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Activision Blizzard announced their financial results for Q1 2023 and we have the highlights.
For the quarter ended March 31, 2023, Activision Blizzard's net bookings were $1.86 billion (up from $1.48 billion for Q1 2022). In-game net bookings were $1.29 billion (up from $1.01 billion for Q1 2022). Activision Blizzard generated $577 million in operating cash flow for the quarter (down from $642 for Q1 2022). Microsoft plans to acquire Activision Blizzard for $95 per share in an all-cash transaction, which has been approved by the board of directors of both Activision Blizzard and Microsoft and by Activision Blizzard's stockholders. Blizzard segment revenue increases 62% year-over-year in Q1, with each of Warcraft, Overwatch, and Diablo contributing to growth. Segment operating income was broadly stable year-over-year, reflecting development and marketing costs, including launch investments ahead of the Q2 Diablo 4 release. Following the November release of Dragonflight, the WoW team is delivering more content faster than ever before, and subscriber retention in the West is higher than at the equivalent stage of recent Modern expansions. Diablo Immortal contributed to Blizzard's Q12 net bookings growth with the game experiencing stable trends across engagement, retention, and player investments. Warcraft: Arclight Rumble continues to progress well through regional testing. Diablo 4 will launch on PC and console on June 6. Public testing of the game in March saw very high engagement and positive feedback, and strong pre-sales. This ambitious title will serve as the launch for a compelling live service, with regular seasons and story-driven expansions planned to drive engagements for many years to come. Blizzard monthly active users dropped by 40% (from 45 million in Q4 2022 to 27 million in Q1 2023). Source: Investor Activision
A Misunderstanding May Have Been the Cause of Activision Blizzard Games Not Being Available in ChinaBy Starym
The break in Activision Blizzard's partnership with NetEase in China which happened in January this year cost many Chinese players the ability to play Blizzard games, and today the New York Times may have some insight as to how the relationship between the two gaming giants might have gone wrong.
While tensions had been building for years before the final negotiations last year, ranging from NetEase's investment in Western studios Activision wasn't happy with (former Activision-owned studio Bungie being one), in the end the fate of Chinese players' Blizzard accounts may have come down to a misunderstanding. The Zoom call in question happened last October, between Activision Blizzard CEO Bobby Kotick and NetEase chief executive William Ding, and involved translators at certain points in the conversation.
As reported by the New York Times, based on accounts from 4 people familiar with the talks and a document they reviewed, the call was part of the standard re-negotiation of licensing rights between the two companies. The discussion arrived at the topic of the merger between Activision Blizzard and Microsoft and the scrutiny it had come under all around the world, but particularly in China. According to two people familiar with the call and the document reviewed by the New York Times, Activision executives recalled that at a certain point Mr. Ding said NetEase "could sway the [Chinese] government either to block or support that deal depending on the outcome of the licensing discussion." Reportedly the Activision executives felt that the statement was meant as a threat, but NetEase executives claim they did not intend to make any threat. They stated that they were just trying to be conciliatory towards Activision, meaning to simply point out that Microsoft would have the same issues Activision now had with the Chinese regulators, and that the new deal NetEase was proposing would help in both situations. A NetEase spokesman flatly denied that there were any threats as well, saying that Activision was continuing to "harass and taunt companies and regulators worldwide."
NetEase employees tearing down the Gorehowl statue in China.
Source: chaijingNDS on TikTok, via Dexerto.
After the call Activision reportedly made a completely different licensing offer, for approximately $500 million upfront, as opposed to the previous smaller payments throughout the course of the deal, which NetEase rejected. There was also a quite literal last ditch effort on the part of Activision later on, asking to extend the existing deal for 6 months as it looked for a new Chinese partner, but that was also rejected by NetEase. Finally, on January 23rd 2023, most of Activision Blizzard's games were shut down in China, with players not being able to access their characters, which some had spent over a decade and a half building. And while their data has been saved, it is still unclear when or even if they will be able to use those accounts and characters again.
The New York Times article has many more details about the two companies' dealings, so make sure to check it out over here, as it is very eye-opening.
About 12 billion hours of Blizzard games were played and 50 million new players joined the Blizzard community this year, according to Blizzard President Mike Ybarra, who posted an update reflecting back on 2022.
Additionally, Blizzard is bringing back BlizzCon. More information will be available early next year.
Hey everyone! It’s been about a year since my last post, and with 2022 coming to an end, I felt it was a good time for an update.
2022 has been a great year for Blizzard, made possible by the hard work, creativity, and passion of everyone who works here, and the support, feedback, and joy from the players. Putting people first—employees and players—is how we’re building the foundation of the next era of Blizzard.
A lot of this work has been internal, but I hope you can see the results of it in our games: the joy and love for Azeroth in World of Warcraft: Dragonflight, the color and scale of seasonal updates in Overwatch 2, the care and respect in Wrath of the Lich King Classic and Diablo II: Resurrected, the creativity and charm in Hearthstone, and the gameplay and rich story built into Diablo Immortal. We also got to show off the chaotic glee built into Warcraft Arclight Rumble, and finally the Diablo IV team got to relish in the excitement with a recently announced June 6, 2023 launch date.
About 12 billion hours of Blizzard games were played this year, and as many as 50 million new players joined the Blizzard community*, and this would not have been possible if not for the passion from the people within Blizzard. We’re hearing from them that there is a fundamental shift happening, and it’s the thousands of people who work here who are steering this ship toward something greater than we’ve ever been—and we’ve only just begun.
To give some clarity on what’s happened this year, I promised in January that we would hire full-time positions to support the ongoing work of improving the culture at Blizzard.
We welcomed Jessica Martinez as our VP of Culture, a brand-new role at Blizzard. We announced Makaiya Brown as our DE&I lead. We have welcomed a new Chief People Officer this year, J.D. Roux. Additionally, we’ve made several important changes to our teams:
Blizzard cofounder Allen Adham, Chief Design Officer: Championing game design as a discipline, helping to ensure we keep Blizzard gameplay at the forefront of the player experience. Holly Longdale, Executive Producer of World of Warcraft: After leading WoW Classic, Holly now oversees all of World of Warcraft, bringing her deep MMO experience to the fore. Jared Neuss, Executive Producer for Overwatch 2: Taking a holistic approach toward building a great live-service experience for this incredible universe. Peiwen Yao, Executive Producer for Diablo Immortal: Leading the co-development partnership for our debut mobile-first title. April McKee, Executive Producer of BlizzCon: Yes, we’re bringing BlizzCon back—more on that early next year! Mike Elliott, Chief Technology Officer: A Blizzard veteran and engineering’s leading voice, overseeing technical evaluations, recommendations, and execution. Dan Hay, General Manager of Survival Game: Leading the team which is infusing this genre with Blizzard magic while crafting our first new IP since Overwatch. The team has doubled in size this year and we’re looking to grow it even more in the new year! *New Battle.net accounts created and at least 1 Blizzard game played. Rebuilding the Foundations
While we have full-time roles dedicated to culture, culture isn’t the work of one person or team. It involves all of us every day, and it requires perspectives and insights of different experiences, backgrounds, functions, and identities. To this end, we convened a culture team consisting of a wide array of functions across Blizzard who are helping us improve how we work, and create and sustain a culture that makes all of us better.
One of the other major projects this year has been taking a deep look at the mission, vision and values upon which Blizzard was built. We have been talking about how these values are interpreted and lived, how they could be improved or modernized, and everyone at Blizzard had the chance to have their voice heard in this critical work. This is a project that our employees, as well as players, will see the results of in the new year.
We’ve also made solid progress advancing Diversity, Equity, and Inclusion (DE&I): we held a successful fourth Women's Summit, we deployed DE&I-focused training across all employees, we’ve expanded self-identification options to be more inclusive, and over the past year, we increased the percentage representation of women and non-binary people within Blizzard from 22% to 25% while also increasing the percentage of employees from under-represented ethnic groups from 34% to 36%. While this is progress, our commitment is that our focus on culture and inclusion will be a core part of our everyday efforts at Blizzard. This work will never be done. For you – our players – our hope is that you are seeing it in our games, the way we communicate, and more. We’re learning along the way, and it’s all of you who are keeping us on the right track.
We have received a lot of feedback this year, and our teams are always listening—as we grow in these areas, we have had important moments that help us learn and be better. Our players are always quick to let us know what they are thinking and feeling, and for that, I want to thank you. I’m three years into my journey at Blizzard, and not long into having the privilege of playing a small role in leading Blizzard forward. It’s inspiring to work here: every day, I learn from Blizzard and learn from you, and as we close out 2022, I couldn’t be more thankful for that.
Finally, to our wonderful teams at Blizzard: thank you. We’re on a journey together to create an amazing culture that fosters and enables creative energy and fresh thinking. Together we’re bringing Blizzard back, better than ever.
Take care this holiday season: spend time with loved ones, your favorite games, your favorite movies and books, and take the time for yourselves. We’ll be doing the same.
I’ll see you in Azeroth, Sanctuary, the tavern, and in the optimistic vision of the future!
- Mike “Qwik” Ybarra
As was was expected, the US Federal Trade Commission has now voted and filed a suit to block Microsoft's $69 billion acquisition of Activision Blizzard, saying the deal would harm competition. As reported by Bloomberg, the commission voted 3-1 on the matter and already filed the suit. The proceedings usually take from several months to a year to resolve, and here's what Holly Vedova, Director of the FTC’s Bureau of Competition had to say:
Microsoft has already shown that it can and will withhold content from its gaming rivals. Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets. Microsoft has been trying to address the exclusivity issues recently, offering 10 year Call of Duty availability deals to Steam, Nintendo and Sony, to assuage their concerns about Activision Blizzard titles becoming available on Microsoft platforms only, as the main focal point of the exclusivity discussion has been Activision's premiere FPS franchise.
This also isn't the only legislative opposition the merger faces, as both UK and EU organizations and legislative bodies are in the process of evaluating whether the deal can be approved. When it comes to the FTC, since Lina Khan was appointed to lead the agency in 2021, it has successfully blocked mergers between Lockheed Martin and Aerojet Rocketdyne Holdings as well as Nvidia ’s attempt to buy ARM.
Here's the full press release from the FTC:
FTC Seeks to Block Microsoft Corp.’s Acquisition of Activision Blizzard, Inc.
Agency alleges that maker of Xbox would gain control of top video game franchises, enabling it to harm competition in high-performance gaming consoles and subscription services by denying or degrading rivals’ access to its popular content December 8, 2022 The Federal Trade Commission is seeking to block technology giant Microsoft Corp. from acquiring leading video game developer Activision Blizzard, Inc. and its blockbuster gaming franchises such as Call of Duty, alleging that the $69 billion deal, Microsoft’s largest ever and the largest ever in the video gaming industry, would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.
In a complaint issued today, the FTC pointed to Microsoft’s record of acquiring and using valuable gaming content to suppress competition from rival consoles, including its acquisition of ZeniMax, parent company of Bethesda Softworks (a well-known game developer). Microsoft decided to make several of Bethesda's titles including Starfield and Redfall Microsoft exclusives despite assurances it had given to European antitrust authorities that it had no incentive to withhold games from rival consoles.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, Director of the FTC’s Bureau of Competition. “Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”
Microsoft’s Xbox Series S and Series X are one of only two types of high performance video game consoles. Importantly, Microsoft also offers a leading video game content subscription service called Xbox Game Pass, as well as a cutting-edge cloud-based video game streaming service, according to the complaint.
Activision is one of only a very small number of top video game developers in the world that create and publish high-quality video games for multiple devices, including video game consoles, PCs, and mobile devices. It produces some of the most iconic and popular video game titles, including Call of Duty, World of Warcraft, Diablo, and Overwatch, and has a combined 154 million monthly active users around the world, according to the FTC’s complaint. Activision currently has a strategy of offering its games on many devices regardless of producer.
But that could change if the deal is allowed to proceed. With control over Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely, resulting in harm to consumers.
The Commission vote to issue the complaint was 3-1, with Commissioner Christine S. Wilson voting no. A copy of the administrative complaint will be available shortly.
NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge.
The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about how competition benefits consumers or file an antitrust complaint. For the latest news and resources, follow the FTC on social media, subscribe to press releases and read our blog.
US Federal Trade Commission "Likely to File Antitrust Lawsuit" to Block Microsoft Acquisition of Activision BlizzardBy Starym
Here's some potentially bad news for the sale of Activision Blizzard to Microsoft, as Politico is reporting that it is likely the US FTC will be filing a lawsuit to stop the acquisition - based on three sources "familiar with the matter". A lawsuit could postpone the deal's timing and even endanger it altogether, regardless of its result.
The acquisition deal has seen a lot of pressure and antitrust probes coming from many sides (including several other countries' regulating bodies and watchdog organizations), as it could constitute an unfair boost for Microsoft's side. The most vocal voice against the sale is Microsoft's chief console competitor, Sony, who argues that the sale would open the door to making many Activision Blizzard games (mostly focusing on Call of Duty) exclusive to Microsoft platforms. This, Sony argues, would significantly disadvantage Sony platforms and leave consumers with less choices for gaming.
A lawsuit challenging the deal is not guaranteed, and the FTC’s four commissioners have yet to vote out a complaint or meet with lawyers for the companies, two of the people said. However, the FTC staff reviewing the deal are skeptical of the companies’ arguments, those people said.
The investigation remains ongoing, but much of the heavy lifting is completed, including depositions of Microsoft chief executive Satya Nadella and Activision head Bobby Kotick, the people with knowledge of the investigation said. If the agency does move ahead with a case, it could come as soon as next month, said the people, all of whom were granted anonymity to discuss a confidential matter.
- Politico's Josh Sisco
Well known gaming industry journalist Jason Schreier also weighed in on the story as well:
You can read the full Politico article here, as it goes in to detail about both Microsoft and Sony's arguments so far, as well as Google and Epic's involvement.