Ryan Goodrich
Activision-Blizzard reports a strong first quarter revenue with earnings exceeding their analysts’ expectations. As a result, the game developer believes it’s in a strong position to continue this heightened performance throughout the rest of the year in spite of the Coronavirus pandemic.
The conference call
During the conference call, CEO Bobby Kotick said, “As of now, we’re on track to deliver compelling new content, including the World of Warcraft: Shadowlands expansion and the next premium Call of Duty release, both of which are planned for the second half of the year.”
Kotick’s statement confirms that their development pipeline is still on schedule. This is quite critical in achieving original release dates to keep revenue flowing at adequate rates. The game development industry is able to continue working on products, unlike Hollywood where many projects are still on hold due to the lockdown. In comparison, game development continues due to workers being able to complete their jobs while at home. So Activision Blizzard is in a great position to deliver on-time releases through the rest of 2020.
How good of a quarter it actually was
Activision-Blizzard described its first quarter results as “strong,” but this is something of an understatement. Adjusted revenue increased by 21% year-over-year. This is driven by in-game spending of $956 million during the quarter, which represents an increase of 20% over the first quarter for 2019.
Call of Duty is one of the company’s best-selling franchises in the industry. The recent releases for Call of Duty Mobile and Call of Duty: Warzone have attracted millions of players to the franchise. This segment originally had 36 million active users during September 2019, but that quantity has blown up to 102 million as of the end of March 2020. This increased number of players spending money on games is what led to a 64% increase in revenue year-over-year for this quarter.
Blizzard had good results to report for its other franchises as well. Both World of Warcraft and Overwatch saw higher player engagement during this first quarter. Kotick said, “Blizzard is seeing strong increases in engagement across our franchises as people around the world stay home, adding to business momentum as our game teams execute against the strongest pipeline of content in Blizzard’s history.”
The release of World of Warcraft Classic last year helped to bring both old and new players alike back to the title. COO Daniel Alegre said, “The community continues to engage deeply in Classic, a recreation of our original WoW from 15 years ago, which has delivered substantial content drops in recent months and has much more to come later in the year.”
This increase in engagement with the classic version has also succeeded in increasing the game’s “reach and engagement” for more recent expansions, such as accelerating pre-sales of Shadowlands. That expansion is expected to release during the second half of 2020.
Keeping busy at Blizzard
Kotick’s statement about t he upcoming release schedule hints at some upcoming releases beyond 2020. This includes the likes of Overwatch 2 and Diablo 4, so we can only assume both titles are still on schedule with their development roadmaps.
Activision-Blizzard likewise expects to begin regional testing for Diablo Immortal, a mobile version of the PC franchise, during the second half of 2020. Additionally to the new Call of Duty title and WoW expansion, management stated that two titles would be releasing from its extensive library of intellectual property, which could suggest at remastered old titles for the current console generation.
Overall, it’s fair to say Blizzard is having a good time this year. Coronavirus notwithstanding, the fact many of us have been driven to stay indoors and game, this has resulted in increased spending on video games in general. So naturally the game developers would be experiencing some higher levels of revenue than originally expected.
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