Why all the changes? Well, some are no doubt due to a desire to try something different (or just to retire), but one can't help but connect all this management movement with the fact that the stock has dropped 30% in recent months, and that the Q3 results showed a drop of 12% in overall sales. Some of the marquee titles like Destiny and Overwatch seem stagnant. Call of Duty still hasn't regained the sales it reached several years ago, though it's still selling tremendously well.
Perhaps some of this is due to Fortnite taking some of the oxygen away. The market for hardcore players is only so big, after all, and it's hard to expand your audience when you're already one of the market leaders. Investors are wondering where the growth will come from in the future. Esports? Perhaps, though it's not clear exactly how that segment will evolve over time. Mobile? Activision Blizzard's King is doing quite well with Candy Crush, but it seems to have trouble coming up with a new hit of that size.
Of course, Activision Blizzard is not alone in its doldrums. Electronic Arts is facing similar questions about where future growth is coming from. Market leadership makes it difficult to rack up strong growth numbers year after year. Just ask Apple.
What should these giants do? Perhaps look at some acquisitions; picking up a company with proven properties in key market segments should be good for growth, if you can make the right picks. (King Digital has certainly performed well for Activision Blizzard.) Mining the back catalog to bring back the hits of the past could be lucrative as well, if you carry it off properly. (Command & Conquer? Tony Hawk?) Both of these companies have many great hits in their past, some of which might be dusted off and brought back to great acclaim.
It will be interesting to see what happens over the course of 2019.
Update: The first big news has already dropped, as Bungie splits away from Activision Blizzard to put Destiny completely under Bungie's control. The game hasn't been performing as well as Activision Blizzard had hoped, clearly, and Bungie will see if they can do better. However, Activision Blizzard is now down two key franchises (Destiny and Skylanders) which had been major contributors to revenue in the past few years. What will replace them? It's not clear what, and certainly creating a franchise that can perform on the scale Activision Blizzard would like (hundreds of millions in revenue per year; ideally a billion or more) is an expensive, time-consuming gamble. Unless you buy one that's already doing well... I expect this will put even more pressure on Activision Blizzard to find something like that.
What this also says, pretty clearly, is that Activision Blizzard has lost faith in the ability of Destiny to grow to the size they need. The game could still be a good performer for Bungie, which doesn't necessarily need such huge numbers. Still, I wouldn't be too surprised to see Destiny go free-to-play at some point in an attempt to grow the user base significantly. That's easy to say, but remarkably difficult to pull off -- you need to have a game design that works well with monetization and can retain customers for the long haul, and it's not clear Destiny has that.
Buckle up, this may be a bumpy ride.
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