Blizzard’s online games drove Activision-Blizzard profits in Q1 2017

Activision-Blizzard can’t claim “biggest quarter ever” for the quarter ending March 2017, but it continues to rake in huge sums of money, enough to at least claim “biggest first quarter ever” on multiple counts with the $1.73 billion it made during the period. But you’re here for the MMOs, which is good, because it’s Blizzard’s titles making all the bank.

“Activision Blizzard had 431 million Monthly Active Users (MAUs)A in the quarter. Blizzard had the biggest Q1 online player community in its history with MAUsA of 41 million, up 58% year-over-year. Overwatch continues to be Blizzard’s fastest growing new franchise, reaching over 30 million players globally less than a year after launch. Overwatch is now the 8th billion-dollar franchise in Activision Blizzard’s portfolio. Hearthstone® MAUsA grew year-over-year and quarter-over-quarter, despite no content releases in the first quarter, and recently surpassed the 70 million registered player milestone life-to-date.”

World of Warcraft managed this bit: “With a regular content and feature update cadence, World of Warcraft® time spent grew year-over-year in the first quarter.” Rah-rah.

Notably, 80% of the revenue comes from digital sales — including subs, online  and lootboxes, as Gamasutra has rightly pointed out.

It’s also worth pointing out that “MAUs” are Monthly Active Users, “the number of individuals who played a particular game in a given month” calculated by “adding the total number of MAUs in each of the months in a given period and dividing that total by the number of months in the period” such that “an individual who plays two of our games would be counted as two users” and “an individual who plays the same game on two platforms or devices in the relevant period would generally be counted as a single user.” This is Blizzard’s preferred method of describing engagement since it stopped reporting WoW sub numbers a year and change ago.

And howasabout Destiny 2?

“Activision and its partners at Bungie expect to release Destiny 2 on September 8, 2017 and welcome PC players into the Destiny universe for the first time. Response to the Destiny 2 reveal was very encouraging, and pre-orders are off to a very strong start.”

Source: ActiBlizz investor relations, press release
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37 Comments on "Blizzard’s online games drove Activision-Blizzard profits in Q1 2017"

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Wilhelm Arcturus

Just to nitpick the title, which of Blizzard’s games are not online? It seems like you could have said, “Blizzard drove Activision-Blizzard profits.”

Except, when you look at the chart, Blizzard and King both contributed $166 million in net profits, so it seems like the real title should have been something like “Activision is least profitable part of its own company in Q1 2017.”

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chriskovo .

These people don’t deserve to be profiatlbe. With the crap they are pulling in wow. The boring tf2 cloneness of Overwatch. The exclusion of the half the cards I bought in Hearthstone from general play. In diablo 3 they are going to charge for a freaking class with out adding any more content! Will you people stop giving them money! They need a hard reality check and cash loss bitch slap to set them strait.

Don’t know how everyone can still be praising them when everywhere I see a train wreck and a dissolution of good games.

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Iain B

The crap they are pulling with WoW? They are continuously releasing new content…

CCGs are constantly cycling out older cards from current tournament play. Magic has been doing it for years.

The Necromancer update for D3 is only going to be $15-$20. Big deal.

It sounds like you’re the one that needs the reality check.

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Giannis Papadopoulos

I am now sure that i am too old and dont belong in the current gamer generation.. since overwatch is so successfull!

I guess these type of games is what the majority of players want now. I am not say its not a good game, its just not my type.

That also lessen my hopes for blizzard to invest lot of money to make a new MMO (a new titan…) or even a wow 2.0

Why take the risk, when they can make an overwatch and get 30 million players (sold boxes) in a couple of years…

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Paragon Lost

I relate it to when the card games really exploded in the mid 1990’s with Magic the Gathering. They’re easy to dive right into and have an easy learning curve to just jump right into casually. It put a serious hurt on the tabletop rpg, tactical and strategic gaming at the time. Made quite a few gaming companies go under as most everyone was simply buying MtG cards instead of other gaming stuff.

FPS, MOBAs etc are the same way. They require a lot less to casually jump right in and play and the action is more instant instead of the build up of mmrpgs. I’m with you, it’s not my thing, just like MtG wasn’t either. What can you do though? :(

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Mr_Planthead

Count me as someone dumping money into their laps. I played overwatch when it was in beta and didn’t think it was very good. A couple weeks ago after hearing about it on the blizzardwatch podcast a lot I decided to try it again, now I’ve bought a few of the loot box packages and play almost every night

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Dystopiq

$1.73b in a quarter. Wow.

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Sally Bowls

Blizzard in the conference call (bolds mine)

Our Q2 slate includes one of Blizzard’s busiest stretches of in-game content releases, including momentum from the March 28 World of Warcraft content update; a new Hearthstone expansion, Journey to Un’goro; the Overwatch Uprising event; and the Heroes of the Storm 2.0 launch with more content to come in the upcoming months.

Evan Wingren – Pacific Crest Securities
Thanks. So given Blizzard’s slate this year, with less full games being released, just curious how you think about the content to help keep the community engaged throughout the year and how you think about the monetization of that engagement?

Michael Morhaime – Activision Blizzard, Inc.
Hi, Evan, this is Mike. So, yeah, this year for Blizzard represents a new type of pipeline, one that’s not necessarily based on full game launches, but instead on delivering new content updates for our games. This quarter, we have meaningful new content for every franchise in our portfolio. In fact, a few weeks ago we set a new DAU record on the back of these new content updates. This reflects the evolution of our business from focusing primarily on full game releases to also providing a consistent stream of content for our players. Even without any full game launches this year, we’re continuing to add to the depths of our games to serve a very highly engaged community with more content across our portfolio than we ever have before.

How much of this is a new strategy? SaaS – software as a service – is a very timely idea in business these days. And how much is this is just what you say without new releases?

semugh
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semugh

plus they are doing the exact opposite lol…
their last sub based game was released 13 years ago. Since then it’s full priced games and F2P games lol…

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Sally Bowls

The conference call transcript is out.

COD: “the negative social media sentiment, which was an issue last year, has virtually evaporated at about 0.2% at reveal.” Second time ever, hands-on COD at E3, and “King and Activision are teaming up to build a Call of Duty mobile game from the ground up. And the goal is to take a brand that tens of millions of people know and love and reinterpret it in a way that is appealing to the mass mobile audience. And we think it’s a big opportunity. With King’s experience making massively accessible and engaging games for that platform, and Activision’s experience building one of the most enduring and appealing and engaging gaming franchises ever, we think we have the right combination of skills to pull it off.”

I saw three chum for the commenters here:

1) Esports

Esports is an important and growing engagement driver for our community, and there were many highlights this quarter. …

Throughout history, sports has helped bring communities together. City and country loyalties form the basis for spectator enthusiasm, generations of engaged audiences and traditions anchored in scheduled competitions. Until the 20th century though, sports like football, baseball and basketball were still hobbies for gifted amateurs. Then professional leagues emerged like the Premier League, the NFL, or the NBA. The value of sports in our everyday lives has grown exponentially, and so have the commercial opportunities that we see in sports. We actually believe the same opportunity to further professionalize esports now exists, and we think the impact can be as significant as the traditional sports we know and love.

The franchises we’ve built over the years deliver competitive experiences as enduring as traditional sports, but with unique strength and value for brands. Our players are digital natives competing in almost every country in the world. The esports audience includes some of the hardest to reach and most sought-after demographics for marketers and advertisers, with the share of millennials two to three times higher than any of the big four U.S. sports. We’re incredibly excited to launch the Overwatch League later this year. We believe by celebrating and rewarding our players, and recognizing their accomplishments, our professional players will become the role model and inspired competitors of the 21st century. The competitions we’re creating around the world will attract sponsors and advertisers resulting in broadcast revenues, licensing, sponsorship and ticket sales, and most importantly, amazing spectator experiences. Through MLG, we’re building the first dedicated global channel for esports, the over the top ESPN of video games.

2) Remember the don’t preorder games movement?
“And after four weeks, Destiny 2 pre-orders are tracking amongst the top in Activision Publishing’s history”
COD: “Preorders are off to a very strong start.” “SKUs that contain the expansion pass have attracted the majority of pre-orders so far.”

3) My personal favorite is the Orwellian third pillar. What this article crassly called “digital sales” were referenced with

“Turning next to the third pillar of our strategy, providing opportunities for more player investment. Blizzard saw an increase in total in-game purchases by almost 30% year-over-year, primarily driven by Overwatch and World of Warcraft, highlighting once again the virtuous cycle of engagement leading to more player investment, all of which starts with great new content.”

Look you ingrates, this benevolent multinational is providing you “opportunities for more player investment.” – show some gratitude.

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Koshelkin

I really don’t have to believe when they say “SKUs that contain the expansion pass have attracted the majority of pre-orders so far.”. Don’t I? Good marketing, though.

Nowadays preordering is a dumb decision, especially if you include “expansion passes”. If you invest into those they have no obligation whatsoever to deliver decent DLC upgrades, they just need to meet the minimum expectations.

The triple A studios just want maximum profit. Quality and Originality suffer.

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Sally Bowls

You certainly don’t have to believe anything you don’t want to.

But this was not marketing people, this was high level executives on a financial discussion. I would think that everything was well vetted in advance. I would be very, very surprised if anything they said was wrong and simply flabbergasted if it was deliberate. I t’s not that I see them as saints, but why would they think a little spin would be worth the risk of hundreds of millions of dollars of lawsuits?

I wasn’t saying preordering wasn’t dumb; merely that is was quite popular with customers. The rhetoric on fansites is quite clear but so is how consumers spend their money.

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Bannex

I guess WoW is dead…

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Sally Bowls

For a decade (next month)

How Open Big virtual worlds grow

hurbster
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hurbster

That map showing Southshore makes my face sad.

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Sally Bowls

About a third of ATVI’s revenue is from PCs. At first, that seemed lower than I expected. Upon reflection, that seemed higher than I should have expected. Not sure PCs can keep that number up once Destiny & COD WWII launch.

IDK, I guess a third of game revenue from PCs is inline with other large publishers? Is this something ATVI and other publishers have been reporting and I missed it?

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Sally Bowls

Ah PCs caught consoles because console were down 20% and PCs up 42%

Revenue breakout: Product sales, $509M (down 21.1%); Subscription, licensing and other revenues, $1.22B (up 50.2%).
Net revenues by platform: Console, $615M (down 20%); PC, $566M (up 42%); Mobile and ancillary, $475M (up 95%); other, $70M (up 49%).
Net revenues by segment: Activision, $215M (down 40%); Blizzard, $441M (up 50%); King, $474M (up 129%).

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Sally Bowls

IMO, it’s also worth pointing out that MAUs is not a metric Blizzard came up with.

Monthly Active User (MAU) is a key performance indicator (KPI) for online games, apps and social networking services (SNS).

http://www.investopedia.com/terms/m/monthly-active-user-mau.asp

As much as we miss the subscriber numbers, if investors are used to seeing MAUs from all ATVI’s peers, ATVI probably needs to show MAUs.

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Armsman

$1.73 billion in the first quarter. Yep, I can see how any Dev in the industry would consider Blizzard their “Dream Job” because hell if they give any sort of bonus based on game financial performance to Devs at a certain level…

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BDJ

How do you grow when you are losing players?

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Manastu Utakata

Goblin economics of making more with less? o.O

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Giannis Papadopoulos

By selling the subscription for 20 euro instead of 12 ;) not to mention the services which also can be bought with gold now

and by that i mean you buy a token that someone else bought for 20 euro but you get 13 euro on your balance.. so if you want to make a characeter or faction change for example, you need 2 wow tokens = 40 euro for blizzard.

Granted, many people pay a regular sub instead of buying a token… but still there are many who buy a sub for 20 euro instead…

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Schmidt.Capela

By growing other franchises: Destiny, Overwatch, Hearthstone, HotS, etc.

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BDJ

Like Sally said. The report said wow grew. Was just curious how a game could grow while people say its “bleeding” players.

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Sally Bowls

While they did say

Blizzard had record Q1 time spent, which grew a double-digit percentage Y/Y

They said

“World of Warcraft® time spent grew Y/Y and LegionTM’s overall performance is slightly ahead of the prior expansion”

So WoW-only time did grow.

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Schmidt.Capela

Take into account that Y/Y comparisons for WoW are right now comparing it with the worst of the WoD content drought. And Blizzard is saying that time played grew without mentioning MAUs, which makes it sound like WoW’s MAU count decreased.

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Dobablo

Blizzard no longer give subscription numbers for WoW (with is what a WoW specific MAU would very closely approximate).
Agree that YoY comparisons are complicated, but YoY comparisons in every industry normally have some complication in them, which is why it is important to consider the details behind the headline figure).

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thirtymil

“With a regular content and feature update cadence, World of Warcraft® time spent grew year-over-year in the first quarter.”

Translation: we have less players but the ones we have left have really been sucked into the World Quest/Artifact grind.

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Schmidt.Capela

Do remember that a year ago we were in the tail end of WoD’s expansion-end content drought. If Blizzard couldn’t improve from that, they could give up making new expansions.

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BDJ

A year ago doesn’t = Q1 2017.

Jan 1 – Mar 31 is considered Q1. How in the world does what WoD had at the end of its life impact the 2017 Q1 numbers, when the expansion we are currently on is almost a year old?

balte04
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balte04

Haha yeah I laughed when I saw that.

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Danny Smith

When asked about Heroes of the Storm was the response “whats that?”

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Sally Bowls

SC & D3 have little sympathy. :-)

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Slaasher

Lots of people playing HOTS. Granted its not Overwatch but I would still call it a successful game.

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Greaterdivinity

Seriously, they’re so quiet about that game. I’m really curious about the next quarterly report, as that will reflect the HOTS 2.0 changes. If that can’t spur enough success in terms of player engagement or revenue, then I’m not sure what’s left for Blizzard to do with it.

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Leviathonlx

It seems like Blizzard has always been the main thing keeping Activision Blizzard afloat.

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Sally Bowls

That’s a bit skewed by the filter bubble here. Blizzard is obviously doing very well, but this Q1 it was 40% of ATVI’s revenue, smaller than King. Last Q1 it was less than Activision. It’s the biggest of the three divisions, but still a minority of ATVI’s revenue.

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