Activision Blizzard’s Revenue To See Double-Digit Decline In 2019?

by Trefis Team
Activision Blizzard
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Activision Blizzard’s (NASDAQ:ATVI) revenue growth will likely see a decline in the low teens in 2019, as compared to an average growth in the mid-single-digits seen between 2016-2018. This can primarily be attributed to the absence of a World of Warcraft release in 2019, while the previous release in 2018 bolstered the sales growth. The revenues will likely pick again in 2020, with the next release of World of Warcraft. This is a popular franchise, and at its peak, it used to have around 12 million active users. In this note we focus on Activision Blizzard’s revenue sources, its business model, and revenue trajectory. You can look at our interactive dashboard analysis ~ ATVI Revenues: How Does Activision Blizzard Make Money? ~ for more details.

Activision Blizzard Generates Its Revenue From Sales of Video Games And In-Game Purchases. Its Largest Segment In Terms of Revenues Is Activision, Which Accounted For 34% of Total Revenues In 2018.

  • Activision includes console games such as Call of Duty, and Skylanders.
  • Blizzard includes franchises such as Overwatch, Diablo, World of Warcraft, and Hearthstone.
  • King’s mobile gaming portfolio includes games such as Candy Crush, Farm Heroes, Pet Rescue, and Bubble Witch.

Activision Blizzard Business Model

  • What Need Does Activision Blizzard Serve?
    • Activision Blizzard is engaged primarily in developing and distributing games for video game consoles, personal computers, mobile phones, and the Internet.
    • It creates popular sports games such as Call of Duty, World of Warcraft, and Candy Crush.
  • Who Pays To Activision Blizzard?
    • Hardcore as well as casual gamers pay for the games and in-game purchases to Activision Blizzard.
  • What Do Customers Care About?
    • Price
    • Gameplay
    • Graphics
    • Story line
  • Who Are Activision Blizzard’s Competitors?
    • Other gaming publishers such as Electronic Arts, Zynga, Take-Two Interactive, and Nintendo.

Activision Blizzard’s Total Revenue Has Grown 14% Between 2016 And 2018. However, It Could Decline In 2019, Amid Timing of Releases Before Picking Up Pace Again In 2020.

2019 Will Likely End With a Revenue Decline In the Low Teens

  • Activision Blizzard’s average monthly active users (MAUs) declined from 491 million in 2016 to 357 million in 2018, and they could decline to 344 million by 2021.
  • The decline in the past can be attributed to King Digital, which saw over 100 million MAUs lost over the last few years, amid increased competition from other game publishers, such as Zynga.
  • However, we don’t expect any significant decline in King’s user base going forward, as the company has been focusing on launching new games, which should aid the overall user base.
  • Still, the decline in user base in the near term can largely be attributed to other segments, given there will be no release for World of Warcraft in 2019.
  • Looking at average revenue per user (ARPU), it grew from $13.50 in 2016 to $21.00 in 2018. It will also likely decline to $19.40 in 2019 due to the World of Warcraft impact, before rising to $22 levels by 2021, in our view.


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