05 August 2020 16:37
A hot potato: Remember the hate that Activision took when it unveiled the mobile-only Diablo Immortal back in 2018? Now, however, the company says the success of Call of Duty: Mobile proves that embracing handheld gaming is the way forward. The amount of criticism leveled at Diablo Immortal might have forced some companies to rethink their mobile strategy, but CoD: Mobile has shown the platform's lucrative potential. In a Q&A section of the company's quarterly financial call, Activision Blizzard CFO Dennis Durkin was asked how Diablo Immortal might be impacted by CoD mobile. "There's a lot more to come on mobile too.
CoD Mobile is off to a really great start, but we're just scratching the surface of what that franchise can be on mobile, and then integrating the experiences across multiple platforms, we know is just an incredible opportunity for the franchise," he said (via PC Gamer). "But to the early successes [of Call of Duty: Mobile], they do represent incredible proof points as to your question of how the franchise strategy is really working. We see that our current players really want more ways to engage with their favorite IP, be it through mobile or other platforms, and that offering authentic and really deep experiences on new platforms can drive much much higher engagement. Durkin added that free-to-play mobile games could coexist alongside their franchises' other platforms, and therefore were not "cannibalistic." Blizzard and Chinese developer NetEase recently revealed a new trailer (top) for Diablo Immortal at China's biggest video game convention, ChinaJoy. Blizzard plans to expand internal testing of the game in the next few weeks, but there's still no word on a beta or release date. In April, Blizzard Entertainment announced that due to coronavirus, it wasn't sure whether BlizzCon 2020 would continue forward.
And we're looking forward to sharing what the teams have been working on for that event. Given the popularity of BlizzCon Virtual Ticket, Blizzard should have the means to put on quite the impressive online show. Thus, it'll be interesting to see how Blizzard manages to structure the entirety of BlizzCon around a similar experience. And with the likes of Diablo IV and Overwatch 2 waiting in the wings, next year's BlizzCon should prove quite special, indeed. The biggest winners in the market for the second quarter were pretty much any stock that enabled us staying at home. Whether it was work-from-home, streaming video, or even food delivery, if it was connecting goods and services to people who were in many cases forbidden by government mandate from leaving the house, it stood an excellent chance of gaining. Video games were no different here, and Activision Blizzard (NASDAQ:ATVI) turned in a second-quarter well beyond expectations. Activision Blizzard delivered a quarter so thoroughly outstanding that it not only beat Wall Street expectations for the quarter handily, but also, it could do what only a handful of companies could do, and that raises full-year guidance on its results. It takes some impressive numbers to do that, and Activision Blizzard had them. The company saw revenue of $1.93 billion in the quarter, which was significantly ahead of the $1.69 billion expected. Console revenue proved to be the biggest leader for the company, with revenue coming in at $655 million just for the second quarter. Mobile, interestingly, wasn't far behind with $622 million coming in. PC revenue followed at $482 million, and the company's distribution arms and esports operations brought in $173 million. As good as the numbers were for the second quarter, the company doesn't expect its fortunes to reverse with the arrival of the third quarter and people going back to work in large numbers. This was reflected in its third-quarter forecast, which featured adjusted earnings of $0.69 per share, and net bookings of $1.65 billion. If this comes to pass, Activision Blizzard's third-quarter will once again ravage expectations, which looked for $0.41 per share and $1.4 billion in bookings. The annual forecast is even brighter; it's expecting adjusted revenue of a hefty $2.87 per share, and to bring in $7.63 billion total for the year. This is helped by a range of factors, including—and this may be the biggest surprise—the mobile business, which saw not only increases for its "Candy Crush" franchise, but also saw improved net bookings in advertising, a feat that even television networks couldn't achieve through all this. It would be easy to dismiss these results and suggest that people were simply doing all their video game buying for the year during the second quarter. There's even some support for such an argument, as video game makers found themselves delaying titles back several months or more; the hotly-anticipated "Cyberpunk 2077" from CD Projekt Red got pushed back from its original date of April back to September, and then finally—perhaps realizing it would be releasing into the holiday season—to November. Those who don't routinely follow the video game market—or have kids who do—may not be aware that a new console generation is set to hit this November or so (most release dates are listed as "holiday 2020", which means "sometime in the holiday season."), and that will likely spark a fresh wave of sales, depending on what Activision Blizzard has in the way of launch titles for the new systems. So the notion that people simply bought what they were going to buy for the year loses some credibility considering that. Still, things are looking up for video games, even if the larger economy is looking a bit shakier itself. It would be easy to think that overall economic weakness would preclude a lot of optional spending like that. But with the holidays closing in, a new console generation on the horizon, and people eschewing going out in favor of protecting themselves against a virus, the video game market may yet continue to succeed. Company Beat the Market™ Rank Current Price Price Change Dividend Yield P/E Ratio Consensus Rating Consensus Price Target Activision Blizzard (ATVI) 1.9 $85.38 -1.2% 0.48% 42.27 Buy $78.84