Activision-Blizzard Q1 2018: WoW is actually outperforming expectations – time for a fourth yacht or no?


Reporting on Activision-Blizzard’s endless piles of money is about as much fun as reporting on how fifty-bajillion-zillion people are playing fork knife. No, I said that wrong; it’s about as much fun as taking a fork and a knife to my own eyeballs. But hey, it’s tradition, so here goes: Bobby Kotick and the gang have announced new records, measured in said piles of money; the company acknowledges it was a quarter “without large content releases” that nevertheless produced enough piles of money to surpass its own guidance, leading it to raise its outlook for more piles of money for the year.

“For the quarter ended March 31, 2018, Activision Blizzard’s net revenues presented in accordance with GAAP were a Q1 record $1.97 billion, as compared with $1.73 billion for the first quarter of 2017. GAAP net revenues from digital channels were an all-time quarterly record $1.46 billion. GAAP operating margin was 30%. GAAP earnings per share were an all-time quarterly record $0.65, as compared with $0.56 for the first quarter of 2017. […] Activision Blizzard’s operating margin was 39% and earnings per diluted share were an all-time quarterly record $0.78, as compared with $0.72 for the first quarter of 2017. […] Operating cash flow was a Q1 record $529 million, up 29% year-over-year.”

One of the reasons these reports have gotten dull is the switchover a few years back to Blizz reporting merely monthly active users (MAUs) instead of more granular results (like sub numbers and concurrency numbers) for its online games. Blizzard itself claimed 38,000,000 MAUs this quarter thanks in part to… wait, what’s this? World of Warcraft getting a nod? This just got interesting after all.

World of Warcraft over-performed versus the prior expansion at this point in time, with higher engagement sequentially and strong community participation with in-game purchases. Preorders for the upcoming expansion, Battle for Azeroth, are ahead of plan. Hearthstone continues to reach and engage its large global audience through multiple efforts including a new promotional bundle, expansion, and player-versus-environment mode, Monster Hunts, which has had strong engagement. Overwatch continues to add new players, and engagement remains strong, with the most recent seasonal event, Retribution, having a higher participation rate than any prior event.” [Emphasis ours.]

Then again, is doing better than pre-Legion really a high bar?

Do note that the company is also still talking up “increased engagement” thanks to Overwatch League. There is no mention of Diablo or Heroes of the Storm, at least in the written report. Perhaps more tellingly, Destiny 2 is also not mentioned.

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