Fortnite effect strikes again: Activision to lay off 800 workers

Epic Games' "Fortnite" has been siphoning attention - and potential sales - from other companies. Photo / Supplied

Video game maker Activision Blizzard is laying off nearly 800 workers as the company braces for a steep downturn in revenue following the best year in its history.

The cutbacks announced Tuesday illustrate the boom-and-bust cycles in an industry whose fortunes are tied to video games that can have a relatively short lives before players move on to the next craze.

Right now, Epic Games' "Fortnite" is a hot fad that has been siphoning attention — and potential sales — from the titles made by other companies.

Although Activision also still owns popular games such as "Call of Duty" and "Candy Crush," it expects its revenue this year to fall by about 20 per cent to US$6.03 billion ($8.8b).

Activision will cope trimming 8 per cent from its workforce of nearly 10,000 people and assigning more of its remaining employees to work on "Call of Duty," ''Candy Crush," and several other of its most popular titles.

The Santa Monica, California, company had already reshuffled its leadership, even though it profits rose last year by more than five-fold to US$1.8b. Revenue climbed 7 per cent to US$7.5b, the highest since Activision's inception 40 years ago.

But CEO Bobby Kotick said the performance fell shy of the company's expectations, prompting a re-evaluation of its priorities and a pruning of its workforce.

This year "will require significant change to enable us to achieve our long-term goals and objectives," Kotick told analysts during a Tuesday conference call. "We're making changes to enable our development teams to create better content for our biggest franchises more quickly."

Severance pay and other costs incurred in the layoffs will result in accounting charges of about US$150 million.

Even as jettisons workers as some of its revenue evaporates, Activision said it will also boost its stockholder dividend by 9 per cent from last year to 37 cents per share.

Activision's stock rose US$1.33, or 3 per cent, to US$43 in extended trading after the layoffs were announced.

- AP