Activision Blizzard beats the Street, doubles down on eSports
Last Thursday, video game developer and publisher Activision Blizzard posted solid second quarter earnings for 2018 that demonstrated robust demand for its existing titles and the forward momentum of its eSports properties. This last area is one which investors are, perhaps, most interested in, as eSports is increasingly being seen as a trend that will push video games even further into the mainstream. Activision Blizzard has fast positioned itself as a market leader in the area, and this quarter was not short on activity.
Activision Blizzard’s share price has risen by 11% so far this year
SOURCE: Yahoo Finance
The company said that its net revenues for the quarter came in at a record $1.64 billion – ever so slightly more than the year-ago quarter’s $1.63 billion. When it came to earnings, Activision Blizzard delivered a bigger beat: the company reported $0.52 per share – that’s a 62.5% rise year on year, and it steamrollered analysts’ expectations of $0.35 per share.
While it was an undoubtedly positive quarter, there was some negativity – which has held the company’s share price down in the aftermath. The company’s audience reach (a key metric to understanding how engaged people are with it) fell across three major divisions (Activision, Blizzard, and King). The extent to which this is a problem is questionable though – we are currently in a “slow” period, regarding video game releases, and it is highly likely that a slew of new releases later in the year will turn this trend around.
On to the interesting stuff: eSports. During the last quarter, Activision Blizzard hosted its Overwatch League Grand Finals at the Barclays Center in New York. The live audience sold out, and millions of fans tuned in via TV networks and streaming platforms. Activision Blizzard’s other eSports property – the younger Call of Duty World League – also saw positive momentum, with a 50% increase in year-to-date minutes watched (taken against the same point in the previous year).
The company’s CEO, Bobby Kotick, made the following comment over the results: “This was another strong quarter for Activision Blizzard. Our portfolio of global franchises enabled us to deliver record first half revenues and earnings per share. This past weekend we held the Overwatch League Grand Finals. We had a very successful first season as we enhanced our leadership position in esports. And, today we announced two additional Overwatch League franchise sales at record prices, adding Atlanta, Georgia and Guangzhou, China to our league. We plan to announce additional franchises over the next few months.”
Dominion holds Activision Blizzard in its Global Trends Ecommerce Fund.
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