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Activision Blizzard’s console revenue drops 31 percent; ‘World of Warcraft’ is getting a mobile game

(Washington Post illustration; iStock)

Activision Blizzard reported earnings after the bell Thursday with some metrics suggesting player fatigue with “Call of Duty” titles ahead of Activision Blizzard’s acquisition from Microsoft. Sales of “Call of Duty: Vanguard” did not meet expectations last quarter, and player engagement was lower than predicted for “Call of Duty: Warzone.”

The company’s net revenue fell by 10 percent as Activision recorded $2.16 billion in revenue in the quarter ending in December, compared to last year when it brought in $2.41 billion. Overall yearly revenue was up in 2021, as the company brought in $8.8 billion compared to $8.09 billion in 2020.

“King and Blizzard were fine, Activision Publishing was not,” said Michael Pachter, a Wedbush analyst specializing in the video game market. “It appears that ‘Call of Duty: Vanguard’ sold meaningfully fewer units than last year’s record sales.”

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Analysts had expected Activision Blizzard to pull in $2.8 billion in net revenue during the quarter.

While the company did not disclose specific game title numbers, it did break down revenue by platform, with console and PC, where “Call of Duty” is typically played, showing big drops. Activision reported console revenue of $576 million, down 31 percent from $840 million during the same period last year. PC revenue declined 12 percent, from $496 million compared with $561 million, while mobile, buoyed by subsidiary King, shot up by 18 percent.

Also in the report, Activision Blizzard announced plans for a mobile version of “World of Warcraft,” though it did not provide details. Blizzard is working on “substantial new content for the Warcraft franchise in 2022,″ according to the report.

The earnings report is the first since the Jan. 18 announcement that the company would be acquired by Microsoft. Activision cited the pending deal as a reason for canceling its quarterly earnings call with investors, which had been planned for 1:30 p.m. Pacific time.

While companies are not required to hold earnings calls, it’s rare for a major tech or gaming company to cancel its call ahead of an acquisition when “the ink is still wet” on the deal, according to Joost van Dreunen, a lecturer on the business of games at the New York University Stern School of Business. For example, Glu Mobile held earnings calls throughout 2020, ahead of its completed acquisition by Electronic Arts last April. However, last December, Slack canceled its earnings call after announcing Salesforce would acquire it. In 2016, Yahoo skipped its earnings call ahead of being bought by Verizon, in the midst of dealing with fallout from its data breach. Activision Blizzard is currently facing multiple lawsuits from employees, California’s state Department of Fair Employment and Housing, shareholders and investigations from federal regulators over how management handled allegations of sexual misconduct, harassment and other corporate workplace issues.

A Wedbush report noted that some reports of culture problems at Activision Blizzard may have led to gamers boycotting some titles, such as “World of Warcraft.”

Instead of speaking live, CEO Bobby Kotick provided a statement to investors that “with Microsoft’s scale and resources, we will be better equipped to grow existing franchises, launch new potential franchises and unlock the rich library of games we have assembled over 40 years.”

The deal has been approved by the board of directors at Activision Blizzard and at Microsoft, according to a news release. It is still pending regulatory approval from the Federal Trade Commission, and is slated to close by June of 2023.

“It may mean we see Guitar Hero again,” Forrester analyst Will McKeon-White said of the acquisition. “Blizzard has had a wide variety of different titles under their umbrella that they haven’t been able to invest as much in.”

Despite the lower console and PC revenue numbers, King continues to be a bright spot for Activision Blizzard, which saw a 14 percent increase in sales from “Candy Crush Saga.” The mobile game continues to be the top-grossing franchise in app stores in the United States.

Activision Blizzard stock held relatively steady at just under $80 a share after market close.

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