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Activision Blizzard Q3 2018 Earnings Call

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Quarterly results of the Activison Blizzard Investor Call are here and Blizzard has 37 million monthly active users across all games, same as in Q2 2018.

Major Releases

  • Activision launched Call of Duty: Black Ops 4
  • Blizzard released World of Warcraft: Battle of Azeroth
  • King launched Candy Crush Friends Saga

Franchise Expansion onto Mobile

  • Many top mobile games are based on IP originally created for console or PC
  • Hearthstone fanbase grew significantly upon its mobile launch
  • Investing in mobile releases for Activision and Blizzard franchises
  • Many more initiatives underway across the entire company

Audience Reach (345 MAUs -- Activision = 46M, Blizzard = 37M, King = 262M monthly active users)

  • Candy Crush Saga MAUs grew Y/Y
  • In October, King launched Candy Crush Friends Saga, building on five years of learing in Candy Crush
    • The game has reached the top of iPhone download charts in 93 countries
    • While still early, retention and monetization metrics are strong, and the game is on pace to drive meaningful growth for the franchise
  • World of Warcraft: Battle for Azeroth set a new day-one franchise record with more than 3.4 million units sold-through
  • World of Warcraft engagement grew strongly Q/Q, and the expansion saw strong participation in value-added services
  • Heartshtone continues to attract new players, surpassing 100 million life-to-date registered players
  • Destiny MAUs grew Q/Q and Y/Y, driven by the launch of Forsaken and reach initiatives for the base game
  • Activision MAUs increased significantly in October following the launch of Call of Duty: Black Ops 4
  • Black Ops 4 versus Black Ops III (the highest-grossing game in the franchise) in the first three weeks after launch:
    • Units sold-through were higher; PC units sold-through were over 3x higher
    • Total active users were 16% higher
    • Hours playerd were 20%+ higher

Deep Engagement & Player Investment

  • Continue to add new ways for fans to show their passion for or great franchises, including esport, linear content and social connections.
  • Continue to innovate in how additional content is offered, to drive strong engagement and commercial performance.

Activision Blizzard

  • Players spent a record 52 minutes per day in Activision, Blizzard, and King games in the quarter.
  • Viewership of our games was up significantly this quarter.

Call of Duty

  • In the month of October, Activision Blizzard had seven of the top 20 most viewed games on the industry's largest streaming platform, including Black Ops 4 where vierwership cotinues to break franchise records.

Overwatch League

  • The Overwatch League continues to build on the success of its inaugural season with the announcement of the sale of another six teams in September, again at substantioally higher valuations than team prices in the first sesason
  • The latest sales take the league to 20 total teams, with nine of these teams outside the U.S.

BlizzCon & World of Warcraft & Diablo

  • In November, BlizzCon drew over 40,000 fans in person with millions more livestreaming from around the world
  • Announcements included new content for every franchinse and Diablo Immortal for mobile

Q3 2018 Segment Results // Blizzard

  • Q3 Segment Net Revenues: $635M
  • Q3 Segment Operating Income: $189M (30% operating margin)

Key Highlights

  • Revenues grew 20% Y/Y, driven by World of Warcraft and the Battle for Azeroth expansion, which offset lower revenues for Overwatch & Hearthstone, with the latter facing a tough comp
  • Operative income grew 13% Y/Y as revenue growth offset investments in strategic initiatives, including the Overwatch League, other esports activities, Battle.net, and franchise incubation across multiple platforms

Check out the full presentation here.

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10 minutes ago, Maxkitty said:

Earnings are gonna drop hard in the next quarter. RIP Diablo 😞

How so?  Is there any current pay-to-play for Diablo?  Any new pay for content that they'll be missing out on?

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4 minutes ago, Gilby79 said:

How so?  Is there any current pay-to-play for Diablo?  Any new pay for content that they'll be missing out on?

The Activision Blizzard stocks are plummeting because of Diablo Immortal. The main problem I see is that Blizzard kind of lost their reputation among the community. It's really unfortunate, but I can't help but think that this is going to have a long term effect on Blizzard.

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5 hours ago, Kaelos said:

Candy Crush and Diablo mobile yess this is future of gaming

Would love to hear your version of gaming future, so the people who just dumped their ATVI stocks can find a better place for their money.
 

31 minutes ago, Maxkitty said:

The Activision Blizzard stocks are plummeting because of Diablo Immortal. The main problem I see is that Blizzard kind of lost their reputation among the community. It's really unfortunate, but I can't help but think that this is going to have a long term effect on Blizzard.

Major investors probably knew about the nature of the mobile title and the co-operation with NetEase well ahead of Blizzcon through shareholder calls, so it's probably the latter. Let's not forget, that the Acitivision part of the company isn't doing so well either, it would be an overreaction to blame it all on Diablo Immortal. Still I wouldn't be too worried - Mr. Kotick may be unpopular, but he has a few tricks up his sleeves.

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1 hour ago, Maxkitty said:

The Activision Blizzard stocks are plummeting because of Diablo Immortal. The main problem I see is that Blizzard kind of lost their reputation among the community. It's really unfortunate, but I can't help but think that this is going to have a long term effect on Blizzard.

Please! In the report, Q3,  you can see that Blizzard-Activision will give the investor 52 cents per share and that the company generated $1.66B in revenue. For Q4 2018, the company is expecting earnings of 43 cents per share and $2.2B in revenu. Investors are being wary about the cautious expectation for Q4 2018. That alone explains the drop in share price.
 

Don't believe anyone on Wallstreet is playing Diablo 😉 I wish gamers could be the majority stock owner of gaming companies, then we can stop complain that too many boards of directors are thinking with their wallets.

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2 hours ago, Keller said:

Please! In the report, Q3,  you can see that Blizzard-Activision will give the investor 52 cents per share and that the company generated $1.66B in revenue. For Q4 2018, the company is expecting earnings of 43 cents per share and $2.2B in revenu. Investors are being wary about the cautious expectation for Q4 2018. That alone explains the drop in share price.
 

Don't believe anyone on Wallstreet is playing Diablo 😉 I wish gamers could be the majority stock owner of gaming companies, then we can stop complain that too many boards of directors are thinking with their wallets.

I don't play Diablo, I'm just saying I was kind of worried how it will affect Blizzard as a whole. I play WoW by far the most out of all of Blizzard's games and I still very much love Blizzard, even if they are a fraction of what they used to be to the community. That's why I'm worried, because expectations don't always reflect accurately to reality. I'm sure Blizzard is going to stay a strong company, but what about their reputation with the community after all the controversy? 

I'm not trying to be toxic/negative. I'm just trying to understand what's really going on, and how Blizzard's image of their future might impact them (whether it be positively or negatively). Especially regarding the transition to mobile that Blizzard wants to do. So many people are against it and Blizzard is all for it. It keeps me asking myself, what consequence will Blizzard face by taking this path? And most importantly, I'm beginning to question if they are really willing to let the hardcore fans down, in trade for money, and a broader, newer, and less passionate audience. It just seems like a reckless idea that will have a negative effect in the long run. 

Blizzard has one of the most passionate fanbases out there for a gaming company. I would die a little inside if that passion left Blizzard. And while some things I said may be debatable, I said them because I'm worried. I'm worried for the future of Blizzard.

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