This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
Activision Blizzard (NASDAQ:ATVI) has released its earnings for the quarter ending December 31, 2022 (the company’s fiscal year coincides with the calendar year), and it seems like it was a happy holiday season for the Call of Duty mega-publisher. The company delivered $2.33 billion in net revenue, up from $2.16 billion for Q4 2021, but the most important measure of the company’s success was net bookings (which includes in-game microtransactions and other purchases) which were $3.57 billion in Q4 2022 compared to $2.49 billion a year ago. The reasons for Acti-Blizz’s good quarter were twofold – the success of Call of Duty: Modern Warfare II and the resurgence of Blizzard.
Call of Duty: Modern Warfare II delivered the highest opening-quarter sell-through in franchise history, leading to a 60 percent year-on-year revenue boost for the Activision division. Call of Duty Warzone 2.0 also contributed to the good quarter, although Activision admits engagement has “moderated” following so-so reaction from players. Meanwhile, Call of Duty Mobile’s playerbase grew by double-digits. Despite rumors to the contrary, Acti-Blizz is promising the “next full annual premium release in the blockbuster series” will arrive this year. What form that “full annual premium release” might take, is unknown.
Ultimately though, the biggest news was Blizzard, which had been struggling for some time to put up the kind of numbers expected of the division. Blizzard revenue was up 90 percent year-on-year, thanks to the launch of Overwatch 2, World of Warcraft: Dragonflight, and World of Warcraft: Wrath of the Lich King Classic. Due to a switch to the free-to-play model, Overwatch 2 delivered record in-game purchases, and Wrath of the Lich King Classic seems to be a bigger hit than Dragonflight, with the latter not matching sales of some past expansions. Meanwhile, Diablo Immortal continues to be a consistent money-maker for the division. Acti-Blizz did acknowledge the split with Chinese Blizzard publisher NetEase in their press release, but don’t expect it to be a major setback for them as they look for “alternative ways to serve the community in China.”
Activision Blizzard will not to hosting an earnings call this quarter, but CEO Bobby Kotick did provide this brief statement on the company’s performance…
“We ended 2022 with record quarterly net bookings as we delivered on our mission to bring epic joy to players. I’m grateful to our talented teams for their many successes entertaining our hundreds of millions of players around the world. We look forward to a historic year, as we work toward merging with Microsoft. This merger will enable us to better serve our players, create greater opportunities for our employees, and allow us to succeed in an increasingly competitive global gaming industry.”
It remains to be seen how Activision Blizzard’s successful quarter may affect Microsoft’s proposed $69 billion acquisition of the company, which is facing challenges from multiple regulators. Despite the good financial news, we also shouldn’t forget that Activision Blizzard has faced a series of lawsuits and other legal action on the heels of a suit filed by California’s Department of Fair Employment and Housing (DFEH) alleging widespread gender-based discrimination and sexual harassment at the Call of Duty publisher. You can get more details on that unfolding story here.
It seems Activision Blizzard is back to operating at full strength after a shaky year or two. With major games like Diablo IV set to launch in 2023, expect that success to continue.
