Mentioned in this article

  • Activision Blizzard reported net revenues of $1.28B USD for Q3 2019, beating its outlook of $1.11B, but decreasing 15% compared to Q3 2018.
  • Over the last nine months, Activision Blizzard decreased its marketing spending and personnel costs by $130M compared to the same period the previous year.
  • The developer and publisher announced several new products at BlizzCon 2019 including Overwatch 2, Hearthstone Battlegrounds, and a new World of Warcraft expansion.

Following markets close yesterday, Activision Blizzard published its Q3 2019 earnings report. The U.S. game developer and publisher reported a net income of $204M generated from $1.28B net revenues.

While the company outperformed its guidance for the quarter of $1.11B, Activision Blizzard’s net revenue decreased by 15% year-over-year (YoY) from $1.51B, and its net income was down by 22% from $260M in Q3 of 2018.

Activision Blizzard reported its revenues separated by segments: Activision Publishing (products for the console platform, including the product franchise Call of Duty titles), Blizzard Entertainment (products for the PC platform, including, World of Warcraft, StarCraft II, Hearthstone, and Overwatch), and King Digital Entertainment (products for the mobile platform).

Most of the company’s net revenues were generated by King Digital at $500M ($194M net income). Blizzard contributed $394M in net revenues ($74M net income), while Activision generated segment net revenues of $209M ($26M net income).

The total net income of Activision Blizzard translates to $0.27 in earnings per share (EPS) according to generally accepted accounting principles (GAAP).

Furthermore, the company reported that it lowered its marketing for esports initiatives and World of Warcraft. For the year-to-date period, Activision Blizzard disclosed a decrease of $130M in marketing spending and personnel costs, primarily associated with lower marketing costs for esports initiatives, the Destiny franchise, and Overwatch.

The company made a few statements regarding its esports ventures. According to the earnings report, the Overwatch League’s second season saw over 30% growth in U.S. average minute audience (AMA), a statistic provided by data and analytics firm Nielsen. The league’s finals were sold out and a crowd of over 11K fans watched the Grand Finals at the Wells Fargo Center in Philadelphia in person.

“I think operationally we had the benefit of two years in a fixed location to really think about how to optimize production,” said Bobby Kotick, Activision Blizzard’s CEO in the company’s earnings call. “What we’ve learned over the last couple of years is serving us incredibly well as we launch the Call of Duty League. In fact, most of the owners are existing owners and most of them have jumped in at prices that are higher significantly than what they paid for their Overwatch teams, and I think we’re going to get the benefits of scale of being the biggest operator of a professional esports league anywhere in the world.”

The latest franchised league operated by Blizzard, the Call of Duty League, will kick off in late January 2020. In collaboration with Tencent, Blizzard published a mobile version of Call of Duty, which surpassed 100M downloads in the first month on the market.

During BlizzCon last week, Blizzard announced the next World of Warcraft expansion (named Shadowlands), Hearthstone Battlegrounds (an auto-battler mode competing with Dota Underlords, Teamfight Tactics, and Auto Chess), and a sequel to Overwatch.

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