"Game On" is The Fly's weekly recap of the stories powering up or beating down video game stocks.
NEW RELEASES: This week's big release is the Xbox Series X/S (MSFT) version of "Microsoft Flight Simulator," which originally came out for PC in 2020. The next-generation console port launches July 27. In addition, Square Enix (SQNXF) role-playing game "NEO: The World Ends With You," a sequel to 2007 title "The World Ends With You" rolls out for Nintendo Switch (NTDOY) and PlayStation 4 (SONY) on July 27, with a PC version of the game set for release later in 2021.
BLIZZARD LAWSUIT: Last Thursday, the California Department of Fair Employment and Housing filed a civil action in Los Angeles Superior Court against Activision Blizzard (ATVI), Blizzard Entertainment and Activision Publishing for "violations of California's Equal Pay Act as well as the Fair Employment and Housing Act, which provide broader protections and greater remedies for victims than their federal counterparts." The agency said Activision Blizzard "allegedly fostered a sexist culture and paid women less than men despite women doing substantially similar work, assigned women to lower level jobs and promoted them at slower rates than men, and fired or forced women to quit at higher frequencies than men." DFEH also alleges that "African American women and other women of color were particularly impacted by Activision Blizzard's discriminatory practices." In addition, DFEH alleges that women were "subjected to constant sexual harassment, including groping, comments, and advances."
Following the announcement of the suit as well as some additional Bloomberg reporting on the matter, various leaders at the company released statements on the matter, with Blizzard Entertainment president J. Allen Brack saying the allegations are "extremely troubling" and pledging to make sure employees feel safe, according to an internal email. In another internal message, Activision president Rob Kostich called the behavior alleged in the suit "unacceptable" and "disturbing," though he and Brack did not confirm that such behavior had actually occurred. Meanwhile, UppercutCrit reported yesterday that Activision Blizzard COO Joshua Taub held a contentious all-hands meeting, claiming during the meeting that he and CEO Bobby Kotick "have never seen" such behavior, though he admitted that "does not mean this behavior does not happen." Taub went on to encourage employees to let the handling of such issues remain internal, including when it came to a question about unionization, according to UppercutCrit.
Many employees were unsatisfied with the corporate response to the matter, with more than 2,000 current and former Activision Blizzard staff signing a petition supporting the litigation and criticizing management's response to it, according to CNN. The letter calls for "official statements that recognize the seriousness of these allegations and demonstrate compassion for victims of harassment and assault," as well as the resignation of Frances Townsend, who currently serves as executive sponsor of the company's employee women's network, CNN said.
In the fallout of such claims, Kotaku reported that certain video game outlets and YouTube channels have decided to pause coverage of any games released by Activision Blizzard as well as Ubisoft (UBSFY), which has also been the subject of numerous reportage over the company's labor practices. Strategy guide Prima Games has indefinitely suspended coverage of those companies' games, while gaming news site The Gamer said it would halt coverage of Activision Blizzard titles, Kotaku's Ari Notis said, adding that prominent YouTube channel GameXplain has also offered a timeline for a coverage halt.
NETFLIX: Along with its quarterly report last week, Netflix (NFLX) confirmed media reports that it is in the early stages of further expanding into video games. "We view gaming as another new content category for us, similar to our expansion into original films, animation and unscripted TV," the company said. "Games will be included in members' Netflix subscription at no additional cost similar to films and series. Initially, we'll be primarily focused on games for mobile devices. We're excited as ever about our movies and TV series offering and we expect a long runway of increasing investment and growth across all of our existing content categories, but since we are nearly a decade into our push into original programming, we think the time is right to learn more about how our members value games." Netflix noted on its quarterly call that its expansion into the gaming space will be a "multi-year effort."
OTHER STORIES TO WATCH:
In other Netflix news, Variety reported that a new shoe based on Nintendo's "Pokemon" franchise is in early development at the streaming platform.
Warner Bros. (T) game "Mortal Kombat 11" has sold over 12M units globally.
Intel (INTC) CEO Pat Gelsinger said on the company's Q2 call that he expects the recent chip shortage to continue well into 2022, with IGN's Taylor Lyles noting that the shortage has caused supply issues for next-generation gaming hardware.
Epic Games announced the acquisition of Sketchfab. Investors in Epic include Tencent (TCEHY), KKR (KKR), Disney (DIS), and Sony.
Electronic Arts (EA) unveiled a "Dead Space" remake and "GRID Legends" at EA Play Live last week.