Yesterday saw the release of earnings information for Activision-Blizzard for the first quarter of 2018.
As I have complained about in the past, the company has gone to great lengths to scrub all but the most basic data from these reports over the years. Long gone is any talk of subscription numbers or line items that single out subscription revenue. They have even reduced emphasis on their bullshit monthly average users metric. As soon as something stops looking good they stop talking about it.
Still, they can’t hide everything. As a public company they have to give some standard information in formats acceptable to the accounting and investment industries. So we have, as an example, slide 9 of their presentation.
Revenues on Slide 9 of the investor presentation
This is generally where they brag about what went well. Last year in Q1 for Blizzard in was World of Warcraft, still high on the Legion expansion, and Overwatch. At that point Blizz was behind King for revenue, but tied with King for income, giving them the lead in margins.
This year Blizz has fallen back from that. We expect the Activision side of the house to be in third place in any quarter when they did not have a Call of Duty release. Still, they did pretty well year over year, largely based on Call of Duty digital sales if I read that right, but at least they have managed to get revenue out of it over more than a single quarter spike.
King grew as well. Like each of the three segments of the company, they rely heavily on one title, Candy Crush Saga in this case. But they managed to milk that for a lot making them both the top earner and the best in margins.
And then there is Blizzard whose revenues grew, but not by as much as the other two. Income from that is down over last year and margins are now back in third place.
Q1 2018 Revenue and Income
The upside news from the Blizzard front seems to be mostly about keeping Legion going with updates and pre-sales of the upcoming Battle for Azeroth expansion. Overwatch League is also mentioned, but I am not sure how much I buy that given that it is also listed under the reasons why margins have slipped.
Blizzard’s investments in “key growth initiatives” is blamed for the reduction in margins. On them, the one I wonder about is “mobile incubation.” With King on board I though they were handling all the mobile. Then again, with King on board and dominating revenue, income, and margins, maybe there is a push to get the Blizzard brand on mobile in a form that makes money.
We shall see. I suppose it is nice to see World of Warcraft still so strong, but Blizzard needs one of its newer titles to pick up some slack here as WoW declines, be that decline gentle or not.
Anyway, the reports, presentation, and audio from the call are all on the quarterly reports page of the investor relations site for Activision-Blizzard.