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Activision Blizzard have announced their financial results for Q2 2022, showing year-on-year revenues have fallen in nearly every metric, amidst imminent Microsoft acquisition.
CEO Bobby Kotick boasted in the Quarterly Results for Q2 2022 that ““Our acquisitions this past quarter of Proletariat and Peltarion further boost our development resources, including our artificial intelligence and machine learning capabilities.”
“Even in a challenging economic environment,” he insisted, “with so many companies announcing hiring freezes and layoffs, our development headcount grew 25% year-over-year as of the end of the second quarter.”
“Our talented teams are planning to release exciting new Call of Duty, World of Warcraft and Overwatch content later this year. Of course, we look forward to completing our pending $95 per share all-cash transaction with Microsoft as soon as possible,” Kotick concluded.
However, this optimism did spread to the raw numbers. Net revenue was $1.64 billion, fallen from $2.30 billion in Q2 2021. This is a drop of 28% year-on-year as noted by GamesIndustry.biz. GAAP earnings per diluted share was also noted as $0.36, fallen from $1.12 the same period last year. Even on a non-GAAP basis, Activision Blizzard’s earnings per diluted share fell from $1.20 to $0.48 this year.
The company generated only $198 million in cashflow compared to $388 million in the same period last year, while net bookings fell from $1.92 billion to $1.64 billion (a drop of 15%).
In-game net bookings also fell from $1.32 billion to $1.20 billion. Overall Monthly Active Users were 361 million, falling from 408 million in Q2 2021 (a drop of 12% year-over-year and 3% quarter-over-quarter).
Due to the imminent Microsoft acquisition — expected to close during Microsoft’s end of fiscal year on June 30th — “as is customary during the pendency of an acquisition, Activision Blizzard will not be hosting a conference call, issuing an earnings presentation, or providing quantitative financial guidance in conjunction with its second quarter 2022 earnings release.” In some ways, they may be grateful for it.
Activision Blizzard state they expect “GAAP revenue and earnings per share to remain lower year-over-year in the second half of the year.” However, “Based on the current pipeline, total segment operating income is expected to increase modestly in the third quarter versus the second quarter, and to return to year-over-year growth in the fourth quarter.”
Likewise, releases in the second half of 2022 — namely Call of Duty: Modern Warfare II, World of Warcraft: Wrath of the Lich King Classic, World of Warcraft: Dragonflight, Overwatch 2, and a game touted as “a new Call of Duty: Warzone 2.0 experience” — are expected to “increase our global audience, deepen community engagement, and drive year-over-year growth in player investment in the fourth quarter and beyond.”
This is also in conjunction with Diablo IV, currently planned to launch in 2023. Activision Blizzard closes out their financial report with how they remain “committed to becoming the most welcoming, inclusive company in our industry, and continues to implement previously announced initiatives to strengthen our practices and policies.”
Activision Blizzard emphasize that in the second quarter they “added experienced DE&I leaders in key positions across the organization.” This would seemingly also include Chief DE&I Officer Kristen Hines, who swore to bring “diverse and inclusive perspectives” to various elements of the company’s game designs, including “storylines, character development, gameplay and community interaction”.
The company also stated that in July they launched the 12 week Level Up U program “that prepares talented individuals from inside and outside the industry to become full-time game developers.” The company’s new program will be funded via a $250 million investment over 10 years that seeks to “accelerate opportunities in gaming and technology for under-represented communities.”
The news is hardly surprising to anyone with even a passing knowledge of how Activision Blizzard has operated in recent years, with PR nightmare after nightmare since 2018. For example, Diablo Immortal was mocked as an “out of season April Fools joke” when announced, yet even the accusations of its microtransactions being predatory haven’t stopped it earning $49 million in its first month; it didn’t elevate their Q2 2022 results either.
The following year saw Activision Blizzard making the polar opposite of a good idea by stripping a Hearthstone Grandmaster of his winnings after voicing support for Hong Kong’s independence. The utterly bungled Warcraft III: Reforged in 2020 did little to quell fans dissatisfaction.
The truly dealt hammer-blow wouldn’t come until 2021, when Activision Blizzard were sued by the State of California for fostering and permitting a discriminatory and unsafe “frat boy workplace culture” within the company. The most damning of the allegations were “a female employee committed suicide during a business trip with a male supervisor who had brought butt plugs and lubricant with him on the trip.”
After several walkouts and condemnation from both players and the industry — and Microsoft still dragging the acquisition process — Activision Blizzard has been desperate in changing its image.
They have purged references of the accused developers from their games — such as renaming Overwatch’s McCree — and censoring “sexualized” paintings and inappropriate jokes from World of Warcraft in an attempt to make it more “inclusive.”
Even these efforts have been met with backlash, however. Activision Blizzard showed off their “Diversity Space Tool,” designed to judge and quantify the ‘diversity’ of a given video game character based on their race, sexuality, and more.
In a move only Activision Blizzard could be blindsided by, gamers and activists were quick to point out that it was tokenizing, prompting their own developers to deny their company’s claims of them having tested it. Activision Blizzard would later claim the tool had not been used in active game development and have unceremoniously remained silent since.
What do you think? Have Microsoft still made a solid investment? Let us know on social media or in the comments below!