Activision Blizzard is shuttering its Luxoflux studio.

FEB. 12, 2010 • Despite accolades as being one of the best performing publishers during the recession, Activision Blizzard announced a series of lay-offs at its studios. Staff cuts were made at Neversoft (Guitar Hero) and Radical Ent. (Prototype). Luxoflux, which has worked on Hollywood motion picture franchises such as Shrek and Transformers, is set to close.

Impact: Activision Blizzard had some monster hits like Call of Duty: Modern Warfare 2, that helped mask much of the downturn.  Nevertheless, the issues facing all publishers are the same for Activision Blizzard.  There is simply a growing disparity between the huge blockbusters and all the other products.  Furthermore, as reported later in this issue, there is growing resistance among consumers to average games that are driven by a high profile license.  When looking at the financials for Activision Blizzard, it is clear how the Blizzard division, with one major product (World of Warcraft), is far more profitable than the rest of the company.  Two years ago, Electronic Arts and Activision Blizzard were talking about which was the biggest company in terms of revenue.  Now it seems both players are realizing growing revenue while decreasing profits is not really a good thing.