A law firm Kuznicki Law PLLC filed a class lawsuit in the US District Court in California against Activision Blizzard for misleading its shareholders about the finalization of partnership with Bungie. The firm is also inviting all other shareholders who don’t already participate, to join this class lawsuit if they bought shares in the period from August 2, 2018, to January 10, 2019.
The Activision Blizzard Loss Submission Form states that “defendants made materially false and/or misleading statements and/or failed to disclose that: (i) the termination of Activision Blizzard and Bungie’s partnership, giving Bungie full publishing rights and responsibilities for the Destiny franchise, was imminent; (ii) the termination of the two companies’ relationship would foreseeably have a significant negative impact on Activision Blizzard’s revenues; and (iii) as a result, Activision Blizzard’s public statements were materially false and misleading at all relevant times.”
The Form also includes details on how shareholders can join the lawsuit. However, this is not the first legal conundrum around the Activision Blizzard and Bungie split. In January this year, the firm Pomerantz LLP started the investigation of claims made by investors that Activision committed fraud regarding the split.
“The investigation concerns whether Activision and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices,” states the report from MarketWatch along with an option to join a class action from the article.
In mid-February, the two companies ended their partnership stating that it was a mutual and amicable agreement. The split was announced in January after eight years of working together on Destiny whose publishing rights are transferred to Bungie, while Activision Blizzard will focus on their own projects.
“Bungie gets to focus on the IP that they created and we get to focus on our biggest opportunities and our biggest franchises with our best resources,” said Activision Blizzard president and COO Coddy Johnson.
Destiny is a very popular online-only franchise which was developed by Bungie and published by Activision in 2014. Bungie, who was the original developer of Halo before 343 Industries took over, turned Destiny into their new big project which was available for PlayStation 3, PlayStation 4, Xbox 360 and Xbox One. In 2017, Destiny 2 was published also as the joint project of Bungie and Activision for PlayStation 4, Xbox One and Microsoft Windows. The final publication these two companies made was last year in September with Destiny 2: Forsaken, a huge and third expansion to the main game.
But Bungie is not a new video game developer being that it was established in 1991 in Chicago. It first started off with Macintosh games and created Myth and Marathon which were two successful franchises. In 2000, Microsoft bought Bungie and Halo became the titular game for Xbox console in 2001 which sold in millions of copies. However, the company split from Microsoft in 2007 leaving behind Halo IP and signed a 10-year partnership contract with Activision in 2010. Destiny was the first project from this partnership.
“Long-term, Bungie is committed to Destiny. We created the universe and we hold its future entirely in our hands. The vast majority of the team is hard at work envisioning future experiences, enemies, and ways to play the Guardian you’ve been building since 2014. We’re going to keep doing that,” said the statement by Bungie back in January.
So, it seems that Bungie is quite happy to once again be a free player on the market, and as for Activision Blizzard – it will have a lot on its hands. These class action lawsuits are just some of the controversies surrounding the company which fired 800 employees this February in order to relocate resources for its IPs. I guess time will tell how the things unfold for this video game giant and what it will all mean for shareholders, employees, and gamers.