Activision Blizzard had their Q4 2019, and 2019 overall, financial results announcement and conference call yesterday. You can find all the numbers, the slide deck, and the conference call recording over at the investor relations site.
The basic financials for the three groups were presented in the slide deck as usual.
Revenue was down from last year’s Q4 results, when Blizzard pulled in $686 million, but operating income was up from $241 million. They made more money from less income, so margins were also up from last year’s 35%.
Compared to the rest of the year, Blizzard’s revenue and income was heavily tilted towards the end of the year, giving it a distribution akin to its Activision stablemate, which tend to make most of its money when the latest Call of Duty launches every year in Q4.
- Revenue / Income / Margin
- Q1 $344M / $55M / 16%
- Q2 $384M / $75M / 20%
- Q3 $394M / $74M / 19%
- Q4 $595M / $260M / 44%
For Blizzard the highlights were a bit of hand waving and repeated mentions and nods towards WoW Classic.
A few things happened between the end of Q2 in June 2019 and the end of the year, but WoW Classic was the big one. Bobby Kotick specifically said on the call that adding WoW Classic to the WoW subscription doubled subscribers over that period. Yay WoW Classic. But they didn’t mention a lot else, including what a rebuke to the current game the popularity of WoW Classic is, and were clearly avoiding bringing up some things.
I am reminded of the CEO of EA on the first earnings call after the launch of SWTOR where they declined to break it out or even mention it specifically. He said that SWTOR was not their most interesting title or some such. Battle for Azeroth is clearly not on the “interesting” list over at Blizz right now.
Nor is Warcraft III Reforged.
Over at Massively OP they reported on the question and answer segment of the call where Activision Blizzard was clearly ducking questions related to a few things they didn’t want to talk about.
The company also declined to break out total revenue and income numbers for the three divisions, something they have done in the past on their charts. But we have the quarterly numbers. I typed them in above. I can also add them up to get totals.
In 2019 Blizzard made $1,717M in revenue for $464M in operating income, which gives a simple margin number of 27%.
In 2018 Blizzard made $2,291M in revenue for $685M in operating income, which put the simple margin number at 30%.
Basically, Blizz was down 25% in revenue and about 33% in income in 2019. Not a good year for them in that regard, though all numbers are relative. I am certain some smaller studios would think their dreams had come true if they pulled in a quarter of what Blizz did in 2019.
And will things get better? The slide deck promises “follow-on” content for WoW Classic, but so far as I have seen that just means the remaining unlock phases. Giving us Darkmoon Faire and the final raids will make people happy, but it isn’t going to grow the subscription numbers. For what is in the plan, those numbers have peaked, dropped off some, then hit something of a steady state. And we know that a steady state for an MMORPG is really a slow decline.
Other than that, there isn’t a lot on the horizon. Yes, there is the Shadowlands expansion, but that won’t be until Q3 and, while it will likely cause a spike in revenues, it needs something special to hold people.
There will be more Hearthstone decks, because there are always more Hearthstone decks. And Diablo: Immortal will go into regional testing at some point. Didn’t NetEase claim that was done almost a year ago? And Blizzard’s recent efforts like the 8.3 patch and Warcraft III Reforged have not been burnishing the company’s reputation for quality and polish.
Will 2020 revive Blizzard’s fortunes or just see them sink further?