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Activision Blizzard reported earnings today that exceeded expectations as the company saw an increase in its games because people are staying indoors due to the pandemic.
The major video game publisher said that both Call of Duty: Warzone, a new battle royale mode for Call of Duty: Modern Warfare and Call of Duty: Mobile fueled demand for the quarter. He added that virtually all of his games benefited from people staying home.
The company reported non-GAAP earnings per share of 66 cents in revenue of $ 1.79 billion for the first quarter ending March 31. Analysts had expected earnings per share of 38 cents in revenue of $ 1.32 billion (and Activision Blizzard reported 58 cents on a basis comparable to the analyst figure). Based on GAAP, earnings per share were 65 cents on revenue of $ 1.79 billion. In after-hours trading, Activision Blizzard’s share price rose 4.6% to $ 71.72 per share.
Activision Blizzard is at the top, as are other video game companies, because games are expected to benefit from the coronavirus crash. Other forms of entertainment (such as sports and movie theaters) stagnate due to social distancing and shelter orders in place during the pandemic. With few more options, more people than ever are turning to games.
The question remains whether games can be “recession-proof” as more people lose their jobs and have less discretionary income to spend on something, let alone on games. So it’s about whether a greater commitment can make up for less disposable income.
“Our goal of connecting to the world through epic entertainment is more important to our players than ever before,” CEO Bobby Kotick said in a statement. “We deliver solid financial results for the first quarter and are increasing our outlook for the full year. I have been impressed by the strength of our employees and their families during this difficult time. “
He added: “Whether they administer medical care or child care, provide public service or community service, our teams around the world have demonstrated ingenuity and resilience. In the face of so many difficulties, our employees have ensured that the joy, commitment, and benefits of gaming remain an effective way to help keep our 400 million players worldwide connected and safe. “
In an interview with GamesBeat, Kotick said: “I think we are changing the trajectory in the interest of Call of Duty. I think it started last year with the launch of Modern Warfare and mobile devices. And I think Warzone did a good job of bringing back to the downed players of Call of Duty, but it also introduced new players. “
Above: Activision Blizzard CEO Bobby Kotick.
Image credit: Activision Blizzard
When Call of Duty: Warzone launched on March 11, the United States was entering a pandemic blockade. In its first month, the free game was downloaded more than 50 million times, or the same number that Electronic Arts and Respawn saw with the Apex Legends debut last year. In this case, social distancing and self-isolation contributed to the success of Warzone, and now the number of downloads is 60 million.
In my opinion, Warzone is much more attractive than Call of Duty: Blackout, which debuted with Call of Duty: Black Ops IIII. That battle royale mode came out last year and didn’t have the same type of hooks that kept me in the game any longer.
In addition to Call of Duty, Activision Blizzard also takes advantage of the fortress in its online game World of Warcraft and the team shooting game Overwatch. Add to that King’s Candy Crush Saga, and you can see why the company remains strong during the recession.
In the statement, Activision Blizzard said all employees had moved into work-from-home settings in mid-March, and that the company is covering all testing and treatment costs for affected employees and their families. The company also said that employees have been able to move to digital work, though it adds complexity in some areas of game development.
Activision Blizzard has also found ways to disseminate health and safety information and make donations to healthcare entities and their own Call of Duty Foundation, which places veterans in high-quality jobs.
Activision Blizzard’s perspective is better
Above: World of Warcraft: Classic is fine for Activision-Blizzard.
Image credit: GamesBeat
When it comes to prospects, the company said it sees the tailwind of a strong execution in Call of Duty and an increased commitment to taking refuge at home. But the full scope of COVID-19’s impact is not predictable.
There are risks of global economic weakness, rising unemployment, pressures on retail and prices, and other factors. But there are positives like increased engagement that could last well beyond the second quarter. Therefore, there is the potential for “underperformance if these risks do not materialize.” So far, the pandemic has not changed plans for key content releases this year.
For the second quarter ending June 30, the company estimates revenue will be $ 1.69 billion without GAAP, and the company will increase its earnings and earnings per share estimates for the full year. Activision Blizzard now expects to report revenue of $ 6.8 billion and non-GAAP earnings per share of $ 2.62 per share.
Activision results
Above: Call of Duty: Mobile in Nuketown.
Image credit: Activision
The company said it saw strong demand for Call of Duty and World of Warcraft games. In the first quarter, Activision had 102 million monthly active users. Call of Duty: Warzone reached 60 million downloads in its first 52 days as a free Battle Royale mode for Call of Duty: Modern Warfare.
And Modern Warfare has sold more copies and has more players than any previous Call of Duty title right now after its release. Direct sales in the first quarter (sales of the game to players, compared to retailers) was the highest for the franchise outside of a launch quarter, fueled by growing demand amid refuge conditions at home said the company. And Modern Warfare’s net reserves in the game doubled year-over-year compared to last year’s Call of Duty: Blacks Ops IIII.
Call of Duty: Mobile continued to develop at last October’s launch with new content, features and events aimed at player engagement and retention. The game saw increased reach and engagement in March. And the Call of Duty League turned to fully digital matches.
Activision’s own revenue was $ 519 million in the first quarter, driven by Call of Duty: Modern Warfare, Call of Duty: Warzone battle royale mode, and Call of Duty: Mobile.
Above: Echo from Overwatch.
Image Credit: Blizzard
Blizzard Entertainment had 32 million active users in the quarter. After doubling in the second half of 2019, the World of Warcraft active player community grew further in the first quarter. And each of Blizzard’s key franchises grew month-to-month in March as a result of home refuge tailwinds. Hearthstone improved sequentially, as did Overwatch in March.
The Overwatch League switched to online gaming and remote production during the quarter. Blizzard reported $ 425 million in revenue for the quarter and operating revenue of $ 197 million, driven by World of Warcraft.
Above: Candy Crush Saga is also savoring a player boost.
Image credit: GamesBeat
King had 273 million monthly active users for its mobile games in the first quarter. Growth accelerated until March when the pandemic hit. Net advertising bookings grew 75% a year ago in the first quarter. King reported revenue of $ 498 million and operating income of $ 156 million in the quarter.
