE, Calif.–(BUSINESS WIRE)– Blizzard Entertainment, Inc. today announced that it has conducted a review of its business based on current organizational needs. Following a completion of the review, the company is conducting a global reduction in workforce of approximately 600 employees.

A follow-up post was written by DiabloWikiMike Morhaime to ensure their continued development for their other titles – both upcoming and unannounced.

Everyone,

We announced today that we’re in the process of cutting a number of active positions, mostly non-development, throughout the company. I’m sure this announcement has sparked some questions from all of you, so I want take this opportunity to address those as best I can. Over the past several years, the company has grown rapidly and evolved to better serve you and the rest of our global community. Thanks to all of your support, we continue to serve by far the biggest subscription-based MMO community, as well as the most passionate eSports and online gaming communities, in the world.

In order to keep making epic game content while serving players effectively, we have to be smart about how we manage our resources. This means we sometimes have to make difficult decisions about how to best maintain the health of the company. We’re in the process of making some of those hard decisions now.

After evaluating our current organizational needs, we determined that while some areas of our business had been operating at the right levels and could benefit from further growth, other areas had become overstaffed. As a result, we need to scale down some of our departments and part with some of our colleagues and friends here at Blizzard. I know that you all understand how difficult this type of situation can be for anyone who might be affected, so I want to assure you that we’ll be offering each impacted employee a severance package and other benefits.

I also want to emphasize that we remain committed to shipping multiple games this year, and that our development teams in particular remain largely unaffected by today’s announcement. We’re continuing to develop, iterate, and polish Blizzard DOTA, Diablo III, StarCraft II: Heart of the Swarm, World of Warcraft: Mists of Pandaria, as well as other, unannounced projects. We’ll have exciting news to share in the coming weeks regarding Diablo III’s release date, and will soon be holding a private media event to showcase the latest work on Mists of Pandaria. It goes without saying that we’re working hard to get all of these games in your hands as soon as possible.

You’ve all come to expect Blizzard to live up to our mission statement with every game, and deliver the most epic entertainment experiences ever. You can continue to expect that and nothing less from us as we move forward.

-Mike Morhaime


It is important to remember that this is a global reduction in staff – this is not a Blizzard Irvine-centric reduction. They have offices all over the world where they liaise and conduct other important operations for marketing and PR. The moral of the story here is to not be worried – Diablo 3 is still full steam ahead. Whether we see the date on March 5th, as rumors suggest, or “in the weeks ahead,” rest assured that it will be released…. sometime.

According to Blizzard, most of the layoffs were in the Customer Service department where Blizzard employed over 4000 support staff for World of Warcraft located across 11 cities. I think this was overdue, considering they’ve created many robust tools for things like GM’s for WoW, etc. Plus, the enormous reduction in subscriptions over 2011 must have had an impact on CS needs.

Thank you Dreadbringer for bringing this to our attention.

A bit of business analysis on this from the Orange County Business Journal.

The cuts, which amount to about 8% of Blizzard’s companywide employment of 4,700, as of last month, follow a string of recent setbacks.

Blizzard is a unit of Santa Monica-based Activision Blizzard Inc, which is part of Vivendi SA in France. It’s the largest software maker in Orange County, and employs about 1,700 people here.

Blizzard saw revenue of $1.24 billion in 2011, down 25% from 2010, as World of Warcraft and StarCraft games led the way.

Earlier this month the Business Journal reported that Blizzard pared down subscription losses in the fourth quarter for its flagship title World of Warcraft as revenue and operating profits dipped. It ended the fourth quarter with about 10.2 million World of Warcraft subscribers, down less than 1% at the end of the third quarter. Blizzard posted revenue of $276 million, down nearly 52% from a year earlier. The company reported an operating profit of $71 million, down 76% from a year ago. Blizzard did not release a game last year, which accounts for some of the declines in both sales and profit.

The slight drop-off followed Blizzard’s disappointing performance in the prior quarter when some 800,000 gamers dropped subscriptions, down 7% from the second quarter.

Tagged As: | Categories: Blizzard People, Blue Posts, Financial, Rumours

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  1. They should lay off the Diablo 3 development team.

    • Actually, that’s already been done. Why do you think the game was, like, 5 years late?

    • they should lay off everyone over 40 (always the old farts monetizing and the younger folk come with better ideas because theyre from our generation of gaming). Annnd JW and Bashiok. k thx

      • the old farts you are talking about are the ones who made diablo and diablo ii. think before you talk. and if you think what this generation likes is better than the past generations you can go and play assassins creed it has so good graphics, diablo iii’ graphic sucks yea why would you play something old.

        • The people who made diablo 1 and 2 are already long gone.  You didn’t know this?

        • Never played assassins creed, not my generation of interest. Those old farts made some crap games when they left blizz north. Their ideas and skills are expired. Notch would be a good example of modern age gaming – as well as other indi developers.

          • rofl notch, the guy who let a shitton of bugs exist in his game for like… the entire time the game has been out. Great example.

          • if notch is the example for modern age gaming I seriously don’t want to live on this planet anymore. Anyone else want to go find the old fart planet?

          • The solve media message I had to type for this comment was “off the record”.

            It expresses exactly your opinion regarding “notch” and “modern gaming”. If anything, minecraft is the most backward game that’s popular today. 

    • Hopefully the D3 team + PR department comes to 600 in total.

    • maybe they should just lay off Mike Morhaime?and keep the 600? ^^

      http://people.forbes.com/profile/michael-morhaime/119128

      Michael Morhaime got $16.5 Million in compensation in 2010.

  2. That’s a damn shame. Bobby must have figured he couldn’t afford a new mega yacht if he didn’t lay off those 600 people.
     
     

  3. Looks like 600 people are going hungry so the ceo’s can rake in more cash. 

    • They’re getting severance, I hardly think they’re “going hungry”.  While I can have sympathy for the 600 (I’ve been laid off before, it sucks) I also think as a gamer that this is a good thing.  All fast-growth companies go through this – business is booming, people are working unsustainable hours, so you hire and hire often.  Then, as things inevitably cool down you can’t afford all that extra staff.  In order to make great games and be left alone by Bobby K, Blizzard needs to be a high-margin studio within Activision.  This is the natural cycle of things and everyone benefits as a whole. 

      Captcha: get over it (!)

    • blaming this on money-hungry executives is ignorant and naive.

      they had enough employees to accommodate a certain number of customers. and then they lost 2 million customers. anyone with a brain would cut staffing too.

  4. Hopefully the ones calling the shots for Blizzards PR are affected by this, not likely though.
     

  5. Geez hurry up already .. bored shitless of jumping through hoops like a trained monkey with a banana at the end of a string to get a beta key and get a glimpse of the game that ive so badly wanted to play now for 10years+!!!!!!!

    laying off of 600 staff? well seems to be the latest trend worldwide!… hire more development and get another few more games cranking 😀 World of Diablo? o.0 Diablocraft? World of Starcraft? hmmm? boost development on Titan perhaps? gagging to spend my time on another mmorpg and neglect my real life again…

    either way .. beginning to see a light at the end of the tunnel now

    • 600 people have lost their jobs, and you can only think about getting a Diablo 3 beta key…

      What has this world come to?

      • Yes, a sample size of one person = “what has this world come to?”

      • What Wilfy said can be sumed up in one overused on the internet terms. “First World Problems”
         

      • people lose their jobs all the time .. im from england .. this place is going downhill fast .. all we have left are betting shops, tattoo parlours and charity shops… unemployment rates are hitting all time high .. sound a familiar story in america too i guess
        I hear on the news all the time how thousands get laid off when all our businesses are offshored …
         so blizzard is cutting some fat off its workforce to increase profits? yeap .. rich get richer .. poor get poorer … nothing i can say or do can change this … 😯

        i’m not on diablo inc gamers to show sympathy or pity over people getting sacked .. im here for Diablo info .. Diablo updates, Diablo release date, Diablo nibbles, Diablo cuddly toys, Diablo whatever! 👿 

        • Yes, but just because other people elsewhere are losing their jobs too it’s still insensitive to dismiss it as a mere boredom to you.  It’s shitty to happen to anyone.  And they weren’t sacked they were made redundant – big difference.

          • You can wrap dog poo up in nice paper but its still dog poo m8.. they still lost their jobs

            am i being insensitive? probably!
            Does this happen on a daily basis on our planet anyway? indeed!
             the “geez hurry up bored shitless” statement was aimed at “We’ll have exciting news to share in the coming weeks regarding Diablo III’s release date” nothing to do with people being laid off ..
            but are we all just here for Diablo info anyway? definately     

            I think its just my english(slang?) … sack can generally be used as just lost your job as an all encompassing word for redundancy, laid off, sacked, fired, etc… my bad

      • on another note , Blizzard alone created these jobs out of thin air , its not like they outsourced their business. i think its a natural developement , if you dont have work for 600 people why keep them ? jobs like GM are no lifetime jobs anyway, so i`d be concerned if those people had no plan B.
         

  6. i hope they fired all the PR retards

  7. Hm, the “epic” PR speak is affecting Mike too.

    I’m worried. 

  8. Severance package = Lifetime WoW subscription

  9. Diablo 3 will definitely be pushed out the door now, ready or not.

  10. “We’ll have exciting news to share in the coming weeks regarding Diablo III’s release date,” weeks?? 😯

  11. I can see the company wide e-mail now, “We wish them well in their future endeavors”. I’ve had that experience. Not fun. With all the profits Activision has made they deserve a huge severance if not more. Wouldn’t be surprised to see their stock price go up. The remaining employee’s? Back to your monitors!

    If there is any justice, Bobby’s yacht will stall out in pirate infested waters.  

  12. Few weeks ago it was “in the coming weeks”, and today it’s still “in the coming weeks” 😀 I guess it’s not different than in “in the coming months”

    • well it`s still right 😛 i could give the remaining time until my birthday in the seconds to come and i`d still be accurate :p.
      however i got used to , Blizzards “pre-announcements” are worth nothing ; i wish they would just shut their cookieholes until they can give us the info , all that teasing they are doing without anything to show for it is just nuts.

  13. Well, this was foreseeable, wasn’t it? We have yet to see the numbers for Q1/2012, but I suspect the once-12-mio-subscribers cash cow WoW has become leaner again.

  14. Money money money…meh this sucks. No wonder the guy left from their team before, prolly some will follow…again.

  15. 600 new potential leak sources.

  16. Last time I checked, we lived in a capitalistic market.  If 600 people are sacked so that blizz can keep a profit and stay in business, then be it.  It is sad if you are one of those employees, no doubt.  But as a consumer, you have to be happy since this means better results (financial) for Blizz, which will lead to future investments. 

    If you are one of those who like to see everyone getting paid the same and hate to see the rich getting richer, then 1) move to a socialistic society, or 2) revolt. 

    You think the economy is bad, but its not.  When occupy wall street becomes occupy white house or congress, then its bad.

    • How many times have you checked whether or not we live in a capitalistic market? Is this something you do a lot?

      • Your point is so irrelevant.  I could have checked 100 times, or 1 time.  Doesn’t matter as it points to the most recent time I checked. 

        • I was just curious because it seems like rather psychotic behavior to “check” if some abstract ideology is still applicable to a governmental system, especially if you check it often.
           
          What a weird turn of phrase, “last time I checked”. Unless you’re talking about oil levels or testicular cancer or something.

      • I usually check on Mondays at 3 pm.

    • “and stay in business” ? !
      do you honestly believe keeping those 600 people would have bankrupted Blizzard ? 
      Blizzard has more than enough money to retrain those people, put them in other positions and still make a HUGE profit 

      • First of all, don’t quote me out of context.  I said “If… stay in business”.  Secondly, making a profit is not what matters.  It is about meeting expectations.  If Microsoft makes $200million in profit this year, it is “HUGE” right?  No, Microsoft would bankrupt in months if it only made $200million. 

        My point is that since Blizz is now a publicly traded company, they are obligated to meet the expectations of their shareholders first and foremost.  You can like it or dislike it, but this is a fact. 

        • You weren’t quoted out of context. Nothing in your post suggested you even leave it open to the possibility that they may have been fired despite no threats of bankruptcy. If you have a very conservative opinion, at least have the huevos to state it with a straight face. Just say you have no problem with people being fired so that the company can make even more money.

          Also, bankruptcy has less to do with the size of the profit and more with cash-flows. Amazon, for example, was unprofitable for many years, yet it didn’t go bankrupt because it was sitting on a ton of IPO cash. I find it very unlikely that a company with a solid market share and with a solid reputation (like Blizz or MS) would need to worry about bankruptcy.

          Yes, the stock price may suffer, but that’s a different story. If you believe the shareholders are the only stakeholders that matter, just say so. No need to over-dramatize and go “oh, noes! Blizz may have gone bankrupt!.

          Also, asking corporations to be more socially responsible is not the same thing as socialism. If you’re going to use big words, at least know their meaning first.

          • Nothing in my post suggested?  I said “If they were fired… so that blizz can stay in business…I’m ok with it”.  This means if the first two conditions are met, I am fine, everything else, I have to evaluate the situation.  Whatever point you are trying to make are mere inferences, again, out of context!  

            If you think solid companies with market share and reputation won’t bankrupt, see WorldComm or Enron.  Both were AA rating companies. 

            I do think shareholders are more important than stakholders, since keeping a company alive should be the number one priority for any company, unless its shareholders are seeking something else.  No point in arguing shareholder vs stakeholder, its all subjective anyway.

            We can discuss corporate finance anyday, no big words will be used, I promise. 

          • @Penncrow

             Perhaps it had something to do with the fact that those AA ratings were based on bogus revenues and unreported losses by both companies. Perhaps it also has to do with their reputation basically flying out the window once accusations of accounting fraud in the billions of dollars started coming. Perhaps  it was really really hard to get a hold of more cash once no creditor could trust their reported earnings or reported asset value. Which of these do you suspect are happening at Blizzard or MS, and if they are, how is this not making the layoff of 600 employees even worse than it is, from a reputation point of view? 

            But anyway, enough of this. The fact that you believe Blizzard is, even after the decline in WoW subscriptions, in any danger of going bankrupt is completely ridiculous. 

            On the “out of context issue”: look, when you can quote me from your original post what your position was if those 600 people were NOT fired so Blizz can stay in business, then we can discuss this further. But you can’t because you didn’t have one. The rest of your post was based on the unproven assumption that the layoffs were motivated by the threat of bankruptcy. Or, too put it in your own words, the entire post was based on mere inferences based on a hypothesis for which you showed no evidence.

            A much more honest position would have been to simply have said: “if Blizz wants to fire 600 people EITHER because they fear they may go bankrupt OR because they simply want to make even more money, I’m ok with it!” 

    • “then 1) move to a socialistic society, or 2) revolt”.
      Both of these are pretty good advices imo.
      If enough do it, maybe we wont have to check so damn often whether we still live in a capitalist market :O

  17. Sign of a release

  18. Honestly, global layoff of 600 is probably not as drastic as it sounds. I bet their NA CS dept alone has over 600 employees.

    • Indeed. Romney would have done better.

    • Agreed.  I feel bad for these 600 people, but this is Blizzard Inc feeling the same (or perhaps lesser as a percentage) economic pains in 2012 that most companies went through in 2009.
       

    • Actually, for me it turns out it’s more drastic than i thought.  As of 2009 they had 4600 employees (most recent reference on wikipedia), so this is probably about a ~10% staff reduction.

      • That’s when they started ramping up expansion, not just domestically but across the pond, as well. Particularly keeping in mind their focus on the asian market and esports stuff, I’m sure they bloated up really quickly.

      • The vast majority of Bliz employees are CS people, largely for WoW. As WoW sub numbers decline, fewer of those people are required.  I updated the OP with some financial details about this news. Bliz has (had?) around 1700 employees in Irvine, of which no more than several hundred are directly on the “development teams.” 

        The people whose names we see or know at Bilz are a very tiny % related to game production or PR. The majority are basically office workers; accountants, office managers, secretaries, clerks, etc, who could be toiling in almost any industry without any real change in their day-to-day responsibilities.

  19. Just re watched the 2008 demo. I can’t help thinking that they’ve gone sideways for 3 1/2 years and now appear to be rushing to get the thing out, and at the same time asking us to be patient as they need more time to hack at it.

    meh! Depressing. 

  20. I guess they don’t need these people for Titan ?
    Couldn’t Blizzard move these people around to other positions until Titan’s arrival ?  
    Surely there’s something they can do in the company ?

    With the amount of bugs in the D3 its pretty obvious they could use a few more people in the QA department 

  21. Like ElementEight said, they did, many years ago. Big mistake on their part IMO. What the then-Diablo III and proceeding sequels could have been, all lost. 

  22. With WoW numbers in decline,  they will be hoping that MoP will keep people hooked but it’s risky to keep so many support staff on. The market is so much more competitive now that it was and Blizzard need to scale back. With new titles a long way off it will be a slow couple of years for Blizzard. I don’t think SC2 expansion will set the world alight, Diablo 3 is what is going to have to carry them through. Having said that the development process for Diablo 3 has well overrun and it certainly appears a little misguided leading up to release.

    • WoW #s are definitely in the decline, and I gaurantee these layoffs are a part of it. My guess is the only reason they didn’t show more #s was because of the D3 1 year subscription tie-in. I imagine SC2 and Diablo3 will indeed bring in plenty of profit for the company, just not sustainable repeatable income. I doubt D3’s development process had really anything much to do with the layoffs. In a vacuum blizzard hasn’t released a title with alacrity or even close to their original release estimates since forever. Wasn’t starcraft’s date announced with the release of diablo and ended up being two years late? Btw for some reason this is getting press but they’ve done this before, like in 2008 they layed off 300 during one of their most profitable years.. *shrug*

  23. as I remember correct he said”in the coming weeks”on conference call 3 weeks ago and today he said it again.
    So,can you explain to me which one is closer? “in the coming weeks”or “soon”?

  24. Sucks for everyone involved. Hopefully they find new jobs fast.

    If most of them were from customer service etc, I just want to know which parts of development was affected. Even a small amount of 600, could still be a substantial amount of development related workforce.

    Also /flame:
    It is because they know D3 will fail!!
    /flame off.

  25. Fire bashiock. Where’s my beta key.

  26. uh bashiok was the one that posted the news…

  27. hehe np , I wish bashiok got fired though 🙁

  28. It does confirm my suspicions that Blizzard isn’t making as much money as they one were.

    But it’s also concerning that if these are PR/GM based layoffs, that when games like D3, MoP and HotS do launch, there will be a crush of issues to deal with and 600 fewer employees to handle them.

    • QA and patch staff aren’t customer service. CS is stuff like forum admins on the cs support sites, chat GMs, call support, things like that.
       
      They’ve automated a lot of these processes now anyway and can filter them more efficiently.

      • “They’ve automated a lot of these processes now anyway and can filter them more efficiently.” 

         That’s the best business double speak I’ve heard all day. You’ll do well in management.   

        • It…isn’t double speak. It’s plain english.
           
          A lot of the CS processes (or systems if you prefer) have been automated via forms on the website or petitions within the game. They’re replied to automatically, and data is gathered automatically, and then, if necessary, presented to a CS employee who will handle that specific case number.
           
          It’s more efficient than what a company like EA does, if you’ve ever had to deal with that. Blizzard customer service gets shit done. Better than most other companies I’ve had to deal with, and a lot of that starts before you even have a problem.

          And how much business double speak do you hear per day in order to make some sort of rubric to calculate it?

  29. The shareholders probably saw the new skill system and UI and said. Lets get the f out of here! :d

    On a serious note though I am unemployed( I am however studying to get a teaching degree) and I personally know how hard it is to be in that situation, so my best wishes goes to them.

  30. Very cool Blizzard is the best i can w8 to play D3 and see the new MMO , because Blizzard in the last yers they ramake the old games and meke better but new ideeas , pfff i can w8 💡

  31. Shame, Shame… don’t you know Blizz? Layoffs are supposed to be on Fridays!

  32. Maybe they should take Bashiok’s salary away and put it to someone who would actually contribute something to the company.

  33. They probably expect WoW to keep shrinking.  Dragon Soul was a terrible raid to begin with– on par with ToC and the like.  Even after all they threw at the game last quarter to gain or at least retain subs, they still lost 100k.  What’s going to happen when they don’t have those things to fall back on?  MoP has been met with, at best, a lukewarm response.  And it’s still probably 8 months to a year out.

    This is what happens when you sacrifice game/community depth (which may or may not have anything to do with difficulty, mind you) for convenience features and accessibility.   It’s fun for a couple weeks, then people realize there’s nothing to do.  So they leave.

    • I think you’re right. 

      WoW is a leaky ship right now, and the continued loss of subscriptions is primarily the fault of the development team. I say this, because after 7 years, people don’t leave because of bad customer service, they’ll leave because the game feels too familiar/old or they don’t like where it’s going.

      So it is just a bad decision, imo, to let go of the low performers in an unrelated department without addressing the real problem area. They should take on some new blood in development in conjunction with what they’re doing with CS.

      I think it’s reasonable to assume it’s their CS that took the hit…  

      tl;dr – Having said that I’m sorry to hear about everyone that lost their job, I’m actually trying to show them support by saying they took the hit when it should’ve been laid elsewhere. 

  34. How will these firings impact future release of shiny, new wallpapers?

  35. I read an AP article today that women are paid at 80% the salaries of their male counter parts.  Maybe they fired 600 men and will hire back 600 women with a 20% cost savings!

  36. Perhaps Kotick and Morheim figured they weren’t going to make enough with the RMAH so they had to cut some staff to make a profit…

  37. Mike Morhaime’s compensation 2010: $16,544,154.00
     
    http://people.forbes.com/profile/michael-morhaime/119128
     
    This isn’t meant to be dumb capitalism criticism, but mere fact check.

  38. The GM staff perform to very rigorous quotas for support tickets.  Most likely commonly dealing with personality/abuse issues and “I deleted an item” type issues.
    If you reduce the user community by a couple million “daily” or “hardcore” players, you’ll also have a reduction in total number of service tickets.  For example if a quota is 20 tickets per hour, reduction in player base may result in only 6-10 tickets per hour  (or less)
    You then wait until you have such a reduction in ticket volume you are able to close an entire building or campus of staff.  (Since operating a campus at 50% staffing would have very high per employee overhead).
    Next, you upgrade your call center to better handle high volume call loads so you don’t need as many telephone operators on a given shift.
    You also upgrade all your servers to an VM-ware type cloud system where you don’t require dedicated hardware per “server”. 
    As you calculate your right-sized staff, you plan your shutdown to clear an entire building/campus.  Efficiency planning is fun and profitable.  Major savings.
    I am surprised they took this long before they came to a major staff reduction.
     
     

    • Pretty funny because about a year and a half ago I had to wait over a week to have an item-related ticket responded to, and that was via email.

  39. haha so now, even though we still don’t know what \soon\ means in blizzardspeak, it’s safe to say that \in the near future, see i’m not taunting you\ means \in the coming weeks. so all those people tried to interpret jay wilson’s statement in the most naively optimistic way, where \in the near future\ meant in just a week or two (ZOMG SIGN OF RELEASE ZOMGZOMGZOMG) can next rest assured that \in the near future\ means \the coming weeks\ which could, by any realistic & impartial assessment of how time is measured, would mean that we could still be 2months away from a release announcement.. 2 months is about 8 weeks, which is like the maximum someone could say when meaning \in the coming weeks\. and since blizzard typically releases games 2 months after they officially announce the relese date, that puts us still at least 3 months out. so it’s time to finally give up on the hope that d3 will be released in march or april (LOL especially march) because it ain’t happenin – sorry. we’re talking may/june at this point, which really is ok with me because i won’t have my new badass computer until then and i’ll have more time to play once summer starts

  40. Has it occurred to anyone that some of these 600 redundant workers may be coming back once D3 hits the streets? All those fresh users demanding refunds will surely require more staff to deal with the flood… (lone cricket chirping). 

    Having been spat out by the system myself in the past, the 600 scrapped workers have my sympathy. It’s the nature of some industries to have high staff turnover. If they are primarily in CS then yeah, I can understand that. 

  41. To those of you that have been or will be fired, have no fear. In about 1 year, they’ll hire you back as part of the iterative program they use!

  42. THE END IS NIGH!
     

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