Is America’s Biggest Video Game Maker Losing Its Magic?
(Bloomberg Opinion) -- Activision Blizzard Inc. is under siege. The largest U.S.-based video-game publisher is facing multiple regulatory probes over its workplace culture, but it could soon have another serious problem: its games.
Back in July, the California Department of Fair Employment and Housing sued the company on allegations it had failed to protect female workers from harassment. And last month, the Wall Street Journal reported that the Securities and Exchange Commission has opened an investigation into how Activision Blizzard dealt with employee discrimination issues.
But those scandals don’t appear likely to derail the company. In addition to the modest $18 million agreement it reached with the Equal Employment Opportunity Commission last Monday, the most likely outcome of these inquiries is the publisher settling with authorities, paying fines and committing to stricter compliance polices.
A larger problem for Activision Blizzard may be that its games this year aren’t capturing the zeitgeist the way they once did. Recently, Baird analysts published a report that revealed searches for “Call of Duty” and “World of Warcraft” were down markedly from last year, falling 32% and 44%, respectively.
To make matters worse, the company’s formidable World of Warcraft title is facing unprecedented competition from an unusual source: Amazon.com Inc. Amazon, which has been known for several high-profile gaming failures, put out its latest title, New World, last week. The release appeared to be an instant success, becoming the most-played game of the year on the Steam platform, and overwhelming Amazon’s servers, forcing players to wait for hours to get into a session. It seems far-fetched that the game could overtake World of Warcraft, but it could easily lure some players away.
Then there’s Call of Duty, arguably Activision Blizzard’s most important business. Last year, the company’s Activision segment — nearly all of which is Call of Duty — accounted for 55% of the company’s operating profit. The next installment of the game, Vanguard, comes out in November. If the title falters, it would spell big trouble for the company’s future earnings.
Already, there are troubling signs. The company has been conducting extensive “beta” testing for the new release, putting out a public demo that allows players to assess the state of the game. So far, the Reddit message boards dedicated to the game are quieter than usual, and host a litany of complaints. Unless various bugs are fixed, wrote one Redditor, “It might just be the first COD I pass on.”
By contrast, Call of Duty: Modern Warfare’s beta two years ago impressed early players with its revamped graphics engine and improved gameplay. The positive reception by fans presaged record-breaking sales for the franchise that year. Unfortunately for Activision, 2021’s Vanguard is pointing in the opposite direction.
I’ve also played the Vanguard beta, which ended in late September. And I, too, found it riddled with technical issues — including poor map design, lackluster control and a distracting art style. After buying every Call of Duty game over the past decade, I have no interest this year.
At the end of the day, success in the video-game industry comes down to the quality of a company’s games. This year, Activision Blizzard’s prospects remind me of two titles it published during its golden era in the 1980s: Pitfall and Kaboom. (For what it’s worth, I loved them both.)
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Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.
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