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Activision Blizzard reported earnings today that beat expectations as the company saw a surge for its Call of Duty games because people are staying inside due to the pandemic.
The Santa Monica, California-based game publisher said its GAAP revenues were $1.93 billion, up 38% from $1.40 billion a year ago while non-GAAP earnings per share were 81 cents, compared to 53 cents a year earlier. Activision Blizzard echoed Electronic Arts and Take-Two Interactive in attributing growth of video games due to people wanting to entertain themselves while sheltering in place.
The big video game publisher said that both Call of Duty: Warzone, a new battle royale mode for Call of Duty: Modern Warfare; and Call of Duty: Mobile drove demand for the quarter. Call of Duty: Warzone hit 75 million downloads since mid-March, and the company said virtually all of its games benefited from people staying at home.
Analysts expected the company to report non-GAAP earnings per share of 64 cents on revenues of $1.69 billion for the second quarter that ended June 30. On a non-GAAP basis, earnings per share were 97 cents on revenues of $2.08 billion. In after-hours trading, the company’s stock price rose 1.2% to $87.60 a share. Activision Blizzard’s market value is about $66.6 billion.
“I’m hoping that what is happening is that people have started to realize that games are just a great form of entertainment,” said CEO Bobby Kotick in an interview with GamesBeat. “The more people are experiencing it, the more they will stay connected to gaming.”
During the lockdown, other forms of entertainment (like sports and movie theaters) are stalled because of social distancing and shelter-in-place orders during the pandemic. With few other options, more people than ever are turning to gaming.
We don’t know if games can be “recession proof” as more people lose work and have less discretionary income to spend on anything, let alone games. So it’s a question of whether increased engagement can offset less disposable income.
When Call of Duty: Warzone launched on March 11, the U.S. was just going into a pandemic lockdown. In its first two months, the free-to-play game was downloaded more than 60 million times in its first 52 days. In this case, social distancing and self-isolation contributed to Warzone’s success, and now the number of downloads is at 75 million.
Across its games, Activision Blizzard is shooting for expansion of its audience, engagement, and player investment in its core franchises.
The Activision division had more than 125 million monthly active users (MAUs) in the quarter (those that signed on at least once in a month), up from 102 million in the previous quarter. Blizzard had 32 million MAUs (flat from the previous quarter) and King had 271 million (down from 273 million in the previous quarter but up 5% from a year ago).
Warzone is a free-to-play battle royale within the Call of Duty: Modern Warfare. In the first full quarter since Warzone launched, the number of hours played in the Modern Warfare increased eight-fold year-over-year, driven by both new and existing players. Modern Warfare added more players outside of a launch quarter for a Call of Duty game than ever before, with the majority as upgrades from Warzone.
On PC, life-to-date consumption for Modern Warfare is more than double that of the prior title. Call of Duty’s in-game net bookings more than doubled from the previous quarter and were around five times higher than the year-ago quarter, hitting a new record.
The free-to-play Call of Duty Mobile saw sequential quarterly growth in engagement and player investment, benefiting from both shelter-in-place and updates for seasonal content and gameplay improvements. The game released three seasons in Q2 and each generated more net bookings per day than the prior.
Activision didn’t say anything about its next Call of Duty game, which is believed to be Call of Duty: Black Ops Cold War, based on a leak by marketing partner Doritos. In an analyst call, the company confirmed that Call of Duty’s next installment will come from Treyarch and Raven Software later this year.
Blizzard and King results
Blizzard saw an enthusiastic response for its Shadowlands expansion for World of Warcraft. It said preorders are accelerating for the expansion, which debuts in the fourth quarter. Overwatch also grew its engagement from a year ago, and the Hearthstone: Ashes of Outland expansion debuted in the quarter.
King also saw increases in reach and engagement amid shelter-at-home conditions, though that moderated in the second half of the quarter. Still, MAUs were higher from a year ago, driven by Candy Crush Saga. King will be launching a mobile game, Crash Bandicoot: On the Run.
As far as outlook goes, the company said it sees tailwinds of shelter-in-place moderating in certain parts of the world, where the pandemic is lessening and people get outside. Activision Blizzard is raising its expectations for revenues and earnings for the year.
There are risks of global economic weakness, rising unemployment, pressures on retail and pricing, and other factors. The company now expects non-GAAP earnings per share of $2.87 on revenues of $7.275 billion, up from the previous estimate of non-GAAP earnings per share of $2.62 on revenues of $6.8 billion. That raise is the largest lift in a forecast in the company’s history, said Dennis Durkin, chief financial officer at Activision Blizzard, during the analyst call.
On October 2, Activision is releasing Crash Bandicoot 4: It’s About Time, the first original Crash Bandicoot title in decades. The remakes of Tony Hawk Pro Skater and its sequel will be coming in September.
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