(Bloomberg) — One summer day in 2018, employees of the video game maker Blizzard Entertainment opened their email to find a brusque message from the chief executive officer, Mike Morhaime. It said the company parted ways with Ben Kilgore, the chief technology officer and Morhaime’s heir apparent. The email didn’t give a reason, but employees immediately began to gossip. Kilgore presided over the most notorious group of sexist drinkers at the Irvine, California, headquarters, where sexism and drinking were rampant, current and former employees said.
Shortly afterward, they got a supposed explanation during a large staff meeting. Derek Ingalls, now head of the technology department, was asked why his former boss had left. Ingalls told a brief story that concluded with a strange piece of advice: “Don’t sleep with your assistant. But if you’re going to sleep with your assistant, don’t stop.”
Five people who attended the meeting, which hasn’t been previously reported, recounted versions of that story in interviews with Bloomberg. Also in the room that day was a representative from human resources who stood silently by, they said. Ingalls’s comment led to a barrage of speculation surrounding Kilgore’s departure that Bloomberg has not been able to verify. Regardless, a former Blizzard assistant said this sort of locker room banter was sexist and damaging to the careers of assistants and other women at the company.
The comment illustrates a side of Blizzard unknown to the outside world until recently. The games it developed, such as Diablo and Warcraft, are among the most critically acclaimed on the market. The Activision Blizzard Inc. division was regularly ranked among the best places to work and served as a shining example of how to build a long-running game studio that had never put out a bad product.
That facade crumbled last month when California sued Activision Blizzard, saying it harbored a “frat boy” culture of sexual harassment and discrimination. Current and former Blizzard employees then took to social media to share their own experiences. More than 50 spoke to Bloomberg, and most requested anonymity over fear of reprisal. Women recalled getting accosted for dates at the office, being subjected to alcohol-fueled hazing rituals and watching male colleagues use company events as a venue to solicit sex. Six women said they reported incidents to Blizzard’s HR department and saw no results. Their stories provide insight into how the corporate culture developed into a legal liability.
The complaint from California, and the employee protests and shareholder lawsuit that soon followed, spurred the company to action. Activision Blizzard Chief Executive Officer Bobby Kotick apologized, and the company ousted Blizzard’s president and an HR executive. In an emailed statement, an Activision Blizzard spokesman said, “We appreciate the courage of any current or former employee who felt uncomfortable in the workplace in coming forward and will fully investigate any such claims.” Morhaime, the Blizzard co-founder and former CEO, declined to comment. Kilgore and Ingalls didn’t respond to multiple requests for comment about the meeting in 2018. Ingalls left the following year for a job at Amazon.com Inc.
Although California’s case is against the parent company, a global game publisher with nearly 10,000 employees, the bulk of the complaint centers on Blizzard. Until just a few years ago, the unit operated with near-autonomy, largely because its quirky formula was so successful. Its fantasy and science-fiction worlds borrow heavily from tentpoles of nerdom, like the Lord of the Rings and Alien. Blizzard has cultivated such an adoring fan base that it draws tens of thousands of people to an annual convention, where attendees cosplay as characters from the games and the developers are treated like rock stars.
“It is absolutely a rock-star mentality, and it touched almost every aspect of Blizzard culture,” said Christina Mikkonen, who worked at the company from 2013 to 2019. “These developers were untouchable. Not only could they tell you how to do your job, but they had so much power, they could do whatever they want in line of sight with their other powerful friends.”
Blizzard management set the tone by hiring mostly men, stoking their egos and often overlooking or being unaware of misbehavior, current and former employees said. Many executives were also dating lower-ranked employees. Morhaime, who ran the company for 27 years, courted and then married a Blizzard business director in 2010. Another founder, Frank Pearce, left his wife for a Blizzard customer service representative, and they wedded in 2012. J. Allen Brack, the outgoing president, also married a lower-level employee.
Those relationships were consensual, but they set a precedent that made some female employees uncomfortable, the women said. That dynamic, combined with testosterone-fueled arrogance and heavy drinking that were a regular part of office culture, led to frequent and often unwanted sexual advances. Cher Scarlett, who worked at Blizzard for a year starting in 2015, said she was groped by male co-workers at two company parties. “It didn’t even occur to me I should report this behavior,” she said, “because in my mind this behavior was normal and protected here.”
Blizzard was founded in 1991 by three men. Early employees, almost exclusively male, were bookish and introverted. Those days were less of a drunken party and more like the inside of a teenage boy’s bedroom. Desks were adorned with pictures of scantily clad women, and designers drew characters with large breasts and little clothing, recalled one of the few women there at the time. A video created for the company’s 10th anniversary condescendingly describes the “easy laugh” and sister-like qualities of Blizzard’s first female employee.
However, the team quickly became known for making quality games. Its biggest innovation was Battle.net, an online platform that made it easy to match against other players on the internet. It served as the basis for Blizzard’s success moving forward. In 2004, Blizzard began to penetrate pop culture with World of Warcraft. The online game, set in a vast land of orcs and elves, had more than 10 million subscribers by 2008. That summer, Activision finalized a merger with Vivendi Games, the parent of Blizzard, generating a windfall for early employees.
Christine Brownell, who worked at Blizzard from 2003 to 2005, said she was never harassed but noticed a change in a portion of her colleagues once World of Warcraft took off. Some got profit-sharing bonuses the size of their salaries, she said, and fancy cars suddenly populated the parking lot. “Their ego filled the room,” Brownell said. “They thought so much of themselves and what they had done.”
World of Warcraft went on to become a cultural phenomenon. Vin Diesel and Mila Kunis confessed on talk shows that they were addicted. South Park devoted an episode to the game, and Universal Pictures released a big-budget movie (28% on Rotten Tomatoes). The company’s convention, BlizzCon, ballooned from 4,000 attendees in 2005 to more than 20,000 in 2010. The events featured performances from Ozzy Osbourne and the Foo Fighters.
This marked a turning point for Blizzard, and for its culture. Some male employees began to see women at the conventions not just as customers but as groupies. One woman who worked there recalled a conversation in which one of Blizzard’s top executives told a group of his staff that young women—both fans and colleagues—saw them as superstars, and why shouldn’t they benefit sexually from that? “They have these legions of fans swarming around them just because they are known figureheads in the community. And they’re abusing their power like that to take advantage of these fans and their co-workers,” said Mikkonen, a former Blizzard community manager.
Female employees learned to avoid the bar at the Hilton hotel near the convention center, which was a destination for drunk colleagues to hit on women, said Mikkonen and other former staff. The California lawsuit claimed a former Blizzard game director, Alex Afrasiabi, harassed women in a hotel room he and his colleagues referred to as the Cosby Suite. (The nickname referred to how the carpet in the room resembled Cosby’s sweaters, former employees said, and predated the widespread public resurfacing of the sexual assault allegations against the comedian.) “They will wrangle up the cosplayers or the girls or whoever they see at BlizzCon,” said Mikkonen. Occasionally, the company would discourage this kind of behavior, she said: “This is why the emails go out: Don’t wrangle the fans into the executive suite.”
Inside the office, women were outnumbered four to one, according to an internal gender breakdown from 2017. That imbalance left women facing misogyny, loneliness and harassment, current and former employees said. The Activision Blizzard spokesman said, “Such conduct is abhorrent and will not be tolerated.”
Men at all levels traded insults that regularly involved the word rape, according to the lawsuit and interviews. Some women found themselves so isolated that they were even at odds with female co-workers, said Nicki Broderick, who worked at Blizzard from 2012 to 2019. “Because there were so few women, the women really had to compete to stand out with their peers,” she said. “It created a really toxic, competitive environment, not just between the men and women at Blizzard but the women themselves.”
Whenever a woman started in the quality assurance department, men would line up to introduce themselves, said two women who worked on the team. (Male recruits did not get their own receiving lines.) On the esports team, women frequently complained about a man who gave them unwanted backrubs, made inappropriate moaning noises during meetings and discussed his sexual exploits in detail, said Broderick, a former project manager in that department. In spite of all the complaints, “they didn’t touch him,” she said.
Another colleague once told Broderick that her “ass looks great” in the shorts she was wearing. “My friend reported it to HR, but nothing happened,” Broderick said. “I never wore shorts to the office again.”
Until his departure in 2018, Morhaime was the heart, and often the face, of Blizzard. He is soft-spoken, gregarious and adored by many Blizzard employees. Receptionists shared stories of Morhaime’s kindness, and developers gushed about how he prized creativity above all else. Glassdoor reviews named him one of the top CEOs of 2018. Morhaime encouraged people to come to him directly with their problems.
But people who worked for Morhaime said his warm leadership style could be a blind spot. Some said he was shielded from the misbehavior or that he gave offenders the benefit of the doubt, extended them too many chances or let them walk over him. In a private Facebook post reviewed by Bloomberg, a former assistant to Morhaime wrote that she had informed him and other executives about rampant misconduct.
In a public statement following the lawsuit, Morhaime apologized to his former female employees and said he wanted to hear their stories. “The fact that so many women were mistreated and were not supported means we let them down,” he wrote.
Many of the most grotesque descriptions of misconduct in California’s lawsuit were about Blizzard’s technology department, current and former employees said. Kilgore, the longtime head of that group, was Morhaime’s planned successor but didn’t share his boss’s understated demeanor. Two former employees said they saw Kilgore touch female colleagues inappropriately at work functions. The legal complaint described claims of Kilgore’s misbehavior, identifying him only by his job title.
Technology staff sometimes got drunk during work hours or showed up hungover; they vomited in trash cans and held after-work hazing rituals where new recruits were expected to take shots of liquor every half hour, former employees recalled. Finally, in 2019, Blizzard enacted a “two-drink maximum” at after-work functions to stave off some of the problems and cut down on drunk driving.
The #MeToo movement arrived late to the video game business, but it has had a profound impact over the last year. Tencent Holdings Ltd.’s Riot Games is facing two high-profile lawsuits, and Ubisoft Entertainment SA ousted three senior executives in a far-reaching scandal last year. Riot has said a company-commissioned investigation found that its CEO didn’t sexually harass or discriminate. Ubisoft has acknowledged its issues and vowed to make major changes. Blizzard’s crisis is unique because of its stature in the industry.
The Blizzard name for decades was associated with quality. Morhaime gleefully pushed back game deadlines, repeatedly frustrating investors but inevitably producing hit after hit, which continued over the last decade with Hearthstone and Overwatch. Working there was a dream job, embodied in the employee line, “Bleed Blizzard blue.”
It was common for game developers to make sacrifices just to get there. “When you’re someone who works at a company like Blizzard, it’s almost like you ignore everything that’s happening because you want to be there so badly,” said Scarlett, the former employee. “You stop seeing things that are bad as bad.”
Many former Blizzard staff said they took pay cuts in exchange for the prestige. Some sardonically referred to it as the Blizzard tax. One woman said that to save money, her lunch sometimes consisted only of Nestle hot chocolate packets. This boiled over a year ago, when Bloomberg reported on an employee uprising and a letter to Blizzard’s president seeking better pay. None of their requests were addressed, employees said.
The salary gap was even more pronounced for women, according to interviews and the legal complaint. Seven women who worked at Blizzard said they made less than male colleagues with similar experience. Two women said they were told by their manager not to discuss their salaries. One shared screenshots of her boss saying salary information should be kept confidential, an apparent violation of California law.
Activision Blizzard said it “strives to pay all employees equitably for equal work” and that it has had higher promotion rates for women than men. The company doubled the number of women in game development leadership roles since 2016, the spokesman said.
Nazih Fares, who worked at the company’s Netherlands office from 2018 until this year, said the gender pay disparity was a point of contention for Blizzard employees around the globe. “Lots of my colleagues were really annoyed,” he said.
Still, many women said they were willing to put up with the problems at Blizzard because they loved the products, many of their co-workers and even some aspects of the company’s culture. But in the last four years, that confidence has shaken. With Blizzard’s revenue sliding, Kotick and his deputies have taken a more active role in Blizzard’s operations, Bloomberg reported last month. The incursion intensified after Morhaime’s exit in 2018.
Current and recently departed employees said that, rather than eliminate the sexist culture, the added oversight has only exacerbated Blizzard’s problems. Activision has pushed Blizzard staff to hit unrealistic deadlines and do more work with fewer resources, increasing stress and overtime across all levels.
A byproduct of these changes was the release last year of Blizzard’s first bad game, Warcraft III: Reforged. It was the result of mismanagement and financial pressures from Activision, according to people who worked on the game. Developers on the project wrote in an internal postmortem reviewed by Bloomberg that they were suffering from “exhaustion, anxiety, depression and more,” mirroring some of the stories and complaints that followed in the lawsuit.
Some Blizzard staff refer to Activision as the Eye of Sauron. With budget cuts constantly looming, managers of each department have jockeyed for resources. As a result, some are reluctant to report internal problems and risk drawing unwanted attention to their teams from corporate overlords, current employees said.
Activision Blizzard said it aims to preserve Blizzard’s “unique identity” while ensuring a safe and fair work environment. It recently awarded equity to every employee, the spokesman said.
However, a recent revision to the performance review system forces managers to give more frequent negative reviews, which will result in less generous bonuses and profit share for Blizzard employees, three people familiar with the change said. Several women said they fear this will give managers more opportunities to discriminate in conscious and unconscious ways—and that it will further empower the company’s supposed rock stars.
More stories like this are available on bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2021 Bloomberg L.P.