Activision Blizzard Financial Results Drop Year-on-Year Among High Expectations for New Call of Duty & WoW: Dragonflight

Today Activision announced its financial results for the second quarter of the calendar year 2022, related to the period between April 1 and July 30.

We hear that both revenue and operating income (profit) for both Activision and Blizzard dropped year-on-year due to lower engagement for the Call of Duty and World of Warcraft franchises.

This was partly offset by the improving performance of Hearthstone and the contribution brought by the launch of Diablo Immortal.

That being said, results were higher than in Q1 on all fronts.

The press release comes with the traditional comment by Activision Blizzard chief executive officer Bobby Kotick, who talked about the acquisition of developers Proletariat and Peltarion and mentioned that the company looks forward to the closing of the acquisition by Microsoft as soon as possible.

“Our acquisitions this past quarter of Proletariat and Peltarion further boost our development resources, including our artificial intelligence and machine learning capabilities. Even in a challenging economic environment, with so many companies announcing hiring freezes and layoffs, our development headcount grew 25% year-over-year as of the end of the second quarter. Our talented teams are planning to release exciting new Call of Duty, World of Warcraft and Overwatch content later this year. Of course, we look forward to completing our pending $95 per share all-cash transaction with Microsoft as soon as possible.”

Incidentally, the company confirms that the acquisition is expected to complete during Microsoft’s fiscal year, which ends on June 30, 2023, but provides no further details on the timeline.

We also hear further commitment to “becoming the most welcoming, inclusive company in the industry.”

“Activision Blizzard remains committed to becoming the most welcoming, inclusive company in our industry, and continues to implement previously announced initiatives to strengthen our practices and policies. In the second quarter, we added experienced DE&I leaders in key positions across the organization. In July, the company launched Level Up U, a 12-week program that prepares talented individuals from inside and outside the industry to become full-time game developers. Level Up U is the first major program funded through a $250 million investment over 10 years announced last October to accelerate opportunities in gaming and technology for under-represented communities.”

We then read a list of highlights illustrating the performance of the publisher’s games and brands.

Activision boasts the upcoming Call of Duty: Modern Warfare II, defined “The most ambitious rollout yet across the franchise.”

Diablo IV is confirmed for 2023, and we also get a boast about the performance of Diablo Immortal.

Activision

• The fourth quarter will usher in a new era for the Call of Duty franchise. Anticipation is high for Call of Duty: Modern Warfare II, planned for release on console and PC on October 28. The sequel to 2019’s Modern Warfare, the most successful Call of Duty title to date, will lead the most ambitious rollout yet across the franchise. An all-new Call of Duty: Warzone 2.0 experience, tightly integrated with the premium game, will launch as an extension of the Modern Warfare universe later this year.
• Activision’s expanded studios also continue to make strong progress on an innovative mobile experience that will extend Warzone to the largest and fastest growing platform. Across the Call of Duty ecosystem, the teams are well positioned to support these launches with substantial live operations while also continuing development of new premium content planned for 2023 and beyond.
• Activision’s second quarter segment revenue and operating income declined year-over-year, reflecting lower engagement for the Call of Duty franchise, but grew versus the first quarter. Call of Duty net bookings on console and PC grew sequentially in the second quarter, following gameplay improvements and seasonal content across Call of Duty: Vanguard and Call of Duty: Warzone that were well-received by players. Net bookings for Call of Duty Mobile were consistent with the first quarter.

Blizzard

• The June launch of Diablo Immortal, a deep and authentic Diablo experience designed for the mobile platform, marked the start of a rollout of substantial content across Blizzard’s key franchises. Diablo Immortal received high player ratings on mobile app stores around the world, and reached the top of the game download charts in more than 100 countries and regions following its launch. Over half of the game’s player accounts to date are new to Blizzard. The game ranked in the top-10 grossing games in U.S. app stores for the month of June.
• Diablo IV, the next-generation installment in the genre-defining series, is planned for launch on PC and console in 2023. The title will support cross-play and cross-progression across platforms, and is designed to be the foundation for an engaging live service, providing ongoing storytelling and new content for many years to come.
• In the Warcraft franchise, Blizzard plans to deliver an unprecedented level of WoW content in the coming months, with Wrath of the Lich King Classic launching on September 26and World of Warcraft: Dragonflight, the innovative next expansion for the modern game, slated for release later in the year. Blizzard is committed to growing its development resources to meet and exceed its community’s expectations, and at the end of the second quarter significantly bolstered its World of Warcraft team through the acquisition of Boston-based studio Proletariat.
• During the second quarter, Blizzard unveiled Warcraft: Arclight Rumble™, an action-packed mobile strategy game that gives both new and existing fans an entirely different way to experience the Warcraft universe. Public testing of the game is underway in select regions.
• Overwatch 2 is planned to launch in early access on PC and console on October 4. With a free-to-play live service model designed to provide frequent and substantial seasonal updates, this launch kicks off the next chapter for the acclaimed team-based action game.
• Blizzard’s second quarter segment revenue and operating income were lower year-over-year but higher versus the first quarter. World of Warcraft net bookingsdeclined versus a year-ago quarter that included the launch of Burning Crusade Classic,offsetting year-over-year growth for Hearthstone and the contribution from the June launch of Diablo Immortal.

King

• King’s segment revenue and operating income grew year-over-year, driven by Candy Crush, King’s largestfranchise. King’s in-game net bookings increased 6% year-over-year, reflecting strong execution across live operations and user acquisition.
• King continues to increase the frequency and depth of seasonal content and introduce more player-versus-player features within Candy Crush, fueling growth in engagement and player investment. Time spent within Candy again grew year-over-year, franchise payer numbers grew by a double-digit percentage year-over-year, and Candy Crush was the top-grossing game franchise in the U.S. app stores¹ for the 20th consecutive quarter.
• King’s advertising business grew over 20% year-over-year, despite intensifying macro headwinds through the quarter, as the team continued to carefully ramp ad volume on the King network.
• In June, King acquired software company Peltarion to accelerate the use of AI and machine learning technology in serving its community even more engaging content.