Activision Blizzard (ATVI  ) is the subject of a lawsuit from the State of California after mass allegations of sexual discrimination, including harassment and lower wages. The suit, however, is only the beginning of the company's issues, appearing to come as a culmination of years of mismanagement.

The California Department of Fair Employment and Housing (DFEH) announced its lawsuit last week, suing Activision Blizzard for "Equal Pay Violations, Sex Discrimination, and Sexual Harassment," seeking unpaid wages well as fines and compensation for affected employees.

"Activision Blizzard, Inc., headquartered in Santa Monica, California and known for games such as "Call of Duty," "," and "World of Warcraft" allegedly fostered a sexist culture and paid women less than men despite women doing substantially similar work, assigned women to lower level jobs and promoted them at slower rates than men, and fired or forced women to quit at higher frequencies than men," the agency said. "DFEH also alleges that African American women and other women of color were particularly impacted by Activision Blizzard's discriminatory practices."

Beyond the lawsuit, the once-revered game developer's reputation has been continually eroded by continual revelations from current and former employees, as well as questionable business and developmental decisions.

As I wrote in a previous article regarding the viral petition surrounding Jeff Bezos' space trip, the continual snowballing of the unmitigated poor press is a considerable threat to even the most formidable companies. In the case of Activision Blizzard, lingering antipathy from previous incidents (such as the company's controversial banning of a competitive Hearthstone player for expressing support for Hong Kong protestors) has only made the fallout surrounding the lawsuit far worse.

This antipathy, coupled with controversial development choices involving some of the company's flagship products, has driven millions of users from Blizzard's various products in the past year. This exodus is best illustrated by the recent mass migration of "World of Warcraft" users to competing MMO "Final Fantasy XIV," with the latter receiving so many emigrating players that serial keys for digital copies of the game ran out briefly.

Given that development has stopped on "World of Warcraft," for the time being, prospects for the ongoing development of new and current Activision Blizzard titles are left in question, a possibility that seems to be worrying investors. Activision Blizzard shares lost 6.5% on Tuesday.