Blizzard cuts

[Thrik]

Once again a large round of industry cuts is upon us, this time 600 Blizzard staff with 10% of them (60) coming from development teams:

Blizzard cuts 600 employees in organizational shift

Blizzard Entertainment will lay off around 600 employees -- around 90 percent of which will come from its non-development departments -- after completing a review of its "current organizational needs."

The Irvine-headquartered company will eliminate those positions across its global workforce; as of 2009, Blizzard employed approximately 4,600 workers around the world.

"Constant evaluation of teams and processes is necessary for the long-term health of any business," says Blizzard CEO and co-founder Mike Morhaime in a statement received by Gamasutra. "Over the last several years, we've grown our organization tremendously and made large investments in our infrastructure in order to better serve our global community."

He adds, "However, as Blizzard and the industry have evolved we've also had to make some difficult decisions in order to address the changing needs of our company."

Blizzard says its World of Warcraft team will not be impacted, nor will its development and publishing schedules for upcoming releases like Diablo III, StarCraft II: Heart of the Swarm, Blizzard DOTA, and its Mists of Pandaria expansion for World of Warcraft.

This news comes several weeks after the developer's parent company Activision Blizzard revealed that subscriber numbers for World of Warcraft have been slipping, dropping from 10.3 million to 10.2 million during the October to December quarter.

The developer notes that accounting changes from this headcount reduction are not expected to be material to Activision Blizzard, and were included in its parent company's 2012 financial outlook.

I hope our several Blizzard MapCorians are OK?

[Mazy]

Yikes Didn't expect that, hope our core fellas are hanging in there, sucks but I guess noone is safe these days. Though I guess that what Morhaime says has something to it, a company of that massive size is definitely bound to get a bunch of fat added to it over the years. It really surprises me that the cuts also comes to the development teams tho.

[Zyn]

No worries! Mapcorians have superpowers that prevent them/us from being sacked ... right?

[Vilham]

Yeah hope everyone still has a job, im concerned by them cutting 540 management roles, Blizzard currently is very seperately from Activision, this sounds very much like they could be merging, which would only be bad for Blizzard.

[e-freak]

blizzcore guys alright? It's kinda worrying seeing how many people recently went there and now this

[marks]

Blizz laying people off = beginning of the end.

[GregBoffins]

If I read the article correctly, it mostly says it's non-dev staff, mostly.

[Thrik]

Yeah, still 60 developers going though — more than most studios release in one go. Hopefully noone from here will be caught in the fire.

[GregBoffins]

I wouldn't be surprised if it were contracts too that didn't get renewed.

Diablo 3 ramping down, I assume Mysts of Pandaria is ramping down too if a beta is here in a few months.

So I guess it makes sense to let go 60 employees across a few projects.

(I've been let go twice so I am more than sympathetic with the chaps now looking for work)

[Izuno]

I suspect bulk of the layoffs could be in customer service. They've already said Blizzard Q4 2011 revenues are down 52% but obviously a big chunk of the decline was from raw sales of Cataclysm (retail or download) expansion packs that released Dec 7, 2010. So the comps for Q4 2011 are really tough.

That said, I think the issue is WoW subscribers are down. At end of Q4 they said something like 10.3 million active WoW subscribers but ARPU was down from Q3 2011. Combine with about 11.1 million subscribers worldwide at end of Q3. This nets out to China/rest-of-world subscribers increased and US/EU subscribers decreased...and thus average revenue per user dropped because people in China, on average, pay less per month than people in US/EU. I know they pay by the hour (often at Chinese internet cafes) but the rate is pennies on the hour. Even if you played 50 hours per week, you'd still pay less than average person in US paying around $13 or $14 when taking multimonth (3 or 6 or whatever) renewal discounts. In other words, more China/ROW subscribers and less US/EU = less total revenues from subs.

When that happens, you gotta cut costs. It's cold hearted to think this way but suppose you have 600 people with average annual pay+benefits at $100,000 each (i might be off but that's the order of magnitude). Cutting then could net $60 million/year.

Anyway, in their eyes the only viable response to subs going way down was to cut a lot of customer service jobs since your rates of needing customer service index directly with the size of the player base. Still, I don't think the all in pay+benefits for average CS person was $100k, but even it was $50k that is a non-trivial total amount of savings.

However people from Blizzard here please let us know if the above gorilla math is at all real, though I know you can't say anyway.

Otherwise if anyone here was impacted my condolences.

[Minos]

Really sucks to see so many people being let go. At least no mapcorian was involved afaik.

[GregBoffins]

Yeah I can see that as a fairly good reason.

According to this article in 2008 (yeah it's a few years old but you'll get the idea) http://www.gamasutra.com/php-bin/news_i ... tory=17062 in 2008 EU and NA subs combined totaled 4.5 million.

EU sub income = 40,060,000 (20.03 USD at today's exchange based on a 15 EU month subscription)

NA sub income = 37,375,000 (14.95 USD for today's monthly subscription)

Cataclysm sales = 300,000,000 (based on 60USD a copy and 5 million sales) http://www.playerattack.com/news/2011/0 ... y-popular/

tally = 377,435,000

377 million might seem like a lot but when you factor in wages of employees on the wow team, costs of all the support staff around the world. Blizzard have offices every where to support different languages. Server costs and so on would definitely eat in to that easily.

[Zacker]

Along the lines of Izuno, I am fairly sure that this is like 90% related to WoW support personnel. Considering the significant reductions in userbase and the fact that WoW is now quite mature, it is not unexpected. They are still actively hiring people as much as always so I see no reason to take this as a general fear of Blizzard going down or anything like that.

[GregBoffins]

Along the lines of Izuno, I am fairly sure that this is like 90% related to WoW support personnel. Considering the significant reductions in userbase and the fact that WoW is now quite mature, it is not unexpected. They are still actively hiring people as much as always so I see no reason to take this as a general fear of Blizzard going down or anything like that.

It does say in the article it IS 90% of support staff

[Zacker]

Along the lines of Izuno, I am fairly sure that this is like 90% related to WoW support personnel. Considering the significant reductions in userbase and the fact that WoW is now quite mature, it is not unexpected. They are still actively hiring people as much as always so I see no reason to take this as a general fear of Blizzard going down or anything like that.

It does say in the article it IS 90% of support staff

I can see my interpretation of their statement is quite conservative But no, what what I was really hinting at was the game in question and my guess of department compared to their statement which was a bit more general (ie. non-dev can mean everything from administration over BI to marketing).