Activision Blizzard Q4 2019 Earnings Call – Diablo Immortal Testing Mid-2020, WoW Classic Success

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Activision Blizzard Q4 2019 Earnings Call - Diablo Immortal Testing Mid-2020, WoW Classic Success



Highlights of this quarter’s breakdown include much higher than expected results, despite overall falling net income, adjusted earnings, and revenue compared to the same quarter last year in 2018. Although analysts projected their monthly active users (MAU) to fall down below 300 million, Activision Blizzard reported its user base surge to over 400 million, the first time the company’s user base has grown year-to-year since 2016. Overall, exceeding expectations is an overall positive outlook for a company which deals with a constant ebb and flow.

Fourth Quarter Highlights

  • ATVI had a better-than-expected Q4, with revenue 9.9% ahead of its guidance value.
    Their projection for Q4 was $1.81B revenue, but ended up achieving $1.99B.

Key highlights for the quarter were Call of Duty and World of Warcraft Classic.

  • Call of Duty increased its reach to many new different countries with new Modern Warfare, with a double-digit increase when compared to Black Ops 4.
  • WoW Classic success highlights the potential for compelling new content releases to increase community sizes.
  • Blizzard had a stable Q4 revenue, with World of Warcraft and Overwatch offsetting declines in revenue from Hearthstone and Diablo.

Activision Blizzard’s Plan for Growth

Activision Blizzard’s main plan for growth in 2019 and beyond was laid out around four main pillars, which were developed throughout 2019 with significant progress.

  1. Consistent cadence of Major New Content Releases
    • Call of Duty Modern Warfare highly successful release, with numbers ahead of Black Ops 4.
    • World of Warcraft Classic attracting both new and returning players to the original world of Azeroth.
    • Improving Live Operations
      World of Warcraft Classic continuous updates kept the size of the active WoW player base well above pre-Classic levels.
    • Hearthstone engagement increased when compared to previous quarters.
    • Extending franchises to Mobile
      The launch of Call of Duty Mobile was one of the best mobile launches in the industry, driving Activision to record MAUs.
    • Call of Duty success highlights the opportunities on mobile for other franchises.
    • Adding New Engagement Models to franchises
      Overwatch League and the new Call of Duty League with their homestand formats bring the esports action to many different locations.
    • New partnership with YouTube, bringing ATVI esports content to 200M+ gamer viewers worldwide.

Blizzard Highlights for Q4 2019

World of Warcraft
World of Warcraft ends 2019 with an active player community more than twice the size of its Q2-ending level. Active players defined as players with an active subscription or game time > 1 month.

  • Blizzard has a rapid cadence of follow-on content planned for Classic, as well as the Shadowlands expansion for retail World of Warcraft, in the second half of 2020.
  • Hearthstone

    • The launch of Descent of Dragons Expansion and the new Battlegrounds game mode in Q4 drove increased growth in engagement for the game.
    • Net Bookings also grew in the quarter for the franchise. Net bookings is an operating metric that is defined as the net amount of products and services sold digitally or sold-in physically in the period, and includes license fees, merchandise, and publisher incentives among others and is equal to net revenues excluding the impact from deferrals.

    Overwatch

    • Q4 had Overwatch launch for the Nintendo Switch, further expanding its community, which has surpassed 50M players globally since launch.
    • Q1 2020 will have the return of the Overwatch League, with 20 teams around the world competing in a homestand format and matches being broadcast live on YouTube.

    Diablo Immortal

    • Diablo Immortal plans its first regional tests for the middle of 2020.





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