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The best reporting on Activision I’ve seen has been from outside the games industry and games journalism (I’ve preferred writing from this link, Variety, Bloomberg, etc.)

Activision is not concerned about whether they are making money now. They are concerned about whether they can continue to make money. They have profitable, mature lines but nothing in the battle royale genre that is quickly growing and a threat to both Call of Duty and Overwatch, not to mention what’s next after that. They need to invest heavily in acquisitions and development of new titles using their existing brands. The layoffs came from areas of the company that wouldn’t be able to help with that.

The morality of layoffs can be debated, of course, but analysis of the reasoning has been too absent from close followers of the games industry.

> but nothing in the battle royale genre that is quickly growing and a threat to both Call of Duty and Overwatch

That's not really how games work though. Games are mainly emotional purchases of mass-produced art, not commodities like Corn or Oil. Games are not fungible like this. Telling Activision "you must make a battle royale game because Fortnite" is a quick way to watch them burn a lot of money on something that likely won't be very successful.

It's like saying, "Hey Warner Brothers. Disney just made a bunch of money making this 'Frozen' film, so you need to also make a movie about Magical Sisters in some sort of Medieval European Ice Palace". Technically, they can execute on this, but the result is unlikely to be successful.

> They need to invest heavily in acquisitions and development of new titles using their existing brands. The layoffs came from areas of the company that wouldn’t be able to help with that.

With all due respect, I believe Activision needs to do the exact opposite of the above.

They need to invest in their existing successful titles (WoW, Overwatch, Diablo, Hearthstone), all of which have growth opportunity Activision has ignored in various amounts. And Activision needs to constantly be developing new brands with innovative new games behind them to experiment with. This is a sustainable approach to business in an industry where the market demands can shift wildly literally overnight.

Trying to acquire their way out of this, and recycle their old brands year-over-year into quick products, is how their product quality dropped in the first place. It's not a healthy way to handle the market, it's not a sustainable way to grow their business, and it's why they constantly worry about "whether they can continue to make money".

> It's like saying, "Hey Warner Brothers. Disney just made a bunch of money making this 'Frozen' film, so you need to also make a movie about Magical Sisters in some sort of Medieval European Ice Palace". Technically, they can execute on this, but the result is unlikely to be successful.

Maybe a more apt example is "Hey WB, Marvel just made a huge amount of money making a 'Shared Superhero Movie Universe'. You should do that too".

Although I guess WB is finally starting to make good movies in Wonder Woman, Aquaman, and maybe Shazam?

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In any case, I agree with you. Battle Royale games are clearly the hot new thing at the moment, but Hearthstone (Blizzard / Activision) basically created the online collectable card game (yeah: MtG is the original game, but it never had a good and/or profitable video-game version before Hearthstone).

The goal of these game companies should be to discover the NEXT big game genre. Battle Royale is big today, but it will be years before you can launch a new Battle Royale game on the same quality as Fortnite.

New Genres pop up all the time: MOBA (League, DOTA, HOTS), MMORPG (WoW, Guild Wars, Final Fantasy, Eve), and now Battle Royale. Who knows? Maybe the next major genre will be robot-cars with rockets on them that play soccer. (Rocket League, except no clones have been made yet!! Think about it...)

I feel that the structural components of these large gaming publishers are actively working against them creating an environment to discover any new thing, let alone a new game genre. For instance I just do not believe that these large companies have the logistical bandwidth/incentive to not chase a 100MM hit, and these larger publishers have clearly learned from the post-MMO, post-Kickstarter, F2P/DLC landscape. It was quite a few years ago when I heard the anecdote that all new proposals should have a DLC/loot box hook for projects, and it just makes so much sense. Valve and others trailblazed the concept that you could convince people to part with their money for a chance of getting something of perceived value. Everything they have been doing is to create ecosystems of engagement to create those long relationship/impulse opportunities. To me, this is optimizing for the fact that most consumers in the market seem to have less free money for the traditional model that they are used to, but are willing to leak out a few dollars here and there en masse. From the platform side the console churn/complexity that was there in the 90's is lessened, slowed, and standardized.

The organizations themselves feel like they can't handle 100 1MM projects compared to a single 100MM project just from leadership and management but that's not something I blame wholly on these companies, it's a structural thing in most public companies right now. From a simple analysis it is so much less risky for them to just acquire a new development firm with a sure thing/hit that can be shoved down their sales funnel. You gain the best parts of the corpse too: the employees, the IP, the proven product, and the future and recurring sales. Sure they'll lose the employees, but the rest of it will carry weight until the IP is forgotten. Even right now the IP for both EA/Activision is probably still worth a ton if they had to part it out.

In a more theory kind of sense I just feel like this is one of the problems with how public companies work right now. Once you are of a certain size and exist primarily in the B2C space, the mindset becomes optimize, reduce costs, and make GAAP profits. While I feel like historically this may have been a healthy transition from companies at (today's dollars) 50MM-150MM AR to take them to 500MM+ AR it doesn't translate as well when a 100MM revenue increase is the only way to even move the needle when the majority of the company's revenue steals the attention.

I agree with all that (I try not to think about how we’ll never get a lovingly made, non-F2P Warcraft IV.) I just think that even if their growth strategy is bad or callous, it’s still a strategy and the restructuring/layoffs aren’t only to cut costs.

They are releasing Warcraft 3 remastered - maybe if it does really well they would do a Warcraft 4...

> but nothing in the battle royale genre that is quickly growing and a threat to both Call of Duty and Overwatch

This makes the assumption that if they make it, the market will obviously move to their product. The genre has a fairly fixed market, and taking away players from their previous investments (time and money) will take an exceptionally good game.

Ironically, making good, interesting games is the one thing that Activision/Blizzard are/have been shifting their focus away from, ever since the iconic "I want to take the fun out of making video games" statement from their CEO.

> I want to take the fun out of making video games

Which is just insane. Part of the compensation for game developers is the love of their trade; without that, or undermining that, then it's just a low paying, high stress, and life wrecking tech job.

Making a video game is not fun. Designing one is, but there's so much elbow grease needed to get a design to production that most people who want to make one don't ever complete.

Companies like Activision wants to reduce the risks of failure (where failure means sales don't reach target). Therefore, they cannot trust experimentation (where all the fun in game making comes from). Anyone looking for this should instead turn indie!

The latest Call of Duty game has a battle royale mode. I can't recall hearing anything about their BR mode after launch. Clearly, just making a BR game isn't a guaranteed path to success even when it's backed by a major brand name.

Have we forgotten all the bland brown cover shooters that weren't successful, or the pile of WWII shooters before that? Somehow the industry and many of the customers continually forget that chasing the latest trend typically doesn't pan out. If I want to play BR, then PUBG & Fortnite already exist.

The thing is, I know I'm not the only person who doesn't like BR, and there's certainly money to be made without a BR mode. Just look at Rockstar, they're doing absolutely fine financially.

The Call of Duty BR mode is not free. It's very good, far more polished than Apex Legends.

Neither is PUBG and it was the dominant BR game for a reasonable length of time. I still hear about PUBG and it seems to get more viewers on services like twitch than CoD. This is despite the fact that it started without the kind of brand recognition CoD has and it has a history of being janky.

>but nothing in the battle royale genre that is quickly growing and a threat to both Call of Duty and Overwatch

The past year's Call of Duty had a battle royale mode, which was decently popular. Its problem was that the purchase of the game was a barrier to entry compared to free competitors like Fortnite and Apex.

> EA's quarterly results are down,

And yet they posted pre-tax profits of almost 1.5 billion dollars in 2018 (their highest profit numbers in the last 4 years). That's hardly the mark of a company that's ready to go under.

Growth is not the only measure of a companies health.

EA is really struggling with their Star Wars license. If they put out just 1 good Star Wars game they'd see insane revenue. I haven't purchased an AAA title in years and I would buy an okayish Jedi Knight IV.

My dream is a modern Star Wars/TIE Fighter space shooter. Those were some of my very favorite games back in the late Win 3.1/early Win 95 era.

I suspect it wouldn't have the same widespread appeal as an adventure/shooter/RPG like Jedi Knight, but it could be also be made at a pretty low cost, and it's not like the license restricts how many Star Wars games they can release. May as well go make a space shooter with a smaller team while they still have the license.

Why does everything have to get the AAA treatment these days?

My dream is a modern Star Wars TIE Fighter space shooter...in VR.

But I doubt the VR market is big enough to justify the investment that’s demanded by the Star Wars license. Like you say, AAA is sometimes a straight-jacket.

Elite Dangerous is as close as you'll get.

VR or non VR, refresh of X-Wing vs TIE Fighter with modern graphics would be epic...

> Why does everything have to get the AAA treatment these days?

The same thing that causes companies who are making record profits to be considered underperforming: growth at any cost. For EA and Activision/Blizzard (and their big name kin), if a game doesn't have the potential to make significantly more money than its peers, it's not worth making.

Which has the knock on effect that championing a smaller project through internal green light is not as good for your career as waiting for the chance to lead a AAA title- I’m guessing

Some of the space battles in Battlefront 2 approached the fun I had playing X-Wing and TIE Fighter, back in the day.

It's a little too fast paced and frenetic, but dodging between large girders on a huge space station while being chased by an enemy A-Wing is still quite fun. Or looping around the back of a Star Destroyer in an X-Wing.

If they took that engine (which already featured decent enough AI controlled bots), slowed things down a bit, and wrapped a campaign around it all, I'd be sold.

Because Disney will never give its licences to a company that ships less than 5m copies per SW game.

That's one of the reason EA is one of the only publisher big enough to have the rights.

To follow up on it, EA isn't even terrible on having the studios make relatively great games. A quick look at the skyrocketing success of Apex: Legends, announced _at the EA call_ on Feb 5th, has already surpassed 25M accounts and 2M concurrent users.

They need to focus on what's made them most of their money over the past years, game sales for series games (FIFA, NASCAR, etc.) and great first-party titles that aren't on a rushed release schedule. Apex is a great example of the latter. Nobody knew it was coming, and it ended up being a polished game that will probably make EA a significant portion of money.

Disclaimer:? I play Apex, and legitimately enjoy it. I also play Anthem, which although not the _best_ game in the world, is still of pretty high production value from what I've played.

Though from what I read, EA allegedly had zero input into Apex. That might be why it is becoming popular. I just tried Apex a few days ago, it was pretty fun.

How much input did they have into Titanfall 1&2? Those weren't exactly gangbusters.

EA gets a lot of the blame for TF 2's failure.

"Of course, Titanfall 2’s disappointing sales aren’t as much to do with the nature of its content as much as it is about timing, and that’s entirely on EA. Sandwiching Titanfall 2 between Battlefield 1 and COD: Infinite Warfare hasn’t helped the game at all. Seriously, what were they thinking? Apparently, even the game’s producers were left in the dark behind the decision-making process."

https://wegotthiscovered.com/gaming/poor-titanfall-2-sales-e...

https://www.forbes.com/sites/erikkain/2018/01/31/eas-anthem-...

Titanfall 2 had one of the best singleplayer campaigns for an FPS over the past 5 years. Really fun and unique.

It's multiplayer was good too, but it was launched in a really bad spot that was 100% EA's fault.

Whilst the launch window for Titanfall 2 was pretty bad, I have a feeling that the multiplayer and longevity of the game would have suffered regardless. The skill ceiling is too high for most players, and I feel that without the casual audience the playerbase would drop off as it has even without competition from the other shooters.

I started playing maybe 2 weeks after launch on pc, there weren't that many players. And I'd be running around looking for a titan and some solo pilot would be flying through the air parkouring and one shot no scope me. I wouldn't even see them. After about 30 minutes of getting murdered like that I just stopped playing. Luckily I didn't pay for the game. So yeah no real onboarding, people were way too good.

Titanfall 1 was still a decent game, and it garnered a lot of support from fans. I played it, but not the sequel.

Apex is a great game. Throw in some force powers, lightsabres, and holocrons, and you suddenly have a great Star Wars game.

Just think of how many different colours of lightsabres would be available through microtransactions. I would have said grey area gambling but you did specify okayish.

Disney's perfectly happy with EA's treatment of the Star Wars license, so what could be wrong? /s

EDIT: Downvote away, but that is Disney's public stance on the topic.

I don’t have a ton of direct insight into gaming, but in general when a business that’s dependent on development is facing headwinds and doubles down on hitting the numbers, that’s a bad sign. It’s often a signal that the firm is not investing in the business.

IMO, modern business models for gaming (ie casinos for elementary school kids) are problematic and are turning kids off. There will be a harsh reckoning as more and more people figure that out.

Or even accelerating the rate at which players age out of their target market. There's only so many games you can be subjected to the loot box marketing spree before you start turning away from major publishers all together. I like to sit down and enjoy my video games, not have carrots dangled to open my wallet after every chunk of gameplay.

Amen. I just got a Switch and Zelda: Breath of the Wild, and it's really nice to just sit down and play, knowing that since I have already payed everything upfront, the next 100 hours of gameplay are mine to enjoy without any business transactions interrupting it.

Confused about this response. The person it's responding to says Activision is doubling down on development by saving money in non-development. That's sounds like the opposite of "doubling down on hitting the numbers" and more like putting the money in the correct place, R&D, while saving it in others.

Wow, this is the first time I hear this argument, and it is a really good one.

To enjoy and play games require some initiation to it as a kid. And the kind of games marketed at kids today I don't think do a good job at creating this interest. That could really hurt the industry long term.

I mean, they aren't saying that players don't products, the point is that when "players will still happily arrive and spend lots of money" then (unlike earlier years) those players are leaving some other product (quite likely also made by one of the same few major publishers!) and spending less money there, so building that well-crafted product didn't bring new sales but cannibalized existing sales; and if the industry builds twice as much well-crafted products, the total revenue for the industry will be pretty much the same, with the only difference being that maybe one publisher will gain slightly more sales at the expense of another.

>If you build a well designed, well crafted product

Not a strong suit for triple-a developers.

I'm not sure developers are really the problem. It seems like over the past 10-15 years the video game publishing industry has adopted Hollywood turd-polishing tactics (late review embargo dates, extremely frontloaded marketing blitzes with almost no useful/accurate information) to try to sell troubled productions as-is instead of overhauling them. Anthem absolutely reeks of this, for example.

Developers aren't the root cause but when you're making a AAA game the required team size alone pretty much means you're not going to have an all-star team of devs.