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