Activision-Blizzard Q3 2020: Blizzard MAUs fell to 30M as overall ActiBlizz revenues hold steady

Diablo Immortal will be in external regional testing 'soon', Blizz repeats

    
30
Activision-Blizzard Q3 2020: Blizzard MAUs fell to 30M as overall ActiBlizz revenues hold steady

It’s time for another round of Activision-Blizzard financials as today covers Q3 2020. It’s been a weird couple of years for the company as 2019 saw mass layoffs, the Blitzchung boycott, a weak BlizzCon, and plunging YOY revenues for five straight quarters in May 2019, August 2019, November 2019, February 2020, and May 2020. Q1 2020’s revenue drop was very slight and close to flattening, and then in Q2, revenues for the company were up for the first time in six quarters, largely due to COVID-19 lockdowns.

Of course, at the time, we had only just found out that BlizzCon was canceled, and we didn’t yet know that World of Warcraft Shadowlands was going to be delayed. The latter has already been rectified, of course; the big news that Shadowlands is now launching November 23rd (ahead of the holiday shopping season) conveniently dropped a few hours ago, perfectly positioned to make investors happy.

And as it happens, overall Acti-Blizz revenues for Q3 held steady, improving over 2019’s Q3 and inching up just a tick since last quarter’s $1.93 billion count. Blizzard by itself saw its revenues improve 4% year-over-year, in fact.

“For the quarter ended September 30, 2020, Activision Blizzard’s net revenues presented in accordance with GAAP were $1.95 billion, as compared with $1.28 billion for the third quarter of 2019. GAAP net revenues from digital channels were $1.75 billion, as compared with $1.01 billion for the third quarter of 2019. GAAP operating margin was 40%. GAAP earnings per diluted share were $0.78, as compared with $0.26 for the third quarter of 2019. For the quarter ended September 30, 2020, on a non-GAAP basis, Activision Blizzard’s operating margin was 44% and earnings per diluted share were $0.88, as compared with $0.38 for the third quarter of 2019. For the quarter ended September 30, 2020, operating cash flow was $196 million. For the trailing twelve-month period, operating cash flow was $2.03 billion.”

It’s not all great news; MAUs (monthly active users) across all of Blizzard’s games fell by 2 million over the last quarter. Here’s the chronology of MAUs over the last couple of years so you can see how far the tally has fallen:

38M in Q1 2018
37M in Q2 2018
37M in Q3 2018 (BFA)
35M in Q4 2018 (mass layoffs)
32M in Q1 2019
32M in Q2 2019
33M in Q3 2019 (WoW Classic)
32M in Q4 2019 (Blitzchung)
32M in Q1 2020 (COVID-19)
32M in Q2 2020 (COVID-19)
30M in Q3 2020 (this quarter)

In other words, Blizzard has lost 21% of its overall playerbase in the last three years. According to the press release, WoW’s MAUs are “stable” and 10M of the remaining total of 30M belong specifically to Overwatch, so it’s not entirely clear which games have bled players.

World of Warcraft MAUs were stable year-over-year,” the press release says. “Anticipation continues to build for Shadowlands, the next expansion for modern World of Warcraft, ahead of its November 23 launch. World of Warcraft franchise engagement is at its highest level for this stage ahead of an expansion in a decade, with Shadowlands presales well ahead of any prior expansion.” I know, I know, “engagement.” Obligatory:

Engagement.

Incidentally, Activision-Blizzard’s Bobby Kotick told GamesBeat that “the company needs to hire more than 2,000 people to meet its production demands,” in addition to the 10,000 the company has now. Gee, if only it hadn’t laid off 800 people last year or all the staff in Versailles a few weeks ago. Wild.

We’ll be updating with the important bits from the conference call below once it’s started at 4:30 p.m. EDT.

Blizzard-related notes from the conference call (ongoing)
  • Kotick’s slide says WoW is expected to generate over $1B in net bookings this year and that there are “multiple products” in the Diablo franchise pipeline.
  • Kotick repeats the same line he’s given for several quarters now, mentioning that the WoW subscriber base doubled after Classic but not mentioning that it also appeared to drop back to normal a few months later. The investor call seems to suggest that WoW is back up to those levels again now thanks to Shadowlands and the pre-patch. We don’t actually know the balance of Retail to Classic; last quarter, Blizzard dodged a direct question about that.
  • Kotick is suggesting there will be “more frequent major content launches” for both WoW Retail and Classic. No details given.
  • Pre-sales are “highest [Blizzard has] seen” for any WoW expansion; the company repeats the same line as last quarter about engagement being at its highest point (“unprecedented engagement trends”).
  • Diablo Immortal will “soon enter external regional testing” – another line the company has been repeating for several quarters now. Last quarter, Blizzard dodged a question about the testing plan. No details here either.
  • $411M of the overall Acti-Blizz revenues are attributed directly to Blizzard, a revenue growth rate of 4% year-over-year “driven by another strong quarter of growth for World of Warcraft.”
  • J. Allen Brack was specifically asked about the WoW subscriber/playerbase expectations for Shadowlands and the trajectory heading into 2021. As usual, he gave what sounded like a a prepared statement about the new launch date and excitement and quality and feedback and the prepatch and new-player experience… and really nothing to do with subscriber numbers, apart from once again touching on the Retail/Classic sides being one playerbase. (He repeats this every quarter while dodging these questions. It’s a whole thing.)
  • Brack does say that the teams plan to expand the development teams and “even more content” for the two halves of the game, which… I mean, I sure hope so? What else would they even do? He also hints at expanding the franchise, which is so vague it could mean anything:

“We think of Warcraft as a huge franchise, and WoW is only a part of that. We’re always exploring how to express Warcraft with new experiences, and we’ve seen a lot of opportunity for growth there in 2021 and beyond.”

Let the speculation begin.

No posts to display

30
LEAVE A COMMENT

Please Login to comment
  Subscribe  
newest oldest most liked
Subscribe to:
Reader
Utakata

Once again this is no real indication that the Blizz ship is sinking, nor it’s standard bearer, the USS WoW…

…however, it does appear they are not able to…or won’t patch up those apparent leaks of theirs. Which seems quite self-inflicted from where I am standing. /sigh

Reader
Matthäus Wey

I’m honestly not surprised Blizz is ignoring community feedback left and right if possible when “Pre-sales are “highest [Blizzard has] seen” for any WoW expansion” and “Kotick’s slide says WoW is expected to generate over $1B in net bookings this year “. They clearly do something right.

Reader
Utakata

…or saying the “right” things in the faces of adversity. Also see: Spin.

Reader
Malcolm Swoboda

Losing on subs or expansion enthusiasm can still bring mx income for years, even if it arranges the ultimate decline.

Reader
Utakata

It’s obvious they are not at some tipping point yet.

But as a hypothetical investor, I much prefer growing revenue as opposed to a declining one. Thusly, this where Blizz PR gives everyone a pair of rose tinted glasses to remind them they are still making money regardless. It’s a “neat” trick, to put it mildly.

Reader
Danny Smith

I’m no fan of the state of modern WoW but i can’t imagine an insignificant number of those users has been Overwatch completely tanking in popularity and all news of its sequel falling off the grid.

I mean what else is making up a serious block of this 30 million at this point? are they counting call of duty in this?

Reader
Bruno Brito

My speculation:

Candy Crush: The Windrunner Saga.

Reader
Bruno Brito

Incidentally, Activision-Blizzard’s Bobby Kotick told GamesBeat that “the company needs to hire more than 2,000 people to meet its production demands,” in addition to the 10,000 the company has now.

The gall of this fucking pest.

Reader
Mark Jacobs

2K new people is a lot. My guess is that a lot of the hires will be a mix of contractors and customer support folks. Adding 2K new developers would be quite a major addition to the company and he did say devs. OTOH, I’m sure he’s feeling the pressure of Microsoft’s acquisition spree and other publishers looking to grow ever larger so maybe there are more devs in that number that I would expect.

Reader
Bruno Brito

If he’s feeling any pressure, it’s not because he wants it. Kotick doesn’t feel to me like someone who wants to see the company grow and improve. He actively feels like the bad CEO that you get and you know for some reason he’ll retire in two years, richer than everyone while the company is in some kind of dire straits.

He’s probably being pressured by everyone else in the building because he’s grossly overpaid and grossly incompetent.

Reader
Mark Jacobs

It’s always about the $$$$, not any more complicated than that. Some publicly traded game companies Cs do care about quality/consumer/teams and not just because they think solely about them in relation to earning more money. Unfortunately, I’ve never seen any indication that he’s one of them.

Reader
Bruno Brito

I know it’s about the money, but as a CEO, Kotick’s main focus should be into keeping the company healthy financially speaking as much as speaking on a professional setting. He should be focused in keeping work integrity, good content output and then overseeing the profits.

Instead, he gets overpaid for bad work. I’m aware i’m talking about in a ideal setting, but when you have a 33 billion dollar networth, you don’t have the right to talk about the real world anymore, and any ideal setting should be achievable.

Anyway: He’ll retire with his silky, golden parachute. And everyone here, me as a gamer, you as a passionate developer, Bree as a professional editor, will watch in anger as this trashcan of a leader continues to rake in the cash somewhere else for little work, while we all try to collect the breadcrumbs of this god-forsaken industry.

Reader
Hostagecat

i totally agree.. however the reality of corporate america is make decisions that drive stock prices up in the short run so i get my bonus…I don’t care about long term health because i wont be here in 3 years. Oh no the stock price is going to tank.. lay people off to drive the stock price up. Because i need my bonuses…..

CEO’s of America follow Adam Smiths vile maxim, they do not understand the Goose that keeps laying eggs is way more important in the long run. They didn’t receive that training when they went to business school, all they learned were business tricks about moving paper and money around to make the appearance of a strong company.

Reader
Bruno Brito

I’m aware. I don’t respect people with economic-liberal views here in Brazil, because in 30 years of living, i’ve never met one who was anything more than “i’ve taken the bus once, hated it and now i hate the government”.

And yes, most of Kotick’s actions are basic: He’s vague, he’s a toady, he’s pathetically submissive towards the investors, and he managed to keep his job by being this toady.

He’s a parasite. His only worth for Activision is inexistent. He’s taking money out of the company and not returning any. His embelishing of the accounts won’t last long, and he’ll retire rich and peacefully because the Universe doesn’t care.

Andy McAdams
Staff
Kickstarter Donor
Loyal Patron
Andy McAdams

Not really knowing the timeline of the hiring plan but *assuming* it’s the net year, 2k is almost an unachievable number of net-new hires to hit without as you say contractors or acquisitions. ATVI hasn’t really made any meaningful acqusitions in a long time so that’s unlikely to happen.

Even getting enough contractors to help fill this gap is a huge ask and I don’t think it’s a thing Kotick can live up to. Even assuming you could get that many even moderately qualified individuals and you had a rock-solid on boarding, in most cases it’s 3-6m before any new hires, contract or FTE, really start moving the needle on the production needs.

Ultimately, from a business perspective I think you are right on in that Kotick is feeling some pressure but he’s also going super oldschool with his approach – gaming and online gaming landscape is changing dramatically around him and he just … keeps doing the same thing he’s done for decades.

I tell my teams all the time the only guaranteed to lose in business is to keep doing the same things over and over. Same applies here except I don’t see Kotick and Co reacting to the market. They are acting like they are above the market and that’s just not the case.

Reader
Robert Mann

Problem being, given the conditions (increased revenues) under which they fired 800 for seemingly no reason other than to claim reduced costs to appease shareholders, how many people are interested in a job with said company and the likely long leap off a short plank that will follow? It would just be very odd to have any trust in the company to actually have a job past a very short deadline meeting rush at this point.

“Hey, you guys like crunch right? Crunch and fire… it’s our new and improved worker satisfaction program!!”

Reader
Armsman

Well I guess it’s time for another layoff of 800 people. That’s why the CEO gets paid the BIG bucks, (and never sees a reduction in his high in the sky salary); right?

Reader
Hostagecat

You are probably so right…

Reader
PanagiotisLial1

At this point I wont be surprised if they get bought by MS too in 1-2 years to develop XBOXed WoW as well

Grimalkin
Reader
Grimalkin

WoW is already a console-quality game, so might as well.

Reader
G I G A B E A R

Blizzard was once one of the greatest, if not THE greatest, companies in gaming. I grew up on Blizzard products. Especially Diablo and Diablo 2. And later, WoW.

But ever since Activision, it’s been mostly downhill. The vets all jumped ship to make their own companies.

And maybe one of those will bring back the magic.

Reader
PanagiotisLial1

The merger happened in summer 2008 if I recall and they had some good years after it so I dont exactly attribute it to the merger itself. The main thing is the people who take the decisions on all levels that gradually changed

Reader
Soy

And how nostalgia makes it hard to compare what we have know with what we remember having in the past.

Reader
Bruno Brito

Blizzard has had quite a lot of agency over the years. They were always owned by someone ( Vivendi before ), and blaming their owners for what is quite possibly just the company itself not adapting well towards new game-design philosophies is something that makes me cringe all the time.

It wasn’t Activision that made Blizzard delete systems every xpac. It was Blizzard itself.

It wasn’t Activision that made Blizzard force WoW into a Raid-or-die mentality, which they shove quite a bit of resources in it, every year. It was Blizzard itself.

Activision may not be the best company around, but we really should stop holding Blizzard towards this high, almost-fantasy-like regard that never even existed.

Reader
PanagiotisLial1

Yes I dont buy it either that the parent company pushed them. At most the “landlord” company says they want this percentage of financial growth in 6 months. They dont tell them to fire or push out the creative people they had in the past nor dictate them who to hire and place as creative directors. They got most money than any other mmo to just hire the best and keep the best – they just arent even trying in favour of keeping a low cost model having people that are unfit for driving an AAA mmo

Reader
Bruno Brito

Again: Blizzard always had agency. The fact they weren’t working in Diablo 4 and thought that D:I was a good announcement shows how much agency they really had. Had Activision pressured them, they would have a D4 announcement that day.

It’s because of Blizz’s detachment with their playerbase, that they thought they could pull up ANYTHING and make money. They can’t. They’re finally realizing their limits, and those limits shrink every year.

Reader
Bryan Turner

I’m sure it doesn’t help that the Blizzard we remember now exists in spinoff companies which are staffed by seasoned Blizzard veterans.

Reader
G I G A B E A R

Morhaime literally named his “Dream Haven.” Really feels like a shot at Blizz’s current corporate culture.

Reader
Mark Jacobs

Hehe, yeah, I can’t imagine that was just a clever name, not from Mike. :)

Reader
Bryan Turner

So what’s Mike like, I got the impression he was this chill friendly dev with the heart of an Indie that never really bought into that Activision Corporate culture. Him taking a swipe at Kotick while cool doesn’t seem like his personality, but then obviously he must have had a public persona; so what’s he like when among friends and peers?