blizzard Activision Blizzard Q1 2019 Earnings Call

[Stan 5,020]

Results for the Q1 2019 Activison Blizzard Earnings Call are here and Blizzard is down to 32 million monthly active users (MAUs), since Q4 2018 when they announced layoffs and got rid of 8% of their non-development employees.

Highlights

• Activision Blizzard
  • Activision Blizzard delivered approximately $800 million of in-game net bookings in Q1 2019.
  • For each of Activision, Blizzard and King, daily time spent per user playing their games increased Y/Y.
  • For Activision Blizzard overall, average daily time spent per user was approximately 50 minutes.
• Blizzard
  • Blizzard had 32 million MAUs in this quarter (down from 35 million MAUs in Q4 2018 and 37 million MAUs in Q3 2018).
  • Segment revenues were in-line with expectations. ($344million)
  • Segement operating margin of 16% ($55 million) was lower Y/Y due to decline in segment in-game revenues, partially offset by lower costs.
• Overwatch League
  • The second season of the Overwatch League commenced in February to sell-out crownds at the Blizzard Arena.
  • Viewership hours are over 30% higher than in the first season.
  • Dallas Fuel hosted the league's first home games in front of a sell-out crown of thousands of fans.
• They have four key areas of focus include which include:
  • Major Content Releases: "We are focused on delivering a strong cadence of major content releases, where we meet the growing demand of the industry's gaming communities and release our high-quality content more frequently."
  • Live Operations: "We continue to grow our live operations capabilities, to deliver great content, services, features, and events that continuously engage our communities and drive in-game revenues."
  • Franchise Expansion onto Mobile: "We are building on our existing mobile leadership as we extend our acclaimed console and PC franchises to the largest and fastest-growing gaming platform."
  • New Engagement Models: "We are expanding the reach, engagement and our monetization of our francihses as we build on early success in esports, in-game advertising, and consumer initiatives."

Presentation

(Source)

[Prophet001 543]

I love WoW but this is kinda sad to see. I know they're a business now and not who they were but when they first made the game they did it for the love of the game. Money for sure but the love of the game was the primary driver.

Reading something like this really does put a lot of perspective on the "hook em" techniques they're starting to implement.

They have the tail wagging the dog in my opinion.

[VegaPl 88]

Wow, the numbers for King / Candy Crush are insane, I had no idea.
Also, I thought that an average of 50 minutes daily per user was very high, but then roughly calculated my mean average a week. Now I don't think it's that much anymore ?

[Seksi 208]

I thought exactly the same now that I've read through everything, King was worth comparable revenue as Blizzard + Activision combined and a lot more in actual profit, no wonder the company as a whole wants to push mobile as hard as possible ?

[Valks 2,373]

On 5/4/2019 at 2:42 PM, Seksi said:

I thought exactly the same now that I've read through everything, King was worth comparable revenue as Blizzard + Activision combined and a lot more in actual profit, no wonder the company as a whole wants to push mobile as hard as possible ?

King really specialises in games that have much lower costs than something like WoW, especially in terms of development. Compare Candy Crush to WoW, in terms of development costs, operating costs, all of it, and it's easy to see why it is so profitable. Also, don't forget how incredibly easy it is to pick up a mobile game vs. a PC-based one. Regardless of the perception of the current userbase towards mobile games, there is a massive untapped potential base of players that will flock to a decent mobile game of multiple genres.

[Guest]

2 hours ago, Blainie said:

King really specialises in games that have much lower costs than something like WoW, especially in terms of development. Compare Candy Crush to WoW, in terms of development costs, operating costs, all of it, and it's easy to see why it is so profitable. Also, don't forget how incredibly easy it is to pick up a mobile game vs. a PC-based one. Regardless of the perception of the current userbase towards mobile games, there is a massive untapped potential base of players that will flock to a decent mobile game of multiple genres.

And that is the huge problem IMO.

Why on earth should Blizzard spent lots of money and time to make high quality PC games?
Why invest 50-100 Mio if you can make MORE cash by spending much LESS and instead of a great game you develop mobile games, sell skins and stuff like that?

If you love games (like Blizzard and Bioware did 10 years ago) you are conent that you make good money with good games. Because your heart is in what you do. You love your job. CD Project comes into mind.

But today? Decisions aren't done by the same people anymore. Now accountants get to decicde.

And they are correct: Why invest 100 Mio with a chance to maybe double your investment (but you riks loosing a significant amount too!) - if the alternative is to invest 5-10 mio and a chance to earn even more, like 150 Mio? And if all hell brakes loose you loose 5 Mio.

Obviously, the alternative is the MUCH better choice. More profit, less risk.

[darkinchworm 20]

This is fascinating to me, given that Candy Crush and even Call of Duty would seem to have passed their peak in terms of mainstream relevance.

[Valks 2,373]

On 5/6/2019 at 11:23 AM, WedgeAntilles said:

And that is the huge problem IMO.

Why on earth should Blizzard spent lots of money and time to make high quality PC games?
Why invest 50-100 Mio if you can make MORE cash by spending much LESS and instead of a great game you develop mobile games, sell skins and stuff like that?

If you love games (like Blizzard and Bioware did 10 years ago) you are conent that you make good money with good games. Because your heart is in what you do. You love your job. CD Project comes into mind.

But today? Decisions aren't done by the same people anymore. Now accountants get to decicde.

And they are correct: Why invest 100 Mio with a chance to maybe double your investment (but you riks loosing a significant amount too!) - if the alternative is to invest 5-10 mio and a chance to earn even more, like 150 Mio? And if all hell brakes loose you loose 5 Mio.

Obviously, the alternative is the MUCH better choice. More profit, less risk.

That's why, even with D4 being worked on, Diablo Immortal was the clear choice for Blizzard. If they do it right, this game will be monetized well, be incredibly easy to pick up and get involved in, will bring in huge amounts of money and will have minuscule development costs compared to D4. 

CD Projekt could have focused on Gwent, mobile Witcher stuff etc., but are pouring money into Cyberpunk 2077 and whatever their other yet to be revealed big game is coming in the next few years. 

[Guest]

1 hour ago, Blainie said:

That's why, even with D4 being worked on, Diablo Immortal was the clear choice for Blizzard. If they do it right, this game will be monetized well, be incredibly easy to pick up and get involved in, will bring in huge amounts of money and will have minuscule development costs compared to D4. 

CD Projekt could have focused on Gwent, mobile Witcher stuff etc., but are pouring money into Cyberpunk 2077 and whatever their other yet to be revealed big game is coming in the next few years. 

Yes, CD Project is the last of the big companies that is really interested in making a great game.

The last company, that seems to be led by people, who do not want to make the most money with the least input possible, but who want to make great games. Games that will be remembered in 30 years like we remember old games like Syndicate e.g.

Ubisoft, EA, Blizzard-Activision do not care if they make a great product.

[chronoblip 3]

Mercedes Benz and Hyundai both make cars.

Mercedes Benz can't really make a good "on a budget" Benz because everyone will compare it to the "not on a budget" Benzes.

Hyundai can make a good "not on a budget" Hyundai because everyone will compare it to the "on a budget" Hyundai.

At least for a time.

Eventually, the "not on a budget" Hyundai is compared to the "on a budget" Benz and the Benz is found wanting.

Later, the "not on a budget" Hyundai is compared to the "not on a budget" Benz, and because Benz was busy "looking backwards" in their development, trying to capture a market that didn't fit their expertise, even the "not on a budget" Benz will be found wanting.

Meanwhile Toyota has been in NASCAR for almost 20 years, with an engine design they don't use in any production vehicle.

It's always easier to grow than to scale back. To conquer territory compared to holding it.

There are online games with orders of magnitude fewer people playing, without any monthly subscription, but they also started that way, they didn't really "fall" to that place, so the perception on them being a success or failure is entirely different.

WoW Classic is going to be an enlightening social experiment.