Activision Blizzard has again reported shrinking numbers and performance in its third fiscal quarter, surprising everyone. This is an unexpected result because the news was strikingly similar at the end of the second fiscal quarter, only at that point the company stated that it had a plan to invest into its key franchises that would pay off, but apparently failed to do so.
According to Games Industry, the net revenues for Activision Blizzard dropped a massive 15% to $1.28 billion for the period that ended September 30, and net bookings were down 27% to 1.21 billion. While the numbers may not be what the company expected to see, there will still be a profit made with an earnings per share of $0.26, roughly 24% less than the year-ago quarter.
It is entirely possible that the plan has simply taken longer to materialize and that the gains expected at the end of Q3 will appear for Q4. Activision Blizzard made a point of pointing out other areas where product performance has been positive but not apparent until after the closing of the quarter. The Call of Duty Mobile game for instance has seen over 100 million downloads in the first months since its formal release, and Modern Warfare is seeing better initial sales than Black Ops 4 from last year.
On the other hand, the failure to meet projected expectations may be symptomatic of larger problems within the organization. In December of 2018 fans of Heroes of the Storm were shocked to discover that with no warning Blizzard decided to gut the esports scene and all but dismantle the development of the title to a fraction of what it once was. Players were left without tournaments to play, and casters were left without employment.
This was one of many examples in the past years that one could point to and see a certain number of consumers simply saying that enough is enough. The StarCraft II esports scene and overall development of Diablo 3 can be considered to have been mishandled and ultimately abandoned compared to what consumers expected to see, and that too could contribute to Blizzard seeing fewer return spenders. In today’s saturated market of well-made games, Blizzard has no room to be sloppy, and resting on the brands of their most well-known games will only work for so long.
In October Blizzard faced significant controversy for the harsh ban of Blitzchung, the competitive Hearthstone player who made a pro-Hong Kong statement during a streamed event and had since faced a steady stream of questions over its behavior. While this happened after the Q3 close, it is merely yet another example of Blizzard acting in ways that from an outside view can be seen as destructive to the brand. Blizzard may be coming off of the high of BlizzCon, but past the pompous self-celebratory event, we might be seeing the first real signs of decline for an organization that has deviated far from its roots.