Activision Blizzard Second Quarter 2021 Financial Results - Two Mobile Warcraft Titles in Internal Testing
Activision Blizzard just finished their
second quarter financial results conference call
, having announced exceeding prior outlooks for the months of April through June of 2021, although the company's performance has declined slightly compared to
and the previous year's performance. Major announcements include a brand new internal mobile development studio working on a Call of Duty title, two Warcraft mobile experiences already undergoing internal testing at Blizzard, and a strongly worded opening statement from CEO Bobby Kotick, addressing recent allegations of misconduct.
Kotick's lengthy speech hit on the unexpected announcement made earlier today that
J. Allen Brack would be stepping down as President of Blizzard Entertainment
, replaced by new "co-leaders" Jen Oneal (former head of Vicarious Visions and current Executive VP of Development at Blizzard) and Mike Ybarra (former Corporate VP of XBox and current Executive VP of Battle.net). Despite recent turmoil after the announcement of a
discrimination lawsuit against the company
, the recent wave of protests is not factored into these earnings, and will instead be represented in the third quarter. Still, the company's newfound commitment was reiterated ad nauseum by each of the executives, along with this
statement in the earnings press release
Following serious allegations regarding the company’s employment, compensation and workplace practices, Activision Blizzard is taking swift action to ensure a safe and welcoming work environment for all employees. We have engaged a law firm to conduct a review of our policies and procedures to ensure that we have and maintain best practices to promote a respectful and inclusive workplace. We will be adding additional staff to our Compliance and Employee Relations teams, strengthening our capabilities in investigating employee concerns. We are creating safe spaces, moderated by third parties, for employees to speak out and share areas for improvements. We will be evaluating managers and leaders across the company with respect to their compliance with our processes for evaluating claims and imposing appropriate consequences. And we will be adding resources to ensure and enhance our consideration of diverse candidate slates for all open positions. The leadership of the company is committed to creating the most welcoming, comfortable, and safe culture possible.
Aside from the leadership changes, Blizzard Entertainment specific highlights include the announcement that two Warcraft mobile experiences are already undergoing internal testing at Blizzard, with company co-founder Allen Adham leading the incubations team cultivating new projects at Blizzard. Additionally, despite a small decline in MAU, World of Warcraft net bookings grew by double-digit percentages since last year, noting higher subscriber numbers and hours played following the release of Burning Crusade Classic, and the game remains on track for stronger engagement this year than typical outside of modern expansion years. Blizzard Entertainment overall experienced a decline in total revenue year over year, though that was largely attributed to reduced revenues from the Overwatch League and Hearthstone product timing, as its most recent expansion launched today.
Activision - 127 million monthly active users, down from 150 million in Q1 2021
Activision delivered another strong quarter, contributing to record first half segment revenue and segment operating
Call of Duty sustained reach, engagement, and player investment well above levels seen prior to the introduction of free-to-play experiences.
MAUs are consistent versus the year ago quarter, and over three times higher than two years ago. Hours played in the franchise during Q2 were higher than the entirety of 2019.
Conversion from Warzone drove strong premium sales, multiple times higher than the level typically seen in previous years.
Console and PC in-game net bookings were similar to the first quarter, and approximately four times higher than Q2 2019.
Call of Duty Mobile net bookings grew double-digit percentages Y/Y and Q/Q, driven by strong execution of seasonal content and the game's launch in China.
Call of Duty Mobile is on track to exceed $1 billion in consumer spending for the year.
Blizzard Entertainment - 26 million monthly active users, down from 27 million in Q1 2021
Blizzard’s launch of Burning Crusade Classic in June marked the start of what is intended to be a very significant 18-month period for content releases.
World of Warcraft net bookings grew a double-digit percentage Y/Y, driven by the launch of Burning Crusade Classic. Subscriber numbers and hours played were higher following the release.
World of Warcraft remains on track for much stronger engagement this year than is typical outside of a modern
The previous Hearthstone expansion, Forged in the Barrens, delivered expansion-over-expansion net bookings growth for a second consecutive release following its March launch.
With United in Stormwind launching today and Mercenaries planned for the coming months, the financial performance of Hearthstone is expected to strengthen in the second half of the year.
The highly anticipated Diablo II: Resurrected will launch on PC and console on September 23.
Diablo Immortal has recieved excellent gameplay feedback, but been delayed to the first half of 2022 as the the team looks to make the title more engaging for a wider audience.
Blizzard continues to make strong progress on Diablo 4, allocating substantial resources to creating exciting in game content to drive engagement over multiple years.
Overwatch 2 development passed an important internal milestone in recent weeks. After a great response to the recent community update, the team is looking forward to revealing more of the game in the coming months as they approach the later stages of production.
King - 255 million monthly active users, down from 258 million in Q1 2021
King achieved record segment revenues and segment operating income, with ongoing Y/Y growth in payers and investment per payer.
King segment revenue reached a new record, growing 15% year-over-year, with segment operating income growing even faster.
Advertising revenues grew Q/Q and doubled Y/Y. King’s ongoing initiatives to enhance its ad platform, work with more demand partners and reach more categories of advertisers drove year-over-year growth in both volume and pricing, with broad-based strength across geographies.
The business saw ongoing year-over-year growth in franchise payers and investment per payer, with Candy Crush once again the highest grossing game franchise in the United States app stores.
King has been accelerating the delivery of seasonal content, reaching a monthly cadence for it's largest title, Candy Crush Saga.
The team is planning a slate of seasonal events and live operations for the second half of the year, including tie-ins with other brands.
Somewhat predictably, the Q&A session entertained several questions regarding the on the ongoing
lawsuit by the state of California
, and possible disruption of their content production cycle, though unfortunately most of the answers were non-specific - instead opting to repeatedly express adulation toward employee passion and creativity, along with the executive's newfound commitment to ensuring a safe work environment. Newly appointed as co-leader of Blizzard Entertainment, Jen Oneal reiterated her close working relationship with the Diablo and Overwatch teams since joining the studio at the beginning of the year, mentioning an increased developer recruitment drive, and stating that while there was a lot of work ahead for them, the passion and productivity were already there. Blizzard (then Silicon and Synapse) co-founder Allen Adham likewise joined in to say that he was excited about the things they were creating, and although they've been tight lipped about it, their new game pipeline has been in development for many years and it is greater than ever before, including expansion of existing franchises and brand new IPs which we've yet to hear about.
Questions regarding Apple's recent
regulatory concerns in China
were also brought up, with Chief Operating Officer Daniel Alegre stating that the changes had less impact than expected and the company is still seeing great results from their new advertising initiatives. Less was said about the Chinese regulatory concerns, except that they would continue to work with their local partners, which they've had a long and fruitful relationship with so far.
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