Activision-Blizzard has not had the best year. In February, the company saw record-high revenues and promptly laid off 800 employees, leading to widespread condemnation. In May, we confirmed the company’s revenue spike was indeed a bubble bursting, as the company’s revenues absolutely plummeted. By August, the company was looking at still more revenue dips while talking up its new priorities; while World of Warcraft subs were up ahead of the launch of WoW Classic as expected, monthly active users (MAUs) for Blizz were down from 38M in Q1 of 2018 to 32M in Q2 of 2019.
So here we are in Q3 of 2019, July, August, and September. The date range here is notable because it does include the entirety of the WoW Classic launch, but it doesn’t include the influence of the Hong Kong drama in October or BlizzCon impact in November, good or bad. Ready?
So Activision-Blizzard had another rough quarter, with revenues down once again, this time down 16% compared to the same quarter last year. Even so, the company characterizes it as a better-than-expected quarter thanks to COD and WoW.
“For the quarter ended September 30, 2019, Activision Blizzard’s net revenues presented in accordance with GAAP were $1.28 billion, as compared with $1.51 billion for the third quarter of 2018. GAAP net revenues from digital channels were $1.01 billion. GAAP operating margin was 19%. GAAP earnings per diluted share were $0.26, as compared with $0.34 for the third quarter of 2018.”
“For the quarter ended September 30, 2019, Activision Blizzard’s net bookingsB were $1.21 billion, compared with $1.66 billion for the third quarter of 2018. Net bookingsB from digital channels were $0.98 billion, as compared with $1.44 billion for the third quarter of 2018. In-game net bookingsC were $0.71 billion.”
“Recent launches have enabled significant growth in the size of our audiences for our Call of Duty and World of Warcraft franchises,” CEO Bobby Kotick says. “As we introduce mobile and free-to-play games based on our franchises we believe we can increase audience size, engagement and monetization across our wholly owned franchises. With a strong content pipeline and momentum in mobile, esports and advertising, we are confident we will remain a leader in connecting and engaging the world through epic entertainment.”
There’s a bit of good news for MMO fans in here, however, as Blizzard’s overall MAUs added another 1M players in the quarter, increasing from 32M to 33M. That’s thanks to WoW Classic, which the company says “drove the biggest quarterly increase to subscription plans in franchise history, in both the West and East.” (Again, the fact that Blizzard intentionally obscures playerbase size across all of its games makes it hard to figure out how well Classic really did; we do know that Blizz MAUs were 37M in Q3 2018, the quarter Battle for Azeroth came out.)
Also worth noting here is that SuperData’s revenue rankings definitely reflected a big surge for World of Warcraft in the west in August, but by September that surge appeared to be mostly over as WoW had already dropped back down to its “normal” spot in the bottom half of the top 10. Then again, that report coincided with the news that both console and PC spending is down significantly year over year. Either way, we suspect SuperData’s October and November reports – and the February Acti-Blizz investor call – will make for interesting reporting indeed.
In response to an analyst’s question, the company did point out the importance of WoW Classic’s reach in an “off” year for WoW. After-hours stock trading has shown the company dropping several points, but of course it’s nowhere near as bad as earlier this year.
Another analyst asked specifically about WoW Classic retention. Blizzard dodged and instead pointed out that it intentionally set up the sub so that players can go between the two games.
wow classic will die in a couple months, if not weeks.
I saw a recent industry-analysis piece, primarily focused on UbiSoft and Bethesda, but with some commentary that I think is applicable to Activision-Blizzard as well.
I believe what we are seeing is the beginning of the rebellion with fed-up gamers who feel used and ripped off by these so called “AAA” studios with overly-aggressive monetization techniques and half-baked products being put out simply to fleece people.
We knew this day would be coming as the backlash was reaching a cresendo last year and now, as they old saying goes, it is time to pay the piper.
My personal opinion is this is just the beginning of the pain that companies like Ubisoft, EA, Bethesda and Activision-Blizzard are going to feel for the years of increased customer abuse and sub-standard products they have put out.
Activision will be the death of them if Blizzard doesn’t find a way out of their current contractual obligations. Their behaviour and development has been marred by the hypercapitalistic influence of Activision’s board. As a game company, at least for core gamers, Activision is pretty substandard. Most of their studios churn out either CoD titles or mobile games. Sekiro was the only notable exception in recent years, which was a one-time publishing deal with FromSoftware(afaik).
I don’t say everything what’s wrong with Blizzard atm is Activision’s fault, that would be too easy, but the negative influence is noticeable.
Really? Because i’m highly sure, almost everything Blizzard did wrong was their fault, and they had complete control over their faculties as a company.
Cataclysm was on their shoulders. SC2 was on their shoulders. The entire competitive push of Overwatch and not implementing a PvE mode is on their shoulders. HotS is on their shoulders. The entire direction of WoW is almost free of Activision influence, it’s on their shoulders.
It may be noticeable NOW, after the fated reunion they had after Diablo Immortal, but it was their choice to not work on Diablo IV before that.
People really overblow how much Activision HAD ( nowadays, clearly they got tired of subpar results ) influence over Blizzard’s design decisions in-game.
Totally see your point. I have to wonder if getting rid of founding staff who were telling them whats wrong is an issue from the top down? I do enjoy WoW and the community. To me this drive to always increase profits is a curse for failure but that is just me grinding away from my own opinion at the a software company.
People read this as Blizzard news but I don’t. Activison needs to go back to publishing more games. They’ve become a house of their own IPs and nothing else.
https://en.wikipedia.org/wiki/Activision#2010s
Look at the “notable” games they published in 2010-2019 compared to any other decade. The list is tiny. Of course revenues are going to continue to shrink, they barely make anything new anymore.
They can always move to China. Since they love China so much.
Part of me is sad. I have many fond memories of my late teens and early 20s playing Blizzard games and loving them. All of that has been pushed aside for a corporate greed machine that doesn’t have one iota of passion for the franchises that made Blizzard INTO that giant company. It’s a sad thing, it really is.
The other part of me isn’t surprised and may be enjoying a bit of schadenfreude and “I told ya so” at this: when you treat your consumers like stupid monkeys, don’t be surprised when they throw dookie at you.
And now you know why Blizzard is so hard up for China. They don’t have a path to growth in the west.
They don’t really have one in China either. In fact, during the call they were mentioning expansion in other countries specifically. South America seems to be a bigger focus rn.
I don’t know that I accept that. If some sort of trade deal with China gets sorted that involves opening up their markets a bit more, they have more room for growth there than they do in the west which is unquestionably over-saturated with entertainment options. Also a closer look at the financials reveals the largest income generating segment is King, which exceeds Activision and Blizzard revenues combined. The company literally cannot afford to lose mobile gaming in China. As MMO enthusiasts we sometimes miss just how important that segment is to them.
Yes, mobile gaming is important to Activision on the whole – I even noted this further down in the comments. China and mobile are significantly less important for Blizzard, which is what we were talking about. This is why we had Andy crunch the numbers in that piece!
In any case, we don’t have to speculate much on China’s importance here; the investor release yesterday pinpointed this. As of this past quarter, the entire Asia Pacific region made up only 14% of Activision-Blizzard’s net revenues, up only 1% since last year. Most of the people pouring money into the Candy Crushes of the world are from our neck of the woods.
I seriously don’t think we have a chance in hell of a sweetheart deal with China anytime soon. Tencent itself has had to cancel games it can’t get released in China at this point.
Bree, was J. Allen Brack part of the decision making for the NGE?
Damn, I had forgotten he even worked on SWG. I guess he left SOE before the NGE launched, but it makes sense that he probably worked on it. But I honestly don’t know. Is this the thing to do now, to blame NGE on him instead of on Smed and LucasArts and the traditional SOE clowncar? Hehe. I mean, Brack was at SOE for most of SWG’s development and two other expansions and they weren’t quite the same level of disaster. The narrative I’ve always heard from folks involved was that NGE was more like an executive order from top management, and he would’ve been just one of several producers.
But hey ask me about my side-eyes for Tom Chilton sometime. :P
OH HELL NO.
When I was there I saw a lot of South Americans were on Linux because countries like Brazil are poor due to the debt the Government owes hence deforestation-= another topic :) But I would love to connect more with South American gamers. When I was in Monterrey Mexico where all the manufacturing and Technology hubs are, a lot of my colleagues were gaming on PC. I bet they increase the mobile applications?
I just want to mention that actually they did beat analysts expectations this quarter, so the stock drop is not about current results.
The problem they face now is their next quarter prediction that falls way bellow what the market expected (I’m sure the reason is Classic subs drop allied with the HK brouhaha). This also explains that “I’m sorry” move that no one expected.
Anyway, it’s good to see them hurt by their bad decisions. That’s how it should work all the time.
Yep, this is noted in the third para (“Even so, the company characterizes it as a better-than-expected quarter thanks to COD and WoW.”) Thing is, they provide the guidance for those expectations. They’ve lowballed expectations for three quarters now only to send Kotick out to say “pay no attention to plunging revenue; we did better than expected!” Ma, I didn’t get an F like I thought; I got a D-! Three quarters in a row now.
If I can be honest, I expected this quarter to be much better for Blizzard, to the point that I prewrote the research and left space to drop in the actual figures and quotes, and then when we got the hard numbers, I had to scramble to rewrite it. I am with you – mentally revising my thinking on just why Brack was sent out to apologize.
Btw, let’s see if my prediction was true. ER is over, Kotick knew it was going to be bad, so now Blizzard news stops cold.
watch it.
When I think of Blizzard I think of once innovative company that has allowed itself to stagnate . Even though there were plenty of reveals at Blizzcon this year there wasn’t really any new concepts just a bunch of games based on existing IP’s .
Even the new WoW expansion lacks a new class for people to get their teeth into . A necromancer considering the subject would have been an obvious choice .
Really? Because Blizzard’s recipe was always taking something that already existed and polishing it. Never seen them creating anything “new”.
Surprised they haven’t created a Battle Royale yet.
God no.
I would have liked to seen some type of music class. But a necromancer would be cool as well.