Activision Blizzard, the videogame publisher, had a successful fourth quarter, beating Wall Street estimates for adjusted sales. The latest game in the Call of Duty franchise, Modern Warfare II, played a significant role in the company’s success. In addition to Modern Warfare II, the launch of Warzone 2.0 and World of Warcraft: Dragonflight helped hold the attention of the gaming community.
With inflation affecting household budgets, analysts predict that more gamers will stick to their favorite franchises instead of trying out newer titles from other studios, which will benefit companies like Activision. Modern Warfare II reached a major milestone, crossing $1 billion in sales within 10 days of its launch in October. The company has high expectations for the year, projecting full-year adjusted sales to grow in high-single digits.
Fourth-quarter adjusted sales came in at $3.57 billion, compared to the average estimate of $3.16 billion. The positive results from Activision stand in contrast to the disappointing showings from rival companies Electronic Arts and Microsoft.
Despite the success, there are some challenges ahead for Activision. The company’s $69 billion takeover by Microsoft is currently being challenged by the US Federal Trade Commission and investigated by EU authorities. However, Activision said it continues to engage with regulators as they review the transaction.
In addition, the end of Blizzard’s long-term partnership with China’s second-biggest gaming firm, NetEase, will result in a temporary revocation of access to World of Warcraft in China. The loss of access is expected to result in a loss of $250 million in fiscal 2023, according to a note from Benchmark analyst Mike Hickey. However, Activision expects to form an alternative partnership to regain access to the game in China.
Fourth-quarter net income fell to $403 million, a decrease from $564 million a year earlier. Despite the decrease, the overall success of the quarter demonstrates Activision’s continued strength in the gaming industry. The company’s ability to beat expectations and the success of Modern Warfare II shows that the company is on track for continued success in the future.
In conclusion, Activision Blizzard had a successful fourth quarter, beating Wall Street estimates for adjusted sales. The success of Modern Warfare II and the launch of other games helped hold the attention of the gaming community. Despite the challenges ahead, the company is optimistic about the year and projects full-year adjusted sales to grow in high-single digits.
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For Digital Products and Services: Maurisys Software.
