Although the year is young, 2019 hasn’t been particularly kind to Activision Blizzard. With the departure of a number of executives, stock price dropping, an investigation for possible fraud, and Blizzard recently admitting that itdoesn’t have any big releases plans for 2019, things have not gone according to plan for the massive company. Arguably the biggest news in 2019 was the sudden and abrupt end to the Activision and Bungie forDestinyand now fans have a few details on why that split occurred.
As part of Activision Blizzard’s earnings call this week, President and Chief Operating Officer Coddy Johnson discussed thesplit between Activision and Bungieand admitted that the leadership team is confident that it was the right decision. Unsurprisingly, the main reason why Activision decided to end the 10-year contract early was that theDestinyfranchise as a whole was failing to meet its commercial projections and things didn’t appear to be getting any better after a 2019 financial review showed signs that the franchise wouldn’t be a big contributor to the company’s profit. These statements line up with previous comments Johnson made last year regarding the disappointing sales numbers ofDestiny 2 Forsaken.
“Destiny is highly critically acclaimed, high-quality content, but it was not meeting our financial expectations.”
Interestingly enough, Johnson also revealed that Activision Blizzard first learned in November 2018 that Bungie was interested in getting out of the publishing deal. The separation was actually completed in late December, before being publically announced in early January. As Johnson put it, ending the deal was amicable on both sides and ultimately allows Bungie to continue focusing on the IP that they originally created while freeing upActivisionand its considerable resources to focus on more opportunities for its current its franchises.
The resources Johnson referred to on this call were Activision support studios, High Moon and Vicarious Visions. These studios were assigned to the Destiny IP to help the developers at Bungie to churn out new content faster and in some cases, assist withgetting the PC port ofDestiny 2running. While both studios continue to work with Bungie through this transitional period, Johnson went on to admit thatDestinywas tying up on of the companies scarcest resources: developer talent. With work now wrapping up on that IP, Activision will soon be able to reassign to other projects either there or potentially assisting Blizzard. Ultimately, the goal over the course of 2019 is to increase the number of developers on these internal projects by 20 percent in aggregate.
Unlike the other well known Activision Blizzard franchises likeCall of Duty, theDestinyIP has always been owned by Bungie as stipulated in the original deal between the two companies. It seems that fact was also a motivating factor to end the deal for some of Activision leadership as Johnson admitted that “controlling the underlying IP gives us the chance to move in with new experiences and new engagement models which also come with new revenue streams and, structurally, higher economics when you own the IP.”
While the Activision/Bungie split was a big talking point, the earnings call also confirmed the rumors that the company would belaying off a large portion of its staff. Despite announcing that 2018 was a record-breaking year for the company, Activision Blizzard is cutting costs and reducing its global staff by 8%, which translates to nearly 800 employees. The news comes at a tumultuous time following previous announcements such as the increased paid dividends to shareholders by nine percent and new CFO, Dennis Durkin, getting a $15 million signing bonus earlier this year.
