Activision Blizzard (ATVI), the game publisher behind game franchises like “Call of Duty” and “Overwatch,” will report fourth-quarter earnings on Tuesday after the markets close. This quarter’s earnings will be a telling sign of how the company is weathering the video game landscape, which is being disrupted by changes to the traditional business model and the success of free-to-play games like “Fortnite.”

Analysts are expecting Activision Blizzard to report adjusted earnings-per-share of $1.28 — up 37% year-over-year — on revenues of $3.04 billion, boosted by solid digital sales of games such as “Call of Duty: Black Ops 4,” higher subscription revenues from “World of Warcraft,” and in-game purchases from some of its casual games, like “Candy Crush Friends Saga.” Indeed, investors will be looking to whether the Santa Monica, California-based company posts strong digital revenues and growing profit margins following months of stock declines.

Activision Blizzard’s stock is down nearly 50% since its October high.

Bloomberg reported late last week the company planned to lay off hundreds of employees due to flat or declining sales growth for some games, including “Overwatch” and “Hearthstone.” Two sources familiar with the matter tell Yahoo Finance that Activision Blizzard initiated employee layoffs in its Santa Monica headquarters on Monday, although it’s unclear how widespread the layoffs are at this time.

The company has also seen a number of executives leave in the last year, including Activision Publishing CEO Eric Hirshberg, Blizzard President and Co-founder Mike Morhaime, and Blizzard Chief Financial Officer Amrita Ahuja who joined Square (SQ) this January as CFO.

Keeping revenue expectations low

Activision Blizzard severed a 10-year partnership with the game studio Bungie, following disappointing sales of “Destiny 2: Forsaken” last September — a move that could shave up to $400 million from Activision Blizzard’s annual revenues, estimates Piper Jaffray analyst Michael Olson.

“We view the potential savings in operating expenses as a long-term positive,” reiterated Colin Sebastian, a senior research analyst at Robert W. Baird & Co.

Activision Blizzard’s troubles may be tied to the larger gaming landscape. According to London research firm Pelham Smithers, video game revenues could fall 1% to $136.5 billion this year — the industry’s first decline since 1995 — due to transformative titles like “Fortnite,” a relative lack of big console hits, and China’s stricter approach to approving games.

Epic Games’s “Fortnite” has been a thorn in the side for Activision Blizzard. Since the free-to-play multiplayer shooting game debuted in 2017, “Fortnite” has almost single-handedly transformed gaming: it’s easy to pick up and learn, and it’s available on a very wide range of different devices from the PC, Xbox One, and PlayStation 4 to the Nintendo Switch and iPhone — a relatively rare occurrence in gaming. (Players can buy locked items or features inside the game, including weapons and clothes.)