From October 1 to December 24 ATVI went from $83.38 to $43.39. So ATVI lost 48% of its value. It is not as bad as it looks though. People are taking their money out of NASDAQ and tech stocks in general. NASDAQ lost 22% of its value from early October to late December. Alas, 48% is a lot bigger than 22%. Looking elsewhere, EA lost 50% of its value over six months from late July to late December. Ubisoft lost 34% of its value over three months. Take Two Interactive lost 28% of its value over three months. Nintendo lost 44% over nine months in 2018. That said, no major games industry stock has fallen as quickly and as much as ATVI.
Blizzard Active Player Base Declined By 20%
ATVI measures "Monthly Active Users" and reveals those totals during investor calls. During Q2 of 2017 Blizzard had 46 million MAUs. in Q2 of 2018 Blizzard was down to 37 million. Blizzard has lost 20% of its MAUs. That # remained steady at 37 million in Q3 of 2018. During Q3 of 2018 the WoW expansion sold 3.4 million on release day. With no big new game release in Q4 of 2018 look for MAUs to decline below 37 million. Blizzard recently paid 100 customer service people to end their employment. Blizzard claimed they could still give very good customer service. Well, from a macro perspective if you've gone from 46 million to 37 million active users you do not need as many customer service personnel. So Blizzard's promise of continued high quality customer service seems reasonable.
Blizzard Revenue Is Up So Far In 2018
Blizzard revenue in 2017 was 1.538 Billion after 3 quarters. While in 2018 revenue is 1.604 Billion through 3 quarters of the year. So its not all gloom and doom at Blizzard. Revenue is up ~5%. They are managing to get more money from fewer active users. Blizzard's segment operating income ( profit ) was 0.589 Billion in 2017 and it fell to 0.444 Billion through 3 quarters in 2018. Profit is down 20% in 2018.. ouch. That is rough. Increased revenues along with lower profits seem congruent with the leaks going to the media that Blizzard is trying to cut expenses. Its important to keep in mind that they still made $444 million profit in the last nine months and they still have a player base of 37 million. Does Canada even have population of 37 million? Despite some negative mainstream press and a lot of "piling on" by youtuber news channels Blizzard ain't going under any time soon.
Solid Leadership Provides Reason For Optimism
Mike Morhaime left and that sucks man. It hurts. Morhaime made it clear he loved SC2 and loved RTS games. However, Allen Adham was the leader of Blizzard when WoW, Diablo2, and Brood War were made. Adham was part of building the teams that made WoW and Starcraft1. Morhaime made sure Adham was in on all those retrospective documentariesOriginally, Adham recruited Morhaime and Pierce. Adham is not some guy that moved from marketing department of Pepsi-Cola over to Blizzard. Adham graduated as an electrical engineer and is a life time video game industry veteran. The guy bleeds Blizzard blue.
This retrospective video says a lot about Adham and the fact that overlord-boss-guy Morhaime defers to Adham throughout the video says a lot. Any one, greatly respected by Mike Morhaime is greatly respected by me.
Bobby Kotick has overseen the incubation and development of many great timeless franchises. ATVI was the first company to put an annualized release game on a 3-team 3-year cycle. Contrast that with how EA handles its annualized releases. So each of the 3 CoD teams, Infinity Ward, SledgeHammer, and Treyarch have 3 years to make a game. Kotick is not afraid to spend money and grant long development times to make a great game. Because Kotick works on the financial side of ATVI he'll never be seen as the "good cop". That label is saved for the software creators. He'll always have to take on the "Bad Cop" role because someone has to set a limit on spending. Someone has to pull the plug on stuff that isn't working. Someone has to end Guitar Hero development when its clear consumers have grown bored of the genre. That said, Kotick is a great visionary and is not afraid to spend money. He is video game industry lifer. This is the best we can hope for from a financial//accounting guy.
Great PC Games Of The Future
I'm not saying Blizzard is still the dream company it was 15 years ago with Pardo, Morhaime and Adham in their prime having just cranked out Brood War, Diablo2 and WoW. That said, ATVI seems more willing to spend money and grant more development time to insure a quality game than many other giant publishers. In a fantasy dream world can I imagine a better game maker than Blizzard partnered with a better publisher? yea sure, the Blizzard of 2004 would be the ultimate. However, we are not in a fantasy world; we are in the real world. In the real world of 2019, given the choices available, I think Blizzard remains the best hope for great, large-scale PC games in the future. For me Starcraft2, Diablo3, Hearthstone and Overwatch continue to be really good games. Outside of the PC world, Diablo3 on Switch is a masterpiece for that platform.
Guys like Kotick and Adham provided incredible vision and leadership in past decades. In short, I think they'll provide more great leadership in the future. I think Blizzard remains the best hope for PC players seeking large scale epic gaming experiences.
Destiny 2 and Starcraft 2
SC2 and Destiny2 are the games I play the most and I've been happy with them for a long time. This might colour my optimistic opinion about the future of ATVI and Blizzard. Before those games I played Borderlands2 and Age of Empires2.
As good as BL2 and AoE2 are ... Blizzard made a better RTS game and Bungie's Destiny2 is better than Borderlands 2.
Source Of Blizzard's Revenue, Profit and MAU's:
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