Here’s how much Activision Blizzard relies on “Call of Duty”
Activision Blizzard (NASDAQ: ATVI) posted record financial results in 2020, in large part thanks to millions of new players in its game franchise Call of Duty. The game’s producer reported in December that all titles in the Call of Duty The franchise generated $ 3 billion in bookings over the previous 12 months, or 36% of Activision Blizzard’s total bookings for the year.
That’s a pretty high percentage coming from a single franchise. As current engagement trends look very strong, investors need to consider whether Activision Blizzard’s best-selling video game is at risk of being disrupted by the competition.
Strong first trimester engagement heading into second trimester
Addiction to Call of Duty It may sound like a risk, but it reflects the success of management’s recent initiatives to overhaul its core franchises. Call of Duty was the first to undergo an overhaul, with Overwatch and Diablo soon.
Over a year ago, Activision launched Free and Mobile Experiences to drive more engagement with its best-selling first-person shooter. The result is that the Activision segment now has a record 150 million monthly active users, triple the level of two years ago.
What Activision did was use free experiences – Call of Duty: Mobile and Call of Duty: Warzone – like a hook to wind up millions of new players. But as it usually happens, once gamers get into the game, they start having fun and spending money on additional things that enhance the gaming experience. Activision made a whopping $ 4.8 billion. dollars on in-game spending in 2020 across all of its franchises.
In addition, Activision recently integrated Warzone in the premium version of Call of Duty: Cold War Black Ops which sells for $ 60 on PC and console. Since integrating these experiences in December, Activision has experienced a strong conversion to premium gaming. This contributed to a 72% increase in turnover for the Activision segment in the first quarter.
While Activision has benefited from the fact that millions have stayed at home during the pandemic, the strong engagement in Call of Duty is postponed to the second quarter.
During the first quarter earnings call, CEO Bobby Kotick said: “The current season of Call of Duty: Mobile is the best to date in terms of player investment in the West. ”
In its earnings release, the company said the first three seasons of Cold War Black Ops and Warzone were among the best seasons of Call of Duty historic, as measured by in-game bookings. The third season just launched in April and continues this trend.
Yet there is always the threat that an innovative new take on the first-person shooter could derail. Call of Dutythe momentum of. Still, the franchise has shown incredible resilience over the past year, even as the Chinese tech giant’s new shooter. Tencent (OTC: TCEHY) launched his own eSport title which won many fans.
How? ‘Or’ What Call of Duty fits into the competitive landscape
The video game industry is teeming with creative talent who are always thinking about the next big release. For example, Tencent’s Riot Games released Valuing a year ago, which could have kept a few players away from Blizzard Overwatch. But Call of Duty: Warzone held its own in an increasingly competitive market.
During the first quarter earnings call, Kotick said the company plans to hire 2,000 new developers by the end of next year. Kotick mentioned these plans in the context of discussing two things:
- Growing demand for Activision content.
- New competition from Chinese companies (Tencent) and other platforms, such as Epic Games, which operates an online game store and the famous esports title Fortnite. Epic Games is privately owned, but it recently secured a new round of funding that involves a market value for the company of $ 28 billion. As a perspective, Activision Blizzard’s current market cap is $ 69 billion.
Fortnite and Valuing are currently the most popular shooters, as measured by the number of viewers on AmazonIt’s Twitch. Both titles rank in the top five most viewed games on the live game streaming site. But even with this competition, Call of Duty: Warzone is right on their heels in the top 10.
In fact, data from TwitchTracker shows that the average number of daily concurrent viewers for Warzone recently hit a new high at the end of April. This matches the recent start of season three and the launch of new free content available in the game.
Activision is well positioned for long-term growth
First-person shooter has been one of the most popular genres in the video game industry for decades. The advantages of Activision by having several titles in the Call of Duty franchise available on all platforms as free and premium experiences.
Activision released a strong first quarter earnings report. With new players still arriving in the gaming market and with major new releases in development from Blizzard’s side, this top tier video game stock should remain a good investment.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.