Activision Blizzard Delivers a Big Q3 Thanks to the CoD: Modern Warfare/Warzone Juggernaut


Activision Blizzard (NASDAQ:ATVI) have released their earnings for the quarter ending September 30, 2020, and the company continues to benefit greatly from COVID-19 providing a captive audience and the combined juggernaut that is Call of Duty: Modern Warfare and Call of Duty: Warzone. Acti-Blizz delivered $1.95 billion in net revenue in Q3 (their fiscal year coincides with the regular calendar year), which is way up from $1.28 billion made in Q3 2019. Earnings per share were $0.78 for Q2, or around 13 cents above forecasts. Despite this across-the-board good news, Activision Blizzard stock is still slightly down in after-hours trading, which seems to be a somewhat odd tradition for the company.

Call of Duty: Warzone 2 Will Reportedly Be an Entirely New Next-Gen Exclusive Title

Call of Duty Keeps its Killstreak Alive

The main driver of Activision Blizzard’s success continues to be the double-barreled money shotgun that is Call of Duty: Modern Warfare and the free-to-play CoD battle royale, Warzone. There are three times as many people playing Modern Warfare and Warzone as there were playing Call of Duty: Black Ops 4 a year ago, and in-game spending on the CoD franchise has quadrupled year-on-year. A significant portion of those who play Warzone are upgrading to the premium Call of Duty: Modern Warfare, so much so that the game can claim the best first-year sales in CoD franchise history – no small feat!

Blizzard, which has been struggling somewhat in recent years, largely remained steady in Q3. The division saw a large boost in engagement and revenue in Q2, as many trapped inside by the pandemic once again activated their World of Warcraft accounts. Most of those players stuck with WoW in Q3, as Blizzard brought in $411 million in revenue during the quarter – a good result by recent standards. Meanwhile, Acti-Blizz’s King mobile division continued to milk Candy Crush to the tune of $536 million in revenue.

A Happy Holiday Season Ahead

Activision Blizzard should hit new heights this holiday season, as they plan to release Call of Duty: Black Ops Cold War, which will closely integrate with Warzone with an array of new themed content, including, eventually, an all-new map. While the Black Ops franchise usually doesn’t do quite as well as Modern Warfare, there’s no reason to believe Black Ops Cold War plus Warzone won’t be a very lucrative pairing. Meanwhile, Q4 will also see the release of the nostalgia-catering Crash Bandicoot 4 and the much-anticipated World of Warcraft: Shadowlands expansion.

As I’ve mentioned before, Acti-Blizz have vowed to apply their new Call of Duty model, in which they support multiple interconnected yet separate titles at once, to some of their other major franchises. So, the kind of profits we’re seeing now from Call of Duty may just be the beginning. Unsurprisingly, Activision Blizzard CEO Bobby Kotick remains enthusiastic about the future…

Our teams continue to execute our growth plans with excellence during incredibly challenging circumstances. We are on a path to deliver sustained longterm growth across our fully-owned franchises. With confidence in our ability to continue to execute, we are raising our outlook for the year and remain enthusiastic for our growth prospects next year.

Following their excellent Q3, Activision Blizzard have chosen to raise their FY2020 outlook again, from $7.28 billion all the way to $7.68 billion. Given how well things have been going for Acti-Blizz recently, I fully expect them to easily reach, and exceed, that number.