Activision Blizzard Leads Q1 with Call of Duty and WoW

[Asia Economy Reporter Eunmo Koo] Activision Blizzard recorded earnings that exceeded market expectations in the first quarter, driven by the success of ‘Call of Duty’ and ‘World of Warcraft (WoW)’ as well as increased game demand due to the novel coronavirus (COVID-19).

According to Hana Financial Investment on the 16th, Activision Blizzard’s first-quarter revenue this year was $1.79 billion, a 2% decrease compared to the same period last year. Operating profit increased by 7.4% to $612 million, and diluted earnings per share (EPS) also surpassed market expectations by recording $0.65 against the expected $0.59.

Both Activision and Blizzard showed solid performance. Seungtaek Hwang, a researcher at Hana Financial Investment, stated in a report on the day, “The Call of Duty intellectual property (IP) achieved remarkable results again through ‘Warzone,’ which was released on March 10,” adding, “Although it is a Free to Play model, 60 million users played it, and it is positively impacting purchases of ‘Call of Duty: Modern Warfare.’” Thanks to the success of ‘Call of Duty,’ Activision’s standalone revenue increased by 64% year-on-year to $520 million, with operating profit reaching $180 million.

Blizzard also saw a 31% year-on-year increase in revenue to $450 million in the first quarter, as the number of ‘WoW’ users, which had doubled following the release of ‘WoW Classic’ last year, continued to grow. Operating profit surged 258% to $200 million. Although King’s revenue and operating profit decreased by 6% and 12% respectively, monthly active users (MAU) increased, and ‘Candy Crush’ ranked first in revenue on the U.S. App Store in the first quarter.

It is analyzed that the ‘selection and concentration’ strategy on major IPs has entered a phase where results can be fully realized. Researcher Hwang explained, “Despite uncertainties caused by COVID-19, the promising content pipeline will enhance earnings visibility,” adding, “The hit ‘Call of Duty’ has two season updates planned for the second quarter (one in the first quarter), and in the second half of the year, Activision plans to release two games based on its own IPs and a new ‘Call of Duty’ title, while Blizzard plans the ‘WoW’ expansion pack ‘Shadowlands’ and regional tests for the mobile game ‘Diablo Immortal.’”

Based on increased demand due to COVID-19 and the success of major franchises, Activision Blizzard raised its annual guidance. Revenue was increased from the previous $6.45 billion to $6.8 billion, and diluted EPS was raised from $1.85 to $2.22.