GAMING: Revenue, profit down for Blizzard Entertainment and parent company Activision

Microsoft’s $68.7B Buy Of Activision Still On

The parent company of Irvine video game maker Blizzard Entertainment has seen a slide in profit and net revenues, as the company awaits approval for its $68.7 billion sale to Microsoft Corp.

Activision Blizzard Inc. (Nasdaq: ATVI) has been hit by several developments, including a pandemic-easing that has sent more people away from their screens and phones as well as inflation dipping into everyone’s pocketbook.

The parent company last week posted a 28% drop in quarterly net revenue to $1.64 billion, down from

$2.3 billion in the same period a year ago. Profit fell to $280 million from $876 million.

Analysts polled by FactSet expected $410.6 million in net income, according to the Wall Street Journal.

Bloomberg News chalked up the dip in sales to “a soft Call of Duty launch last fall and a slow year for the gaming industry overall.”

Its Blizzard Entertainment unit brought in $401 million in quarterly revenue, down from $433 million a year ago, according to regulatory filings.

The Irvine segment’s operating income was $94 million, down from $141 million a year ago.

Blizzard is the largest software company in Orange County by headcount, with just over 2,700 employees as of last month.

The company’s games include the Diablo franchise, World of Warcraft, Hearthstone and Overwatch.

Challenging Environment

Activision Blizzard CEO Bobby Kotick said in an Aug. 1 earnings release that the company is operating “in a challenging economic environment, with so many companies announcing hiring freezes and layoffs.”

Adjusted earnings per share were 48 cents a share, matching analysts’ expectations, but down from $1.20 a share in the year-ago period.

Activision Blizzard agreed in January to be acquired by Microsoft, and the proposed deal is under regulatory review in the U.S. and Europe.

Kotick said in the earnings statement that the firm looks forward to completing the Microsoft transaction “as soon as possible.” Industry officials expect the sale to close in mid-2023.

World of Warcraft

“Blizzard’s second-quarter segment revenue and operating income were lower yearover-year but higher versus the first quarter,” the parent company said in the earnings release.

It added: “World of Warcraft net bookings declined versus a year-ago quarter that included the launch of Burning Crusade Classic, offsetting year-over-year growth for Hearthstone and the contribution from the June launch of Diablo Immortal.”

Blizzard Entertainment said last month it had bought video game studio Proletariat of Boston to support the development of the upcoming World of Warcraft: Dragonflight video game.

Blizzard is counting on the latest extension of World of Warcraft, known as a massive multiplayer online role-playing game, to give the company a boost. It is one of Blizzard’s most popular titles.