“World of Warcraft” creator Blizzard Entertainment, which had been immune from broad staff cuts throughout its 20-plus-year existence, announced plans Wednesday to slash 600 positions from its payroll.
Roughly 60 of those jobs will be game developers, with the rest coming from other divisions. While the company did not specify precisely where it will trim the extra workers, industry observers expect the majority to come from the customer-service unit.
“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,” said Mike Morhaime, CEO and co-founder of Blizzard Entertainment, in a statement. “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.”
Activision-Blizzard, the parent company of the Blizzard studios, said accounting changes from the cuts are not expected to be material and were included in its 2012 financial outlook.
Blizzard’s “World of Warcraft” is a multibillion-dollar franchise but is no longer growing as it enters its eighth year. Between the fourth quarter of 2010 and fourth quarter of 2011, the game’s subs count fell by roughly 2 million. And while “WoW” is still far and away the leading massively multiplayer title on the market, that atrophying player base is suspected to be the prime cause for the layoffs. Blizzard took pains to note, however, that the “World of Warcraft” team would not be impacted by the cuts.
“?’Warcraft’ was a money machine for many, many years,” says John Taylor of Arcadia Research. “The subscription numbers peaked out and have been eroding over the last several quarters. My sense is they took a pretty good look at their expense structure that they didn’t need to worry about previously and decided to tighten things up a bit.”
Blizzard has a full slate of games under development, with several due out this year — including the highly anticipated “Diablo III.” A sequel to the popular “Starcraft” series is also likely. Further down the path is a project codenamed “Titan,” the company’s next big massively multiplayer game.
And despite the drop in customers, “World of Warcraft” is still far and away the leader in the online gaming universe. According to the most recent numbers provided by Blizzard, it has 10.2 million active players — and has yet to fully expand into China (an area where it’s expected to make tens of millions of dollars).
There really hasn’t been a viable competitor to the game to date, but many are keeping an eye on EA’s recently launched “Star Wars: The Old Republic”. That game sold more than 1 million copies in its first week and has seemingly captured the public’s interest, due to a combination of gameplay and love of the “Star Wars” franchise. Players immersed themselves in the game for an average of five hours per day — logging some 28 million hours in the first 10 days.