What happened

Shares of Activision Blizzard (NASDAQ:ATVI) were tumbling 7.7% in midday trading Tuesday as allegations of a hostile work environment embroil the video game company. 

Work on updates to the massively popular World of Warcraft franchise was also reportedly put on hold as the company responds to a lawsuit over the charges of misconduct.

Video gamer holds their head in frustration.

Image source: Getty Images.

So what

Activision was sued by the California Department of Fair Employment and Housing over a reported "pervasive frat boy workplace culture" that led to charges of harassment and unequal pay. Company executives were supposedly aware of the situation but never did anything about it.

Senior system designer at World of Warcraft Jeff Hamilton tweeted out the tumult at Activision has led to virtually no work being done on updating the game.

Now what

Activision Blizzard is the leading video game maker on the market, with titles such as Call of Duty, Overwatch, and Diablo, but its response to the charges has only served to roil the waters more.

An email from executive vice president for corporate affairs, corporate secretary, and chief compliance officer Frances Townsend called the allegations "factually incorrect, old and out of context," which only inflamed passions at the company. Over 2,000 current and former employees signed a letter calling Activision's response to the lawsuit "abhorrent and insulting."

The game maker's stock is likely to remain depressed for some time to come as the case plays out and the video game company responds to it.

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