Xbox's next layoffs.
There are good reasons to suspect that Blizzard might be hit in this year's round of Xbox layoffs:
- The deal cost $69 Billion as part of Activision/Blizzard. (As comparison, MS bought all of Nokia for 7.6B).
- When asked about the acquisition, she hedged "..it's hard to say how to think about these decisions."
- They are still carrying intangibles for this on their books, for 25 years. It costs them 3B a year in amortization expense.
- Blizzard shipped Diablo 4 in 2023. There were no major Blizzard announcements at the XBOX show, which was odd.
- Blizzard is not on the list of the doubling down of investments rumored.
- Xbox could save a lot of accounting money if they wrote down the value of Blizzard via impairment, the same way Sony saved themselves from the disastrous 3.6B dollar Bungie acquisition.
Carrying 3B a year in accounting deadweight is weighing down profits for the whole division, which Asha said was only 3%. If they did layoffs and impairment to write down the value of the studio, they could instantly double their profit margin. The could keep the studio, trim it way back, and write down the rest.
A CEO looking at this would seriously consider it when XBOX is on it's last legs as it stands today.