Activision Blizzard's bad year began on July 20. That's when California's Department of Fair Employment and Housing filed a suit against the company, accusing the gaming giant of discriminating against its female workforce and fomenting a "frat boy" workplace culture. It's been a turbulent time ever since, culminating in a Nov. 16 report from The Wall Street Journal that puts CEO Bobby Kotick's future with the company in doubt.
Citing internal documents and people familiar with the matter, the Journal reports that Kotick was aware of several concerning workplace issues within the company, including an alleged rape of a woman by her supervisor, yet he didn't disclose that knowledge to Activision Blizzard's board of directors.
An alliance of workers across Activision Blizzard responded by calling for Kotick to be replaced as CEO. It organized an employee walkout on Nov. 16, the same day the report was published, that attracted more than 150 people, and created a petition signed by over 1,000 staff members demanding Kotick's resignation.
Kotick didn't directly respond to the demands that he leave the company but did release a statement on Nov. 16 with general comments on the situation.
"As I have made clear, we are moving forward with a new zero tolerance policy for inappropriate behavior -- and zero means zero. Any reprehensible conduct is simply unacceptable," he said.
On Nov. 17, a group of shareholders sent a letter to the board of directors to seek the resignation of Kotick and other executives, according to The Washington Post. This group holds 4.8 million shares out of a total of roughly 779 million, the Post noted.
On Monday, Nov. 22, Activision Blizzard announced a "Workplace Responsibility Committee". It'll initially have two independent directors who'll monitor how the company changes its workplace culture and addresses the allegations of misconduct and discrimination. "The Committee will require management to develop key performance indicators and/or other means to measure progress and ensure accountability," the company said.
Since July, over 35 employees have been fired or pushed out Activision Blizzard in relation to the company's attempt to improve workplace conditions, according to the Wall Street Journal.
Activision Blizzard is one of the biggest gaming companies in the world. It owns Call of Duty, World of Warcraft, Diablo, Crash Bandicoot and many more hugely popular franchises. Last year it recorded $2.2 billion in profit. Here's everything you need to know about the evolving situation.
What is Activision Blizzard accused of?
The DFEH's suit accuses Activision Blizzard of workplace discrimination. It alleges women are compensated unfairly -- paid less for the same job, scrutinized more heavily than their male peers -- and subject to considerable harassment. The agency called Activision Blizzard a "breeding ground for harassment and discrimination," in which women are subject to regular sexual advances by (often high-ranking) men who largely go unpunished.
Illustrative of the claims DFEH is making against Activision is an office ritual referred to as "cube crawls," in which men allegedly drink "copious" amounts of alcohol, crawl through the office cubicles and engage in "inappropriate behavior" including groping. The lawsuit describes incidents including allegations that a female employee committed suicide during a business trip as a result of a toxic relationship with a supervisor.
"Women and girls now make up almost half of gamers in America, but the gaming industry continues to cater to men," the suit reads. "Activision-Blizzard's double-digit percentage growth, 10-figure annual revenues and recent diversity marketing campaigns have unfortunately changed little."
What was the reaction?
After DFEH filed its suit, Activision Blizzard responded with a lengthy statement that said the department had filed a rushed, inaccurate report with "distorted, and in many cases false, descriptions of [Activision Blizzard's] past." In an email sent to staff, published by Bloomberg's Jason Schreier, vice president of corporate affairs Frances Townsend said it presented "a distorted and untrue picture of our company, including factually incorrect, old, and out of context stories -- some from more than a month ago."
These statements evidently didn't satisfy employees, neither current nor former. Over 2,000 of them signed an open letter to Activision Blizzard leadership in which they criticized the company's response.
The letter signed by employees made three demands. First, that the company issue statements that acknowledge the severity of the allegations. Second, that Townsend resign from her role as executive sponsor of the ABK Employee Women's Network. Third, that Activision Blizzard's executive leadership collaborate with employees to ensure a safe workspace to "speak out and come forward."
Alongside the open letter signed by over 2,000 employees, workers at the company planned a strike for July 28. Seeking now to be more collaborative with aggrieved workers, Activision Blizzard sent an email to staff saying they would get paid time off for attending the protest.
Hundreds of employees took up the offer, as they set up a picket line outside of Activision Blizzard's Irvine, California, headquarters. Employees held signs that read "every voice matters," "fight bad guys in game, fight bad guys IRL" and "nerf male privilege." (When developers weaken characters in games like Overwatch, it's known as "nerfing" them.)
In October, Activision Blizzard said it was making changes to improve its workplace culture, including a new "zero tolerance" harassment policy and ending required arbitration of sexual harassment and discrimination claims. Kotick also said he would reduce his pay to $62,500 to ensure "every available resource" was being used to improve the workplace. Earlier in the year, shareholders reportedly approved a $155 million pay package for Kotick.
Why is there pressure on Kotick?
Amid the demands by employees, Kotick issued a letter on July 27 addressing the suit and the concerns of employees. "Our initial responses to the issues we face together, and to your concerns, were, quite frankly, tone deaf," it reads. "We are taking swift action to be the compassionate, caring company you came to work for and to ensure a safe environment. There is no place anywhere at our Company for discrimination, harassment, or unequal treatment of any kind."
Counter to these words, the Journal's report on Tuesday, Nov. 16, said Kotick was aware of many of the issues outlined by the suit. People familiar with the matter told the Journal that Kotick failed to inform the company's board of directors of "everything he knew" about some incidents, including a 2018 settlement with a former employee at one of Activision's studios who was allegedly raped by a supervisor.
The report also shed light on the impending departure of Blizzard Entertainment co-head Jen Oneal, who's leaving the company just months after taking on the role alongside former Xbox executive Mike Ybarra. In an email sent to Activision's legal team in September, Oneal said she had been sexually harassed earlier in her career at the game company and was being paid less than her male co-head, according to the Journal.
Another revelation was that the company-wide memo circulated by Townsend, which was rejected by employees and described by Kotick as "tone deaf," was actually written by Kotick himself.
Kotick released a statement on Nov. 16 about the situation. He didn't directly respond to the demands that he leave the company, though he did say that the Journal's article "paints an inaccurate and misleading view of our company, of me personally, and my leadership."
He also said the company is trying to do better.
"Anyone who doubts my conviction to be the most welcoming, inclusive workplace doesn't really appreciate how important this is to me. Creativity and inspiration thrives best in a safe, welcoming, respectful environment. There is no substitute for that," he said. "We are moving forward with a new zero tolerance policy for inappropriate behavior -- and zero means zero. Any reprehensible conduct is simply unacceptable."
An Activision Blizzard spokesperson also said the company is "disappointed" in the Journal's report because it "presents a misleading view of Activision Blizzard and our CEO."
"The WSJ ignores important changes underway to make this the industry's most welcoming and inclusive workplace," the spokesperson said. "At Mr. Kotick's direction, we have made significant improvements, including a zero-tolerance policy for inappropriate conduct."
Has anyone resigned?
Following an employee walkout on Nov. 16, which amassed around 150 people, over a thousand Activision Blizzard employees have signed a petition demanding Kotick resign.
"We, the undersigned, no longer have confidence in the leadership of Bobby Kotick as the CEO of Activision Blizzard," the petition reads. "The information that has come to light about his behaviors and practices in the running of our companies runs counter to the culture and integrity we require of our leadership--and directly conflicts with the initiatives started by our peers.
"We ask that Bobby Kotick remove himself as CEO of Activision Blizzard, and that shareholders be allowed to select the new CEO without the input of Bobby, who we are aware owns a substantial portion of the voting rights of the shareholders."
Kotick wouldn't be the first senior figure to be taken down by the scandal. On Aug. 3, two weeks after the DFEH's suit was filed, Blizzard President J. Allen Brack resigned. Brack started with Blizzard in 2006 and had been president since 2018. Prior to that, he was executive producer of World of Warcraft, Blizzard's most successful game. DFEH's lawsuit alleges Brack was aware of the toxic culture at Blizzard.
Former Vicarious Visions leader Jen Oneal and one-time Xbox executive Mike Ybarra were announced as his replacement. As noted above, Oneal will finish up with the company at the end of 2021. During her time at the company, Oneal had overseen Blizzard games Diablo and Overwatch.
Activision Blizzard said in October that it had fired 20 employees as part of its attempt to fix the workplace culture issues outlined by employees and the DFEH.
What's the industry reaction been?
After the Journal's damning report, the chiefs of both PlayStation and Xbox sent memos to staff criticizing Activison Blizzard's handling of the situation, according to Bloomberg.
Phil Spencer, head of Microsoft's Xbox division, said the company is "evaluating all aspects of our relationship with Activision Blizzard and making ongoing proactive adjustments," according to an email seen by Bloomberg, and that Xbox's leaders are "disturbed and deeply troubled by the horrific events and actions" at Activision Blizzard.
PlayStation CEO Jim Ryan sent a letter to staff with a similar message, if less strongly worded. "We outreached to Activision immediately after the article was published to express our deep concern and to ask how they plan to address the claims made in the article," Ryan wrote in an email to employees, reported Bloomberg. "We do not believe their statements of response properly address the situation."
An Activision Blizzard spokesperson responded to the criticisms, telling IGN, "We respect all feedback from our valued partners and are engaging with them further."
"We know it will take time, but we will not stop until we have the best workplace for our team."
Nintendo followed its fellow console makers, with Nintendo of America's Doug Bowser addressing the situation in an email sent to staff, reports FanByte.
"Along with all of you, I've been following the latest developments with Activision Blizzard and the ongoing reports of sexual harassment and toxicity at the company," Bowser wrote. "I find these accounts distressing and disturbing. They run counter to my values as well as Nintendo's beliefs, values and policies."
He said that Nintendo has contacted Activision and has "taken action and [is] assessing others."
Spencer, Ryan and Bowser are the most recent industry figures to weigh in on Activision Blizzard's alleged workplace culture. Back in August Strauss Zelnick, the CEO of Take-Two Interactive, the studio behind Grand Theft Auto and Red Dead Redemption, assured investors that his company wouldn't tolerate a workplace environment like the one allegedly seen within Activision Blizzard.
"We will not tolerate harassment or discrimination or bad behavior of any kind. We never have," he said. "Is there more we can do? I'm certain there is. Do we feel like we're in a pretty good place? We're grateful that we do feel that way right now."
Chris Metzen, a co-creator of Blizzard franchise Diablo who left the company in 2016, said: "We failed, and I'm sorry... to all of you at Blizzard -- those of you I know and those of you whom I've never met -- I offer you my very deepest apologies for the part I played in a culture that fostered harassment, inequality, and indifference."
Activision vs. US EEOC
In addition to the ongoing suit with California's Department of Fair Employment and Housing, the US Equal Employment Opportunity Commission launched actions against Activision Blizzard in late September. Almost immediately, Activision Blizzard revealed it had settled the case for $18 million.
According to a statement from Activision Blizzard, the funds will be used to compensate claimants or otherwise donated to charities "that advance women in the video game industry or promote awareness around harassment and gender equality issues."
"There is no place anywhere at our company for discrimination, harassment, or unequal treatment of any kind," Kotick said at the time. "I am sorry that anyone had to experience inappropriate conduct, and I remain unwavering in my commitment to make Activision Blizzard one of the world's most inclusive, respected, and respectful workplaces."