About Activision Blizzard, Inc.
Activision Blizzard answers the Call of Duty to make video games that millions of users play for billions of hours. The company is the biggest producer of video games including some of the most durable franchises: World of Warcraft, Guitar Hero, Candy Crush, and Call of Duty. Newer blockbuster titles are Overwatch and Skylanders. Users play Activision Blizzard's games on PCs, game consoles, and mobile devices. The company also creates games based on licensed properties from Marvel and DreamWorks Animation. Activision Blizzard is expanding its theater of operations to games, products, and service for TV, movies, toys, and a professional esports league.
Activision Blizzard operates in three segments: Activision, Blizzard, and King.
Activision, which accounts for about 35% of revenue, produces the company's signature Call of Duty franchise, a first-person shooter game for console and PCs; and Skylanders, a children-oriented game primarily for consoles. Activision agreed to transfer its publishing rights for the Destiny franchise to Bungie as part of the termination of their publishing relationship in 2018. The segment has about 55 million monthly active users (MAU).
Blizzard, about a third of revenue, produces another high-profile game, World of Warcraft, a subscription-based massive multi-player online role-playing game (MMORPG) for the PC as well as StarCraft, a real-time strategy game for the PC, and Overwatch, a team-based first-person shooter game PC and console platforms. The segment also includes the activities of Overwatch League and Major League Gaming business, as well as its online gaming service, Blizzard Battle.net. Blizzard has about 35 million MAUs.
King, about 30% of revenue, develops PC and mobile games that include Candy Crush, Farm Heroes, Pet Rescue, Bubble Witch, and more than 200 other titles. King counts some 268 million MAUs.
Activision Blizzard is showing decreasing dependence on its top franchise games. The top three games, Call of Duty, Candy Crush, and World of Warcraft, account for 60% of revenue, down from about three-quarters of revenue several years ago.
Activision Blizzard depends on the Americas for more than half its revenue. It gets about a third from Europe and about 15% from the Asia/Pacific region. The company has about 100 facilities in some 20 countries around the world. Overall, the company has players in about every country and it notes that Candy Crush is played on all continents, including Antarctica.
Sales and Marketing
Activision Blizzard markets its games on multiple platforms including social media such as Facebook, Twitter, and YouTube, online advertising, print and broadcast advertising, direct response, and product sampling. The company delivers content through retail channels or digital downloads, including subscriptions, full-game sales, and in-game purchases, as well as licenses of software to third-party or related-party companies that distribute Blizzard products.
The company's major customers are Apple, more than 15% if revenue, Sony, about 15%, and Google, about 10%.
Activision Blizzard's revenue has risen for the past four years with help from the King Digital Media acquisition. Sales jumped more than 40% in 2016 immediately following the deal and increased another 7% in each of the next two years.
In 2018, revenue hit a company high of $7.5 billion compared to $7 billion in 2017. The increase came from higher sales of Activision games – Destiny 2, Call of Duty: World War II, and Call of Duty: Black Ops 4, and Spyro Reignited Trilogy -- released in 2018 and 2017. King games sales rose with help from Candy Crush Friends Saga, while Blizzard sales dipped from lower Overwatch revenue.
Activision Blizzard's profit reached $1.8 billion in 2018 (another company high) compared to a $273 million profit in 2017. Besides higher revenue, the company reduced costs to 73% of revenue in 2018 from 81% of revenue in 2017.
The company's coffers held $4.2 billion in cash and equivalents in 2018 compared to $4.7 billion the year before. In 2018, cash flow from operations was $1.8 billion, while investing and financing activities used $230 million and $2 billion, respectively.
Activision Blizzard has significant long-term debt, about $2.7 billion, which could limit its flexibility in dealing with changes in the market.
From big games come big bucks and that's why Activision Blizzard is shifting resources to further develop its blockbuster franchises and create new ones. In 2019, the company said it would add development talent to its biggest games to make sure customers get content they want to return to. It plans to increase the number of developers working on Call of Duty, Candy Crush, Overwatch, Warcraft, Hearthstone, and Diablo 20% in 2019.
For Call of Duty, the company expects more resources to provide more frequent content updates and events and accelerate its expansion across platforms and geographies. Another plan is to start a professional, city-based Call of Duty esports league.
Activision Blizzard is also upping investment in Overwatch esports, as well as live services, the Battlenet platform, and advertising.
To pay for the investment, Activision Blizzard is streamlining its back office operations, consolidating some commercial operations, and revamping consumer marketing capabilities to reflect the continuing move to a largely digital network.
Geographically, the company has seen solid results from Blizzard's business in China and it extended the partnership with NetEase through January 2023.
Mergers and Acquisitions
Activision Blizzard's King mobile game division has acquired analytics and engagement firm Omniata. The deal is consistent with King's practice of using internal analytics and marketing as much as possible to promote its games, such as Candy Crush Saga. Those games have been played by billions of people, but King needs a constant flow of data to figure out how to best acquire new users.
3100 OCEAN PARK BLVD
Santa Monica, CA 90405-3032
Phone: 1 (310) 255-2000
Employer Type: Publicly Owned
Stock Symbol: ATVI
Stock Exchange: , NASDAQ
Chairman: Brian G. Kelly
CEO: Robert A. Kotick
Vice Chairman: Thomas Tippl
Employees (This Location): 333
Employees (All Locations): 9,900
Santa Monica, CA
Foster City, CA
Los Angeles, CA
Redwood City, CA
Santa Monica, CA
Red Bank, NJ
New York, NY