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Activision Blizzard just reported the results of its fiscal Q3. The company hit its own expectations, but it came up short relative to what Wall Street was expecting. That has sent the company’s stock into a small tailspin. But it seems like it has a savior in the waiting. Call of Duty: Black Ops 4 launched October 12, and it’s a sales juggernaut.

As part of its earnings report, Activision detailed the latest Call of Duty’s performance. The modern military shooter has sold through more copies than Black Ops III through their first three weeks. A big chunk of those sales comes from PC and Blizzard’s Battle.net service. According to Activision, Black Ops 4’s PC sales are three-times higher than Black Ops III.

That makes this one of the best-selling Call of Duty games ever. And it has certainly outsold Advance Warfare and World War II, the two most recent predecessors, through the first three weeks.

The publisher is also touting its engagement numbers. It says that active users are up 16 percent over Black Ops III. And hours played also saw an increase of 20 percent over the last Call of Duty from developer Treyarch.

Activision gives a weak outlook despite Black Ops 4

But while Call of Duty is ready to deliver some big numbers for Activision during its Q4, the publisher doesn’t have high expectations overall. While a consensus among Wall Street analysts expected the company to predict an earnings per share of $2.64 for its fiscal 2018, the company gave an outlook of $2.46 earnings per share.

It was even gloomier for Q4. The consensus among analysts was $1.34 earnings per share next quarter, but Activision anticipates earnings per share of just $1.27.

Following that conservative outlook, the company’s stock price dropping 10 percent in after-hours trading. As of the time of this writing, the stock is selling at $56.50 per share.

In a statement to investors, however, Activision chief executive officer Bobby Kotick remained optimistic.

“Activision Blizzard’s results for Q3 exceeded our prior outlook as we continue to entertain large audiences, drive deep engagement, and attract significant audience investment across our franchises,” said Kotick. “Our unique advantage continues to be our ability to create the most compelling interactive and spectator entertainment based on our own franchises, combined with our direct digital connection to hundreds of millions of customers, in over 190 countries. With these competitive advantages we continue to connect and engage the world through epic entertainment.”

But Activision is also about “epic” business models. Last week, Treyarch turned on the in-game microtransactions for Black Ops 4 last week. If that game begins generating significant revenue from digital items, Activision may easily surpass its expectations for Q4. And we’ll see what happens to its stock price when the company reports its fiscal 2018 results.

Why so low?

But if Call of Duty is so strong, then why does Activision has such grim outlook for Q4? The answer is a combination of playing on expectations and Destiny 2. For the former, the company isn’t sure yet how well its Black Ops Blackout (BOBO) battle royale mode is going to monetize. If players get into the habit of spending a ton of cash, it could turn into a massive source of revenue. But the company isn’t going to rely on that and then have it fall through. It’s better to aim low and overshoot those expectations. That’s what investors respond the best to.

For the former, Destiny is an example of a game that is not generating enough cash — and that’s according to Activision.

“Some of our other franchises like Destiny are not performing as well as we’d like,” Kotick said during a conference call with investors.

Developer Bungie launched Destiny 2: Forsaken on September 4, and fans have responded positively to the new content. And yet, Destiny isn’t delivering where it counts for Activision. And you can see the publisher trying to counter that by giving away base Destiny 2 for free on PC to anyone with a Battle.net account. It also included the game in Sony’s PlayStation Plus subscription service at no additional charge. The hope is that more people will come in and start spending.

We’ll likely get a better idea if that worked during the next report coming out of the holidays. For now, I need to get back to BOBO.

Corrected at 4:49 p.m. to reflect the correct Q3 and Q4 figures. 

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