As gamers buy and download more games online, “Call of Duty” maker Activision Blizzard Inc. has closed its only distribution center in the U.S., the company said Wednesday.
The Fresno, Calif.-based distribution operation has shut down as of Jan. 5 and 50 people have been laid off, according to California Employment Development Department records. The decision to close the facility comes amid a broad shift in the gaming sector, as nearly half of consumers have opted to purchase and download console games instead of buying physical copies of new titles.
“It’s clear to us (and many others) that console games will be 100% digital in the future, but the timing of this is hard to pinpoint,” PiperJaffray analyst Michael Olson wrote in a December note to clients. “It’s important to keep in mind that in the midst of the continuing trajectory toward 100% digital full game purchases, the growth of digital add-on content continues; the positive of digital add-on content is it both drives a higher digital mix and creates incremental revenue.”
An Activision spokesman said the closure is an effort to consolidate its warehousing operations and the company has contracted a third-party that it has an existing relationship with to take over from Fresno. The spokesman denied that it was related to the shift to game downloads. “It is unrelated,” he said.
Activision ATVI, +3.61% stock was up nearly 1% to $66.83 during Wednesday’s regular session. In the past 12 months, shares in the videogame maker have gained 74%, as the S&P 500 index SPX, +0.70% rose 21%.
The Fresno facility was responsible for packaging and distributing titles such as “World of WarCraft,” “StarCraft” and the “Call of Duty” series throughout the U.S., Canada, Australia and “many other countries throughout the western hemisphere,” according to Activision’s website.
MarketWatch was able to locate three addresses in Fresno where the company may have conducted operations. According to several job postings, in addition to packaging and organizing games for shipping, workers would also perform quality-control functions, including testing the games themselves, among other tasks.
When contacted, an employee at a Fresno GameStop Corp. GME, +1.42% retail location was unaware of the closure and said it was unlikely to affect its supply of games.
According to Olson’s research, the gaming sector will reach a critical mass of 70% to 80% of games digitally downloaded and bought within the next few years, but that the all-digital future will arrive sometime after 2020. Once that critical mass hits, the trend toward all-digital titles will accelerate, he wrote.