⋮    ⋮  

Activision Blizzard Delivers in Q1, Raises 2020 Outlook Due to Call of Duty and COVID-19

Submit

Activision Blizzard (NASDAQ:ATVI) have released their earnings for the quarter ending March 31, 2020, and the mega publisher is doing quite well for itself as much of the rest of the world suffers. Acti-Blizz delivered $1.78 billion in net revenue in Q1 (their fiscal year coincides with the regular calendar year) or $2.05 billion if you include deferred sales (the sale of digital content and in-game currency is deferred until the content is delivered or the currency spent under GAAP rules). The $1.78 billion in revenue was above the company’s outlook of $1.64 billion, but a bit down from the $1.83 billion made in Q1 2019. Q1 net income was $505 million, up from $447 million a year ago. Earnings per share were $0.76 for Q1, well above the $0.38 predicted by financial analysts. This was enough to boost Activision Blizzard stock around 3.5 percent in after-hours trading.

CoD: Black Ops Cold War Season 1 Delayed, New Multiplayer and Warzone Maps Teased

Stay-at-Home with Live Services

Unsurprisingly, the main reason Q1 revenue exceeded expectations was the continued success of Call of Duty: Modern Warfare, and it’s free-to-play battle royale spinoff, Warzone. Modern Warfare sold more units in Q1 than any other non-launch quarter in CoD history, with in-game monetization double that of 2018’s CoD: Black Ops 4. Meanwhile, Call of Duty: Warzone, which released less than two months ago, has already accumulated over 60 million players.

Of course, Call of Duty doing well is almost a given – the big surprise this quarter is the effect the COVID-19 pandemic has had on Blizzard. The embattled studio has been struggling, with 2019 revenue down $572 million compared to 2018, but with people around the world confined to their homes, games like World of Warcraft, Overwatch, and Hearthstone have seen big leaps in subscriptions and engagement. Blizzard brought in revenue of $452 million in Q1, a $108 million year-on-year increase.

The only part of Acti-Blizz to take any sort of hit was their King mobile division, which was down $31 million year-on-year. This isn’t terribly surprising – King has been on a slow downward trend for a while, and mobile games are likely to be negatively affected by COVID-19, as they’re largely used as distraction while people are at (or commuting to) work.

The Hit Parade Remains on Schedule

Much like their main competitor EA, Activision Blizzard’s focus on live-service gaming has put them in an unexpectedly strong position as the world is forced inside and desperate for dependable entertainment. The continuing strength of Call of Duty and the effect of COVID-19 has driven Acti-Blizz to boost their FY 2020 revenue outlook to $6.8 billion (up significantly from their previous estimate of $6.45 billion).

Call of Duty Sets New Franchise Record, Making $3 Billion in 12 Months

Most of Acti-Blizz’s staff is now working from home, but according to the publisher, this “has not currently changed our plans for our key content releases this year.” These releases include a new Call of Duty game from Black Ops developer Treyarch (rumored to be set in Vietnam), and “several” remakes and reimaginings of classic franchises. While Blizzard doesn’t have anything officially slated for 2020 yet, it’s expected Overwatch 2 may arrive this year, which would significantly boost their bottom line.

Overall, it seems very likely Activision Blizzard will come out of this pandemic even stronger than before. While challenges remain, Acti-Blizz CEO Bobby Kotick insists the company will deal with them, while taking care of their employees…

Our goal to connect the world through epic entertainment is more important to our players than ever before. We delivered strong financial results for the first quarter, and are raising our full year outlook. I have been awestruck by the strength of our employees and their families during this difficult time. […] In the face of so many difficulties, our employees have made certain that the joy, the engagement, and the benefits of gaming remain an effective way to help keep our 400 million players around the world connected and safe.

Activision Blizzard have a lucrative year ahead of them, but can they ensure their future success by shoring up Blizzard and reviving classic franchises? If you had asked me a few months ago, I wouldn’t have been certain, but now I think they may be able to pull it off.

Submit