Activision Blizzard Blows Away FY2020 Outlook Thanks to CoD; No Diablo IV or Overwatch 2 in 2021

Nathan Birch
Activision Blizzard

This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

Activision Blizzard (NASDAQ:ATVI) have released their earnings for the quarter ending December 31, 2020, and the company continues to benefit greatly from COVID-19 providing a captive audience and the seemingly unstoppable juggernaut that is Call of Duty. Acti-Blizz delivered $2.43 billion in net revenue in Q4 (their fiscal year coincides with the regular calendar year), well above the $2 billion they were expecting. For the full year, they brought in revenue of $8.08 billion, once again above the $7.66 billion they had promised. GAAP earnings per share for Q4 were $0.65 and $2.82 for the full year. Activision Blizzard stock has jumped nearly 12 percent in after-hours trading following the good report.

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Going Steady with Call of Duty

Activision Blizzard is increasingly a company driven by a single superpowered engine – Call of Duty. During Q4, the Activision portion of the company brought in nearly triple the revenue of either the Blizzard or mobile-focused King divisions, mostly due to the strength of CoD. The combination of Call of Duty: Modern Warfare and the free-to-play Warzone battle royale has proven to be a license to print money for Acti-Blizz, and in Q4 they added a new game, Call of Duty: Black Ops Cold War, to the ecosystem.

Once Call of Duty: Black Ops Cold War officially integrated with Warzone in December, sales of the former reportedly increased sharply. Q4 premium CoD unit sales were up 40 percent year-on-year, and monthly active users playing CoD: Warzone, Modern Warfare, and Cold War grew 70 percent. The overall net bookings brought in by the CoD franchise were up 50 percent year on year.

If Activision is all about Call of Duty, Blizzard is increasingly all about World of Warcraft. The division has struggled to produce new games and IP in recent years, but the positive response to the World of Warcraft: Shadowlands expansion led to a respectable quarter, with Blizzard increasing their monthly active users to 29 million and bringing in $579 million in net revenue. Meanwhile, Acti-Blizz’s King mobile division continued to mine Candy Crush to the tune of $577 million in revenue.

All the Golden Eggs in One Basket

Activision Blizzard has very little announced for 2021, but another new Call of Duty title is a sure bet. During their earnings call company brass also reiterated their vow to apply their new CoD model, in which they support multiple interconnected yet separate titles at once, to some of their other major franchises. On the Blizzard side of things, it was made clear Overwatch 2 and Diablo IV are unlikely to arrive in 2021, so the studio will remain a WoW factory for the time being.

It’s hard to see anything but lucrative times ahead for Acti-Blizz, although it’s increasingly clear their CoD strategy relies heavily on the continued popularity and success of Warzone. The battle royale market is a fickle one, with players being more than willing to migrate to the next big thing, and there has been growing discontent amongst Warzone players about persistent bugs and gameplay issues. I don’t expect an exodus away from Warzone any time soon, but Activision needs to make maintaining the game a top priority, even at the expense of traditional premium CoD titles. Unsurprisingly, Activision Blizzard CEO Bobby Kotick maintains a positive outlook for 2021…

In a year filled with adversity our extraordinary employees were determined to provide connection and joy to our 400 million players around the world. They accomplished this as well as generating record financial results for our shareholders. Under difficult circumstances, but with the same conviction and focus, they will continue to do so in 2021.

Activision Blizzard is expecting revenue of $8.23 billion in 2021, or $140 million more than this record-setting year, so clearly they have some irons in the fire. I wouldn’t bet against them hitting and likely exceeding those numbers.

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