Activision Blizzard Sales Drop After Weak Call of Duty Release

Activision Blizzard Inc., the largest U.S. video game publisher, reported sales that exceeded analyst estimates, but adjusted sales fell 15% from a year ago due to a soft launch of Call of Duty last fall and a slow year for the game industry in general.

Activision Blizzard Inc., the largest U.S. video game publisher, reported sales that exceeded analyst estimates, but adjusted sales fell 15% from a year ago due to a soft launch of Call of Duty last fall and a slow year for the game industry in general.

Activision, which is currently being acquired by Microsoft Corp., posted adjusted revenue of $1.64 billion in the second quarter, compared to the average analyst projection of $1.6 billion. Adjusted revenue excludes deferred sales of online purchases. Adjusted earnings per share were 47 cents, nearly 50% lower than a year earlier and slightly lower than analyst estimates, according to data collected by Bloomberg.

Last fall’s Call of Duty Vanguard, which Activision said hasn’t performed as well as expected, has had a ripple effect on the company’s fiscal year. The game received negative reviews and faced stiff competition from new players in the popular Halo and Battlefield series.

During the second quarter, Activision’s Blizzard division released Diablo Immortal, a new mobile entry in the action series. Activision’s Chinese partner NetEase Inc. delayed the launch of Diablo Immortal in the world’s largest mobile app market by about a month because it needed more time. It was finally released on July 25. Activision did not provide sales figures for the new Diablo game on Monday.

The video game industry has had a slow year as it deals with hardware supply chain issues affecting consoles, inflation, and a lack of big hits. Interest in gaming has also cooled down as pandemic stay-at-home orders were lifted and people resumed their outside interests and activities. Spending in the video game industry is expected to fall by 8.7% this year, according to a report from analytics firm NPD Group.

Activision said it expects revenue and earnings per share “to remain lower year-over-year in the second half.” Shares were up less than 1% in extended trading at $80.45.

Call of Duty Modern Warfare II, a new entry in the series, will be released on October 28. But the series will skip 2023, Bloomberg reports. Activision will instead release add-ons for Modern Warfare and other Call of Duty-related content. The next main game in the series, from the Treyarch studio, is slated for 2024. Call of Duty is Activision’s largest video game series, and its titles regularly top the annual sales charts. Since the start of the series in 2003, they have sold more than 400 million units.

Activision said it will also release the Blizzard games Overwatch 2 in early access on October 4 and Dragonflight, a new expansion for the online game World of Warcraft, later this year. Diablo IV will be released next year, the company said.

The Santa Monica, California-based publisher increased its developer base by 25% from a year earlier, due in part to acquisitions of Boston-based game company Proletariat, which will help with World of Warcraft expansions, and Sweden-based AI company Peltarion. However, it said it “remains aware of the risks, including those related to the labor market and economic conditions.”

Microsoft announced its purchase of Activision in January. The Xbox maker dove in as Activision’s stock suffered last year amid an ongoing sexual misconduct scandal. Shares of Activision are up about 20% since its announcement in January, though it still trades well below the $95 per share offer price, suggesting market uncertainty that the deal will go through. Lina Khan, the newly appointed head of the Federal Trade Commission, has indicated that she plans to take a tough stance against technology mergers. Activision has said it expects the transaction to close in Microsoft’s fiscal year ending June 2023.

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