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#MeToo Topples Activision Blizzard Exec After Huge Staff Revolt—$10 Billion In Market Value Lost

Topline

The plight of Activision Blizzard, the nation’s largest video game company, intensified Tuesday morning with the resignation of executive J. Allen Brack, the president of subsidiary Blizzard Entertainment who allegedly knew about “constant sexual harassment” faced by female employees for more than a decade—tanking the company’s market value and marking the latest fallout in a years-long reckoning against discrimination and harassment in the workplace.

Key Facts

Santa Monica, Calif.-based Activision Blizzard, the publisher of popular titles such as World of Warcraft, told staff about Brack’s departure in a Tuesday morning email, saying the 16-year company veteran would instead “pursue new opportunities” without mentioning the workplace lawsuit filed earlier this month that sparked a massive staff revolt.

In the suit filed on July 20, the California Department of Fair Employment and Housing alleged the company’s high-ranking executives engaged in a “a pervasive frat boy” culture that fostered a “breeding ground for harassment and discrimination against women”—allegations Activision initially claimed were “distorted, and in many cases false, descriptions of Blizzard’s past.”

The defensive response prompted more than 1,500 workers to walk out of their jobs last week in protest, with thousands more signing a letter last Monday saying management “damaged [their] ongoing quest for equality inside and outside of [the] industry” and demanding new company statements “demonstrating compassion for victims of harassment.”

In a statement Tuesday, Brack, who has not been accused of sexual harassment, didn’t mention the allegations of a toxic workplace culture but said the two “executive vice presidents tapped to replace him “will provide the leadership Blizzard needs to realize its full potential and will accelerate the pace of change.”

Shares of the gaming company plunged more than 5% Tuesday and pushed losses since the suit to nearly 15%, wiping out more than $10 billion in market value for the firm, now worth about $61 billion.

“It became clear” to company leadership that Blizzard Entertainment “needs a new direction and leadership given the critical work ahead in terms of workplace culture, game development and innovation,” Activision said in a Tuesday statement.

Key Background

The #MeToo movement became a household phrase in 2017 following groundbreaking accusations of rape and sexual harassment against disgraced movie producer Harvey Weinstein, who was sentenced to more than two decades behind bars last year. The movement quickly picked up steam in Hollywood and has since spread to other industries, hitting Silicon Valley, the U.S. military and most recently leading to the police detention of popular Canadian singer Kris Wu on Monday. The video game industry, long a male-dominated field, has been slow to foster change, however, industry experts told the New York Times last week.

Crucial Quote 

“This could mean some real accountability for companies that aren’t taking care of their workers and are creating inequitable work environments where women and gender minorities are kept at the margins and abused,” Carly Kocurek, an associate professor at the Illinois Institute of Technology specializing in humanities and gaming, told the New York Times.

What To Watch For

Activision is set to report second-quarter earnings after the market’s closing bell Tuesday. The firm’s post-earnings conference call will give executives an opportunity to field questions from analysts about the company’s workplace reckoning.

Chief Critic

“Our company executives have claimed that actions will be taken to protect us, but in the face of legal action—and the troubling official responses that followed—we no longer trust that our leaders will place employee safety above their own interests,” Activision employees wrote in their letter to management last week. “To claim this is a ‘truly meritless and irresponsible lawsuit,’ while seeing so many current and former employees speak out about their own experiences regarding harassment and abuse, is simply unacceptable.”

Further Reading

Blizzard President J. Allen Brack Is Leaving The Company In The Wake Of Lawsuit Allegations (Forbes)

Activision Workers Walk Out To Protest Sexual Discrimination And Harassment (Forbes)

Activision Blizzard Lawsuit Alleges Horrific Mistreatment Of Women (Forbes)

Activision, Facing Internal Turmoil, Grapples With #MeToo Reckoning (NY Times)

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