Here’s Why Activision Blizzard is Suing Netflix

“Indeed, Hastings, Netflix’s co-CEO, was personally involved in Neumann’s recruitment and hiring, evidencing that Netflix’s tortious and unethical conduct is intentional and a directive ‘from the top,’” today’s filing asserts further.

Activision Blizzard [$ATVI] is suing Netflix [$NFLX] for allegedly poaching its former finance chief and causing competitive anguish, referencing a pattern of behavior by the streaming behemoth. Make no mistake, this isn’t déja vù— Netflix has been accused of plundering employees in the past.

In a complaint filed in Los Angeles Superior Court Friday, the video game company purported Netflix illegally recruited Spencer Neumann in 2018, prompting a contract breach that warped business operations. Activision said the move also cost them business opportunities as well as millions of dollars paid out to retain replacement executives.

Activision says Netflix “knowingly induced Neumann to breach his employment contract with Activision, and—with Neumann’s assistance—was negotiating with Netflix over a commercial partnership to distribute Activision’s linear media content.”

“Activision Blizzard announced on Dec. 31 that Neumann was on paid leave and that it was letting him go. Hours later, rumors circulated that the firing was a result of him being poached by Netflix. On Jan. 2, Netflix officially announced that Neumann was its new CFO. He will replace Netflix’s former CFO David Wells, who announced in August that he planned to step down from the company after 14 years.” — 2019 Nasdaq article

The lawsuit also states, “Unless Netflix is restrained by appropriate injunctive relief from continuing to raid Activision’s workforce by targeting its executives who have voluntarily entered into enforceable and ongoing fixed-term employment agreements, Activision will continue to suffer irreparable harm, including, but not limited to, losing the value of its valid fixed-term employment agreements, damage to its business reputation, workforce, and business opportunities”

The claim is being brought on for intentional interference, unfair competition, and aiding and abetting. Activision hired Neumannas CFO in May 2017 for a term of three years, with an optional one-year extension. In exchange for “substantial compensation,” Neumann agreed to various contractual obligations that committed him, in a very general sense, to do his best for Activision and not take advantage of his position for his own personal gain.

Activision plans to seek a court order to permanently stop Netflix from soliciting employees and unspecified compensatory and punitive damages to be determined by a jury at trial. Neither company has decided not to comment on the matter. Shocker huh?

Netflix more than doubled its revenue over the past three years while Activision’s annual sales dropped 7%. The video-streaming leader’s earnings grew sixfold and the video game maven’s bottom line increased by 41%. For Netflix, its EBITDA kept pace with the company’s revenue growth. Activision’s EBITDA fell by 19%.

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