Activision Blizzard profit drops 32% in Q3 largely due to Activision’s weaker results

Activision Blizzard has issued a financial report for the third quarter ended September 30, 2022. The company saw its revenue and profit fall year-over-year, largely due to Activision’s weaker performance.

Financial highlights

• The company’s net revenue was $1.78 billion, down 13.9% year-over-year.
• Game sales accounted for only around 13% of total revenue, down 45.3% year-over-year.
• In-game purchases, subscriptions, and other sources of revenue amounted to $1.55 billion, or 87% of the total, down 7.3% year-over-year.
• It is worth noting that digital sales (digital copies of premium games, DLCs, microtransactions, etc.) accounted for 90% of Activision Blizzard’s total revenue.
• The company generated only $25 million from retail channels and $151 million from other distribution channels, which primarily include the Overwatch League and the Call of Duty League.
• Activision Blizzard reported net income of $435 million, down 31.9% from the same period in 2021.
• The company’s total monthly active users (MAU) were 368 million, down 5.6% year-over-year.

The company’s results by segments

• When looking at the results of the company’s operating segments, Activision recorded net revenue of $480 million, down 25.1% year-over-year.
• Blizzard reached $543 million in net revenue, up 10.1% from the same period in 2021.
• King remained the leader in terms of revenue, generating $692 million in the third quarter (up 6.1% year-over-year).
• Activision cited “reduced engagement” for Call of Duty following the weaker reception of Vanguard as the main reason for its lower performance year-over-year.
• However, the company expects the numbers to grow again in the next quarter thanks to impressive sales of Modern Warfare II.
• Blizzard’s growth was due to the successful launch of Diablo Immortal, while Warcraft franchise bookings were “stable” year-over-year.
• Blizzard also noted that its licensing agreements for publishing games in China expire in January 2023: “We are in discussions regarding the renewal of these agreements, but a mutually-satisfactory deal may not be reached.” However, this won’t affect Diablo Immortal, which is covered by a separate agreement.
• King’s growth was due to “ongoing strong execution across live operations and user acquisition.” The segment’s payer numbers also increased by a double-digit percentage year-over-year.
• Candy Crush had 200 MAU, with the company hoping to drive further growth with new content updates.