Blizzard Resurgent in Q3 2022

The Activision Blizzard Q3 2022 financial were delivered at the start of the week, but I had some much other stuff queued up that I am only getting to them now.  Also, the whole financials routine remains very low key because the company believes that the Microsoft acquisition means they don’t have to put in the effort for the public, just their new overlords.

Activision Blizzard

The overall company reported revenue of $1.78 billion, up from the $1.64 billion earned in Q1 2022, but still well off from the $2 billion a year ago in Q3 2021. Blizzard, once again, was not the problem this time around, with blame landing on “reduced engagement” with Call of Duty on the Activision side of the house.

Blizzard itself was up, ringing in $543 million in revenue for Q3 2022, up from the $401 million in Q2 2022 when Diablo Immortal gave them a boost, and the largest quarterly numbers in well over a year.

The company has the Diablo Immortal launch in China as well as the run up to and launch of Wrath of the Lich King Classic to help buoy its numbers, as well as pending anticipation for the Dragonflight expansion.

Blizzard highlights from the financials:

October 4 saw the global launch of Overwatch 2, with a free-to-play model designed to allow more people than ever before to experience the acclaimed team-based action game. Over 35 million people played the game in its first month, including many who were new to Overwatch. The expanded community is engaging deeply, with average daily player numbers for the first month of Overwatch 2 more than double that of its acclaimed predecessor. Player investment is also off to a strong start, positioning the title to be a meaningful contributor to Blizzard’s business in the fourth quarter. Blizzard is looking forward to delivering an ambitious slate of regular seasonal updates for Overwatch 2 that introduce new characters, maps and modes, including the game’s much-anticipated PvE mode planned for 2023.

In the Warcraft franchise, the September 26 release of World of Warcraft: Wrath of the Lich King® Classic contributed to a strong increase in WoW reach and engagement at the end of the third quarter. On November 28, Blizzard will release World of Warcraft: Dragonflight, the innovative next expansion for the modern game, as the team increases the cadence of WoW content for the community. Elsewhere in the Warcraft franchise, mobile title Warcraft: Arclight Rumble is progressing well through regional testing.

On mobile, Diablo Immortal expanded its global reach with a strong launch in China in July. The title reached the top of the download charts and has ranked in the top 10 grossing mobile games in China since launch. Around the world, Diablo Immortal is being supported with major new content, features, and events aimed at keeping the community engaged. Meanwhile, work on Diablo IV and its substantial ongoing post-launch content continues to progress very well ahead of its launch planned for 2023.

Blizzard’s third quarter segment revenue grew double-digits year-over-year against a year ago quarter that included the release of Diablo II: Resurrected. The third quarter benefited from the recent launch of Diablo Immortal, while Warcraft franchise net bookings were stable year-over-year. Segment operating margin was lower year-over-year, due to marketing investment to support the strong release slate and the shift in the mix of business in the quarter.

Currently, we have licensing agreements with a third party covering the publication of several Blizzard titles in China. These agreements, which contributed approximately 3% of Activision Blizzard’s consolidated net revenues in 2021, expire in January 2023. We are in discussions regarding the renewal of these agreements, but a mutually-satisfactory deal may not be reached. We continue to see substantial long-term growth opportunities for our business in the country. The co-development and publishing of Diablo Immortal is covered by a separate long-term agreement.

So they should have some good news coming in Q4, with Overwatch 2 and Dragonflight launching, which will help boost numbers even further.  Quarters with a WoW expansion launch tend to be peak financial moments.

Even MAUs have climbed up.  They keep an eye on that over at Massively OP but, as both I and they agree, MAUs are still a bullshit metric used to obstifcate what is really going on with titles in the company.  MAUs may have hit 31 million in Q3 2022, but a subscribed WoW player and a free Diablo Immortal player have considerably different effects on the company’s actual bottom line.

Then there is that last paragraph from the Blizzard notes about the licensing agreements in China, which highlights the problem with MAUs.  In Q3 2022 they were up, no doubt in large part due to the launch of Diablo Immortal in China, but the China market contributes just 3% to the company’s revenue.

Remember that.  Blizzard beshat itself over the Blitzchung incident to make sure they held onto that 3%.  Granted, we have learned since then that kow towing to China was only one of their sins.  But the upshot it that any MAU counts that include China are a doubly garbage numbers.

And all the while Activision Blizzard is whistling a happy tune about being purchased by Microsoft, something that is not a done deal yet.

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1 thought on “Blizzard Resurgent in Q3 2022

  1. PCRedbeard

    Blizz is likely more concerned about being targeted by Chinese state hackers than losing 3% of their revenue, because major disruptions such as ransomware attacks can hit the bottom line far more than losing 3% of revenue from China. (And cause more lasting damaging effects.)

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