President Bobby Kotick lauded the performance of the publisher's core titles in a conference call with investors.
Activision Blizzard has released its earnings report for 2019’s fourth quarter, and the numbers show a slight drop in revenue for the Call of Duty and World of Warcraft publisher. During the three-month period ended December 31, 2019, the company brought in $2.7 billion, which is down from $2.8 billion in the same quarter in 2018. In total, 2019 saw $6.5 billion in revenue, a decrease from $7.7 billion in 2018, along with $1.6 billion in operating income.
The numbers for 2019 may be down, but they come in the wake of massive layoffs that took place early last year. These layoffs weren’t mentioned in the earnings call, but it’s disheartening to see such profit amid such loss.
“Our fourth quarter results exceeded our prior outlook for both revenues and earnings per share,” Activision Blizzard CEO Bobby Kotick told shareholders in the earnings call. “As we continue to transform the company, we've remained focused on the delivery of epic entertainment that connects and engages the world.”
It was the mobile platform that contributed the most to the quarter’s earnings. In fact, mobile is now Activision Blizzard’s leading platform, according to Kotick. October saw the launch of Call of Duty Mobile, which has performed admirably in the months since. According to Kotick, the free-to-play game has been downloaded by over 150 million mobile users.
In an interview with GameDaily last month, Leo Yao, general manager of CoD Mobile dev TiMi Studio, said that there was a lot of pressure to deliver a console-like experience on mobile.
“The biggest challenge is reaching the expectations players have in terms of quality and feel for Call of Duty,” Yao said. “Activision has created one of the biggest IPs in entertainment by delivering engaging, high quality experiences with big replay value. Now, bringing that to mobile means you have to accomplish two things: satisfy Call of Duty fans and hit a higher quality bar than anything else on the mobile shooter market, even on mid-to-low level devices with a weak internet connection.”
Another juggernaut in Activision Blizzard’s mobile portfolio is King, the developer behind a number of leading mobile titles, including Candy Crush Saga, Bubble Witch Saga. The studio was acquired by Activision Blizzard in 2015, and has been a leading revenue generator for the company in the ensuing years. During the last quarter, King’s games attracted an average of 249 million monthly users, and Candy Crush was the top-grossing franchise in the U.S. mobile app stores, according to the report.
Also in the pipeline for Activision Blizzard’s mobile presence is Diablo: Immortal, which is being developed in partnership with NetEase. As the first Activision Blizzard game that has been developed as a mobile-first experience, the company is optimistic about its reception, even if it has yet to figure into its financial outlook moving forward.
“Diablo: Immortal is planned to enter a regional testing towards the middle of the year, but we don't have any material revenue from that title in our guidance,” explained Activision Blizzard CFO Dennis Durkin.
Curiously, there was no mention of Rod Fergusson, former studio head at The Coalition who has been brought over to Blizzard to oversee the development of the Diablo franchise. However, Cody Johnson, COO at Activision Blizzard, said that the upcoming Diablo IV is part of the “brightest pipeline” in Blizzard’s history, which also includes Overwatch 2, Diablo: Immortal, and World of Warcraft: Shadowlands.
Blizzard is likely seeking a win after a very rough couple of years, which have been marked by
high-profiledepartures, PR debacles, and a tepid reaction to Warcraft III: Reforged. During the earnings call, Blizzard president J. Allen Brack addressed the Warcraft III remaster, saying that any perceived shortcomings were the result of rushed production.
“Honestly, it's been a bit of a hurry,” Brack explained. “Our community has come to expect really amazing things from us, and we've heard from them that we did not achieve that bar. But we stand behind our games and have consistently shown that not only do we support them, but we continue to build on them even after launch. And we're committed to doing that here as well.”
Unsurprisingly, Call of Duty: Modern Warfare figured heavily into the quarter: according to the NPD Group, the game crossed $1 billion in revenue in December, and that number has only climbed since. In the earnings call, Kotick touched on Activision’s intent to bolster series revenue across the mobile, console, PC, and esports sectors.
“And then, of course, in Q4 of this year, [we’ll release] a new premium Call of Duty release, which is already generating excitement in our play tests,” he said.
Modern Warfare has been performing well both physically and digitally, with purchases split across both distribution methods. The game contributed greatly to a robust digital market that hit $9 billion in December, a trend that’s likely to continue in the upcoming console generation. Modern Warfare has also eschewed the “season pass” monetization methods of previous entries in the series in favor of a Fortnite-like battle pass model focused more on cosmetic items, supplemented with smaller microtransactions.
Looking forward, Activision Blizzard’s is anticipating similar numbers for calendar year 2020, with an outlook of $6.5 billion in net revenues. Between the company’s annual Call of Duty release, a strong pipeline from Blizzard, and a large foothold in the mobile sector, Activision Blizzard remains one of the top performers in an industry that is experiencing rapid growth year after year.
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