Activision Blizzard sales plummet as Call of Duty: Vanguard underperforms

Activision Blizzard, the largest video game publisher in the United States, posted revenue above analysts’ estimates, but adjusted sales fell 15% from a year ago due to a soft launch from Call of Duty: Vanguard last fall and a slow year for the gaming industry as a whole. Activision, which is being acquired by Microsoft, generated second-quarter adjusted revenue $1.64 billion (approx. Rs. 13,000 crore), compared to analysts’ average projection of $1.6 billion (approx. Rs. 12,600 crore). Adjusted revenue excludes deferred sales from online purchases. Adjusted earnings per share were 47 cents (about 0.3 rupees), nearly 50% lower than a year earlier and slightly below analysts’ estimates, according to data compiled by Bloomberg.

Last fall’s Call of Duty: Vanguard, which Activision said didn’t perform as well as expected, had a knock-on effect on the company’s fiscal year. The game received negative reviews and faced stiff competition from new entries in the popular Halo and Battlefield series.

During the second quarter, Activision’s Blizzard division launched Diablo Immortal, a new mobile entry in the action series. Activision’s Chinese partner NetEase has delayed the launch of Diablo Immortal in the world’s largest mobile app market by about a month, saying it needs more time. It was finally released on July 25. Activision didn’t give a revenue figure for the new Diablo game on Monday.

The video game industry has had a lackluster year due to hardware supply chain issues affecting consoles, inflation, and a lack of major hits. Interest in the game has also cooled as pandemic stay-at-home orders have been lifted and people have resumed outside interests and activities. Spending in the video game industry is expected to fall 8.7% this year, according to a report by analytics firm NPD Group.

Activision said it expects revenue and earnings per share to “remain lower year-over-year in the second half.” The shares were up less than 1% in extended trading at $80.45 (about 6,500 rupees).

Call of Duty: Modern Warfare II, a new entry in the series, will be released on October 28. But then the series will skip 2023, Bloomberg reported. Activision will instead release add-ons for Modern Warfare and other Call of Duty-related content. The next main game in the series, from studio Treyarch, is slated for release in 2024. Call of Duty is Activision’s biggest video game series, and the titles regularly top the annual charts. They have sold over 400 million units since the series debuted in 2003.

Activision has announced that it will also release Blizzard games Overwatch 2 in early access on October 4 and Dragonflight, a new expansion for the online game World of Warcraft, later this year. Diablo IV will be released next year, the company announced.

The Santa Monica, Calif.-based publisher increased its developer workforce by 25% over the previous year, in part due to acquisitions of Boston-based games company Proletariat, which will participate in expansions of World of Warcraft, and Swedish artificial intelligence company Peltarion. However, he said he “remains aware of the risks, including those related to labor market and economic conditions”.

Microsoft announced its takeover of Activision in January. The Xbox maker stepped in as Activision shares suffered amid an ongoing sexual misconduct scandal last year. Activision’s stock has gained around 20% since the January announcement, although it is still trading well below the offer price of $95 (around 7,500 rupees) per share, suggesting the market uncertainty about the conclusion of the agreement. Lina Khan, the new head of the Federal Trade Commission, has indicated that she plans to take a tough stance against tech mergers. Activision said it expects the transaction to close during Microsoft’s fiscal year ending June 2023.

© 2022 Bloomberg L.P.

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