In July 2021, Activision Blizzard was sued by the state of California over its workplace culture. After a two-year investigation, California’s Department of Fair Employment and Housing (DFEH) accused Activision of fostering a “frat boy’ workplace culture.”, where executives sexually harassed women, and male employees openly joked about rape and drank alcohol while engaging in “inappropriate behavior” towards women.
Many agree that accusations of sexual harassment and discrimination against women are far from uncommon in the gaming industry, where game studios’ workforces, especially at the executive level, remain predominantly male. This landscape creates a certain type of company culture across the gaming industry, which can be considered hostile to aspiring entrants and can even hamper the development of new talent.
The proliferation of toxic work culture across the gaming industry not only harms the industry itself, but it can also create significant troubles to a company. If details about a company’s toxic culture go viral, not only will regulators take action, but executives will leave or resign and the firm may lose money due to boycotts or sponsors pulling away, and employees will probably take collective action.
Activision Blizzard is the perfect example for these kind of consequences. To start with, on July 27, 2021, Business Insider reported that Activision Blizzard lost nearly $8 billion in market value amid the growing fallout from its workplace discrimination suit. At the same time, Activision Blizzard employees staged a walkout to call for better working conditions, while fans sought to organize a boycott of Activision Blizzard games in solidarity with the staff. Regarding changes at the executive level, Blizzard’s president J. Allen Brack, and high-profile leaders Luis Barriga, Jesse McCree and Jonathan LeCraft all left the company in the span of two months.
As it can be seen, a toxic work culture not only affects employees themselves, but can also affect operations and business development. As such, taking care of building an inviting and open workplace environment is now more important than ever.
In June 2020, law firm Gibson Dunn said that companies are significantly expanding their environmental, social, and governance (ESG) efforts, which includes taking positive steps in areas such human rights, community involvement, as well as taking a more holistic look at how core, company-specific ESG issues affect strategy, risk, and the long-term viability of a company’s business. Companies are also increasingly disseminating significant amounts of information about these current efforts and future commitments through channels including corporate social responsibility web pages and lengthy corporate responsibility and sustainability reports.
Most notably, Gibson Dunn notes how these statements and disclosures can create significant litigation and liability risks for companies that do not exercise appropriate care and diligence. This includes providing for oversight at the board level so that the board understands what the company is saying about ESG issues and the processes for reviewing ESG disclosures before they are made public.