While gaming industry giant Activision Blizzard suffered a setback in its effort to get acquired by Microsoft the other day, the company was able to share positive first-quarter financial results earlier this week. The Call of Duty and Overwatch maker continues its trend reversal after experiencing declining revenues and profits towards the tail end of the global pandemic with net revenues growing 34.5% year-over-year from $1.77B USD to $2.38B.
A player base of 368M monthly active users (MAUs) is responsible for Activision Blizzard’s upswing in revenues as its customers were responsible for $695M in product sales (up from $386M in Q1 2022) and $1.69B in in-game and subscription revenues (up from $1.38B in Q1 2022). The company’s MAUs were led by its mobile gaming segment King with 243M MAUs, while its console gaming business Activision Publishing recorded 98M MAUs and its PC gaming business Blizzard Entertainment had 27M MAUs.
As per usual, Activision Blizzard’s growth was driven by its five largest intellectual properties: Call of Duty, Candy Crush, Warcraft, Overwatch, and Diablo. The Call of Duty franchise was responsible for driving the Activision Publishing segment’s operating income to more than triple the year-ago level with segment revenue increasing by 28% year-over-year. The continued growth of Warcraft, Overwatch, and Diablo resulted in the Blizzard Entertainment segment experiencing a 62% year-over-year revenue growth.
During the first quarter of 2023, Activision Blizzard spent $402M on product development and invested $363M into game operations and distribution. In total, the company recorded operational costs and expenses of $1.58B, resulting in an operating income of $800M. After interests and taxes, Activision Blizzard earned a net income of $740M in Q1, 2023, up 87% compared to a $395M profit in the same period of 2022. The company ended the quarter with a net cash position of approximately $8.9B.
As part of the earnings report, Activision Blizzard’s CEO Bobby Kotick addressed the decision of the United Kingdom Competition and Markets Authority (CMA) to block the planned acquisition by Microsoft at $95 per share due to concerns related to cloud gaming, saying that “we remain confident that our deal with Microsoft benefits competition, consumers, and job creation in markets around the world, especially in the UK. The CMA’s report today does not reflect these realities, and we will work aggressively with Microsoft to reverse it on appeal.” Initially, the acquisition was expected to be completed by June 2023, however, Microsoft and Activision Blizzard are struggling to get the transaction approved by regulatory authorities with the EU Commission recently pushing back its decision to May 22 and the U.S. Federal Trade Commission scheduling an evidentiary hearing for Aug. 22.