Activision-Blizzard Q4 2020: Activision’s revenues are up QoQ and YoY as Blizzard MAUs drop again

But World of Warcraft's MAUs were bolstered by Shadowlands

    
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We’ve simply got to stop meeting like this exactly every three months. Yes, it’s time for another round of Activision-Blizzard dissembling in the form of the company’s investor report and conference call. Welcome to Q4 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 2019August 2019November 2019February 2020, and May 2020Q1 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. Q3 saw those revenues hold steady.

Revenues in Q4, as it happens, are up again – 17% in fact, a better-than-expected result.

“For the year ended December 31, 2020, Activision Blizzard’s net revenues presented in accordance with GAAP were $8.09 billion, as compared with $6.49 billion for 2019. GAAP net revenues from digital channels were $6.66 billion. GAAP operating margin was 34%. GAAP earnings per diluted share were $2.82, as compared with $1.95 for 2019. On a non-GAAP basis, Activision Blizzard’s operating margin was 39% and earnings per diluted share were $3.21, as compared with $2.31 for 2019.

“For the quarter ended December 31, 2020, Activision Blizzard’s net revenues presented in accordance with GAAP were $2.41 billion, as compared with $1.99 billion for the fourth quarter of 2019. GAAP net revenues from digital channels were $1.87 billion. GAAP operating margin was 25%. GAAP earnings per diluted share were $0.65, as compared with $0.68 for the fourth quarter of 2019. On a non-GAAP basis, Activision Blizzard’s operating margin was 31% and earnings per diluted share were $0.76, as compared with $0.62 for the fourth quarter of 2019.”

Acti-Blizz attributes a lot of the results to Call of Duty, World of Warcraft, and Candy Crush as usual and talks up growth in 2022+.

As for Blizzard specifically, it’s a good thing WoW is doing well because WoW’s numbers are up thanks to Classic and Shadowlands even as Blizzard’s overall MAUs keep on dropping and the press release doesn’t even namedrop Hearthstone, Overwatch, or Diablo III/IV.

To put that in context, Blizzard has lost almost a quarter of its overall playerbase in three years, as measured by Blizzard’s own preferred monthly active user count.

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 (COVID-19)
29M in Q4 2020 (this quarter)

We’ll be updating with the important-to-us bits from the conference call below as it rolls on.

Updates from the conference call
• Bobby Kotick is spending a large part of his introduction talking up the company’s support for veterans, women, and minorities.
• Kotick teases Diablo 4 a bit, saying it’s “on the horizon.” Overwatch 2 too. And he promises “more frequent premium content” for the Warcraft franchise.
• Activision says Classic helped buffer WoW between expansions and is suggesting the game and franchise will expand to “more platforms than ever before.” (Not sure what this means – hoping an analyst asks about this. The company did spend a chunk of the Blizzard section vaguely talking up mobile.)
• Activision is talking up reach and subs for WoW and Shadowlands, saying net bookings were up 40% since this time last year, its highest level in almost 10 years.
• Diablo Immortal is apparently still on track to launch this year, though it sounds like it’ll be the tail end of the year at best (the company isn’t incorporating revenues from the game in its 2021 outlook).
Overwatch 2 is still be worked on as one of the multiple 2022+ pipeline titles.
• Blizzard revenue by itself fell to $579M, which Blizzard attributes to a decline in non-WoW games and the cancelation of BlizzCon. But revs were still up 11% for the year.
Diablo IV and Overwatch 2 are NOT coming in 2021.
• Activision is saying that in some of its more social titles (like WoW), player engagement has stayed high even as COVID lockdowns are reduced.
• Another hint about upcoming “remastered content” – presumably a reference to Diablo II.
• J. Allen Brack is asked about WoW growth and content. He talks about how Classic and Retail are very different playerbases. They’re very happy with Shadowlands’ quality and numbers and the “momentum” of the engagement is still up a few months past launch. Brack basically says Blizzard is addressing both playerbases and will have more to share (BlizzConline is coming, after all). Nothing concrete in here at all.
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Motherball

I think it’s awesome how engaged people are with this company’s quarterly reports. Love it or hate it, it gets people talking every damn time. Free entertainment is always welcome.

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Armsman

So, as revenues are UP at Blizzard…I assume that means we can expect another round of about 800 or so layoffs, right?

I mean, that has been the company’s pattern over the last few years.

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Bruno Brito

• Bobby Kotick is spending a large part of his introduction talking up the company’s support for veterans, women, and minorities.

To all the filthy rich able white men in the room.

Pat yourself in the back, Kotick. It’s always great to start with a joke.

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Utakata

“I’m the most diverse person in this room!”

…I heard something similar to that from someone else. Now he can’t even get back on Twitter, lol.

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Loopy

Diablo IV and Overwatch 2 are NOT coming in 2021

This is a real bummer. Overwatch has been stagnant for a really long time, and Overwatch 2 announcement from 2019 really promised some badly needed bloodline into the game.

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Wilhelm Arcturus

Back in 2019 when I said we wouldn’t see Diablo IV before 2022 I thought I was being a bit cynical.

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McGuffn

Squeeze harder!

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Greaterdivinity

Activision says Classic helped buffer WoW between expansions and is suggesting the game will expand to “more platforms than ever before.”

Uh…what? >.>

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Danny Smith

Its finally time, WoW on stadia baybeeee!

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SmiteDoctor
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McGuffn

nope. They stopped their in house development studios, except maybe things already near launch.

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SmiteDoctor

Usually Blizzard tells you they’re doing it before developing it, they only wait for a playable demo; in WoW’s case the game itself is playable they just need to develop the code to make it cross platform so they can announce it anytime they like.

I’m thinking they’re developing it for X Box and Playstation, can’t be Switch because the file is too large.

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Kickstarter Donor
Greaterdivinity

Apparently mobile, based on Kotick’s comments about wanting to reproduce the CoD success and how D:I is on that track.

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Loopy

Don’t you guys have stadias?

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Bruno Brito

Not anymore :D

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SmiteDoctor

Why not?

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Hostagecat

Whats a Stadia…. is that where you go to watch sports?

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Danny Smith

Its basically par for the course now to see the title and go “okay what call of duty got farted out to cover the losses again?”. I can’t imagine what would happen should the CoD fanbase ever move on.

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Devin B

While they have some attrition in most of their properties, the lion share of this loss is obviously Overwatch related.