Activision Blizzard fallout intensifies even as it beats on earnings

4 Aug 2021

Image: Dinosaur918 via Wikimedia Commons.

The company now faces sponsor withdrawals, an investor class-action lawsuit, further resignations and increased pressure from workers.

Activision Blizzard’s quarterly earnings report beat Wall Street expectations even as the company continues to suffer the seismic consequences of its harassment and discrimination lawsuit.

The gaming company reported $1.92bn in net bookings for Q2 of 2021, a decline of 7pc year-on-year but edging out expectations of $1.89bn. Revenue rose to $2.3bn while adjusted earnings increased to $1.20 a share.

Its number of monthly active users was 408m, down from 428m in the second quarter of 2020. Following the earnings report, the company’s stock climbed more than 5pc on Tuesday evening (3 August), even as the fallout from a California Department of Fair Employment and Housing lawsuit continued.

In the wake of widespread allegations of harassment and sexism at the game studio, president of Blizzard J Allen Brack resigned several hours before the earnings call. Brack was named in the lawsuit as having allegedly failed to take action to deal with complaints of harassment.

Now, Blizzard’s head of human resources, Jesse Meschuk, has also left the company following allegations by numerous employees that HR was part of the problem at the studio.

On release of the earnings report, Activision Blizzard CEO Bobby Kotick pledged a change in how the company handles such allegations in future.

“People will be held accountable for their actions,” he said. “That commitment means that we will not just terminate employees where appropriate, but will also terminate any manager or leader found to have impeded the integrity of our processes for evaluating claims and imposing appropriate consequences.”

This tone was echoed in the earnings report itself, with the company promising it was “taking swift action to ensure a safe and welcoming work environment for all employees”. Activision Blizzard also said it had engaged a law firm to conduct a review of its policies and procedures to ensure that it maintains “best practices to promote a respectful and inclusive workplace”.

The company’s employees, however, appear to be unsatisfied with the steps it is taking. IGN reported that a group of workers from across the company’s constituent studios have sent a joint letter to Kotick and the executive team criticising the company’s choice of law firm for consultation on workplace policies.

The letter says the firm has “pre-existing relationships with Activision Blizzard and its executives,” and a track record of “discouraging workers’ rights and collective action” and “protecting the wealthy and powerful.”

Company employees who walked out last week published a list of demands, which included an audit performed by a neutral third party, pay transparency, a reform of hiring practices to become more inclusive, and ending forced arbitration for employees.

The new letter sent to Kotick has requested the company address this list of demands. It also said that employees are undertaking their own steps to improve workplace culture including establishing mentorships and holding worker meetings and listening sessions.

Despite the positive earnings report, many of Activision Blizzard’s investors are also unhappy. Rosen Law Firm announced that it has filed a class-action lawsuit on behalf of holders of the company’s stock, and has encouraged investors who’ve taken large losses to join in the legal action. This new suit alleges that the company violated US securities law by failing to disclose its ongoing problems of toxic workplace culture as well as the California investigation.

On top of this second lawsuit and ongoing pressure from workers, the company has taken a further financial hit as T-Mobile appears to have withdrawn sponsorship of Call of Duty League and Overwatch League. The telco has yet to publicly confirm its decision, but its logo has disappeared from all Activision Blizzard promotional materials.

Activision Blizzard. Image: Dinosaur918 via Wikimedia Commons (CC BY-SA 3.0)

Jack Kennedy is a freelance journalist based in Dublin