Activision Blizzard, Inc. and its top executives are facing a lawsuit in which a shareholder alleges the video game developer failed to warn investors that its long-time partnership with Bungie, with whom it released the Destiny franchise, was ending.
Activision Blizzard, Inc. and its top executives are facing a lawsuit in which a shareholder alleges the video game developer failed to warn investors that its long-time partnership with Bungie, Inc., with whom it released the Destiny franchise, was ending. The proposed class action claims investors were blindsided when it was revealed on January 11, 2019 that Bungie would be assuming full publishing rights for the popular Destiny series going forward, which reportedly caused the stock prices of Activision Blizzard to plummet 9.37 percent in one day.
According to the 20-page complaint, Activision Blizzard, recognized for its part in developing the Call of Duty series, announced on April 29, 2010 that it would be entering into an agreement with Bungie, Inc., the developer responsible for blockbuster franchises such as Halo, Myth, and Marathon, to publish and distribute Bungie’s video games for the next 10 years.
The partnership between the two gaming companies yielded the Destiny franchise, the suit says, which, on the first day of its release, was the largest video game franchise launch in history until that time. In the years following Destiny’s initial launch, the case continues, Activision Blizzard and Bungie released four expansions for the game, followed by a sequel, Destiny 2, in September 2017.
The suit alleges that beginning in August 2018, the defendants boasted of Destiny’s success and assured investors in SEC filings that Activision had secured “a long-term alliance” with Bungie to publish the Destiny universe.
Up until January 2019, the case goes on, there were no indications of a potential split between the companies. The lawsuit alleges, however, the defendants were well aware that the termination of their agreement with Bungie “was imminent,” yet failed to warn investors of the separation and the negative impact it would have on Activision Blizzard’s revenues.
The companies reportedly announced the end of their business relationship on January 10, 2019 with a posting on Bungie's website that stated, in part:
“Looking ahead, we’re excited to announce plans for Activision to transfer publishing rights for Destiny to Bungie. With our remarkable Destiny community, we are ready to publish on our own, while Activision will increase their focus on owned IP projects.
The planned transition process is already underway in its early stages, with Bungie and Activision both committed to making sure the handoff is as seamless as possible.”
Upon this news, Activision Blizzard’s stock price reportedly dropped $4.81 per share, damaging investors who had relied upon the defendants’ allegedly false representations.