The aftermath of Activision Blizzard Lawsuit: Will Blizzard be going out of business anytime soon?

Image via Activision Blizzard
Image via Activision Blizzard

On July 20th, the State of California on behalf of the California Department of Fair Employment and Housing filed a lawsuit against global video-game giants, Activision Blizzard.

Multiple allegations of gender-based discrimination, a gap in pay between men and women, and a long-term “frat-boy” culture were made against Activision Blizzard. Furthermore, a failure to act on complaints related to discrimination and sexual harassment was also listed.

On August 3rd, Activision Blizzard announced that company president J. Allen Brack was stepping down from his position after 16 years in the job. He was replaced by executive VPs Mike Ybarra and Jen Oneal as the new joint-leaders.

The lawsuit comes after a recent petition was signed by thousands of Activision Blizzard employees urging the company to take action against the complaints. Regardless, the lawsuit and the overall change in leadership have led to people questioning whether Activision Blizzard will be going out of business anytime soon.

Will Activision Blizzard capitulate under scrutiny?

In a nutshell, the company is highly unlikely to go out of business or even maintain its current state of plummeting stock value. At the start of July, the company’s stock was priced at around $95 USD.

Since then, it had dropped to slightly above $80, which is a loss of around 20%. Regardless, Activision Blizzard is one of the biggest video-game developers in the world, and owns some extremely popular titles such as COD, Tony Hawk’s, Crash Bandicoot, Overwatch, Hearthstone, World of Warcraft and even the Candy Crush saga.

The company had a revenue of over $8 billion in 2020 and a net income (profit) of over $2 billion. With such a scenario and the overall popularity of some of the video game series attached, it is almost impossible for Activision Blizzard to capitulate anytime soon. However, this does not mean that the recent crisis and loss in stock value hasn't incited questions.

On August 3rd, Activision Blizzard CEO Bobby Kotick held an Investor’s call in which he assured company owners about the future of the video-game giants. He claimed that Activision Blizzard will emerge as an example for the overall industry with their response to the crisis:

"I want to start by making clear to everyone that there is no place at our company where discrimination, harassment, or unequal treatment of any kind will be tolerated nowhere. We so appreciate the current and former employees who have come forward in the past and recent days with courage."

Kotick also claimed that the investigation into the matter will continue internally. However, Activision Blizzard has also come under scrutiny for choosing the "WilmnerHale" firm for internal investigation.

The company in question is the same one which helped Amazon stop its workers from unionizing in the past. Regardless, Activision Blizzard’s employees have formed a coalition called “ABetterABK” which criticized the hiring of WilmnerHale and asked for a change.

Bobby Kotick also said the following with regards to the controversy:

"Because our work cannot be successful with diverse voices, views, and talents, we made a commitment to consider diverse slates of candidates for all open positions. And we’ll continue to add resources to ensure this occurs throughout the company. Over the past several years, we’ve made significant changes to address company culture, reflect more diversity within our leadership teams, and create environments conducive to reporting any misconduct. We’ve amplified internal programs that encourage employees to report violations. We’ve reinforced channels for employees to voice concerns in confidential and safe ways without any fear of retaliation. We’re directing additional resources to our compliance and employee relations teams dedicated to investigating complaints."

In conclusion, the company under the new leadership is aiming to investigate and take action against all the complaints despite the criticism against its hired firm.

Activision Blizzard will not be going out of business unless, under extraordinary circumstances. The company has, simply, too many assets to worry about any implications concerning earnings.