Azeroth Choppers — Episode 5

On this episode of Azeroth Choppers, both of Blizzard’s Alliance and Horde team are heading toward Paul’s JR Designs to have a look on the choppers !

Azeroth Choppers Episode 5 – Watch Now!

The time has come! This week on Azeroth Choppers, the Blizzard teams brave the cold and journey out to New York for a first look at the Horde and Alliance bikes.

Keep up to date on all of the latest episodes at www.AzerothChoppers.com, and let your faction’s war cry be heard with #AzerothChoppers.

 

Activision Blizzard Q1 2014 Finacial Results Conference Call – Mike Morhaime Transcript

activision-blizzard-logoThe first quarter of 2014 ended with 7.6 million World of Warcraft subscribers (200 thousand below the previous quarter). However, Warlords of Draenor pre-orders have surpassed 1 million sales even without an official release date. The number will continue to increase. The Warlords of Draenor Collector’s Edition isn’t yet on sale at retailers, which means pre-order sales will continue to increase.

The conference call still didn’t provide an official release date simply generalizing that Warlords of Draenor is slated for the second half of 2014. However, mentions Alpha testing will begin soon. It is a trend now with Heroes of the Storm, and now with Warlords of Draenor that opt-in players will get invited in waves into the Warlords of Draenor Alpha testing.

Hearthstone is now played by 10 million players worldwide, more content in development and new platforms coming in 2014. This in reference to Hearthstone on Android devices, announced at PAX East 2014.

Diablo III will see content updates and new console versions. Check out below the audio and transcript.

Activision Blizzard to Release First Quarter 2014 Financial Results on May 6, 2014

Activision Blizzard announced the next Financial Results conference call will take place on May 6th at 1:30pm PST / 4:30pm EST.

As usual, Blizzard Entertainment CEO Mike Morhaime is expected to present his report about Blizzard games’ progress and overall performance for the first quarter of 2014.

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Speculation Mode-On

Before starting, I wish to point out that most of the time these conference calls do not share any new details and sometimes no official announcements about upcoming games.

However, there have been precedents in past conference calls where Mike Morhaime has announced BlizzCon that year, at one point he offered an ETA range for the StarCraft II beta testing (which started 2 weeks after the conference call), and other interesting news bits might happen during his speech at the Activision Blizzard financial results conference call. Thus, nothing can be ruled out about upcoming Blizzard games/expansions, but don’t hold your breath.

Things I can think of at the tip of my mind that “might” be discussed:

[Artcraft] The Daughter of Argus

Lugìa: A few moments ago, Blizzard published another Artcraft about the revamp of the character models, and this time it is about the female Draenei (not a April Fool this time!), enjoy that space-goat !

Medievaldragon: I wish to point out to our visitors that this ArtCraft is only a sneak peek. The developer assigned to the development of the female draenei model hasn’t finished. Once the model is finished, it will be sent to the animators where the model will be tweaked for some time to add facial and body animations. Blizzard might have something more juicy to show at a later time.

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Hello again! I’m Senior Art Director Chris Robinson, and today we wanted to give you a super quick look at our current progress with the new female Draenei.

After the April Fools’ joke we wanted to ensure you weren’t waiting too long to see where we’re at with her actual character model update. Keep in mind that she’s still in-progress, and doesn’t have any animation to pose her body or face.

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Animation is a big factor for the female Draenei specifically, so it’s important to keep it in mind when comparing the two. The original female Draenei has some fairly extreme posing that happens when she’s animated. If you were to see the static model of the original without any posing you’d see that it looks very similar to the new one. With her pose applied her shoulders stretch backward, her pelvis rotates forward, and her chin lowers—causing her head to angle downwards. The curvature in her lower back, and why the head shape looks slightly different, are also due to the new model not having the same posing applied yet. She also looks a lot taller! Ultimately all of those things will be addressed when we animate the new model, they just don’t take place until she’s rigged and sent on to the animation team.

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We hope you enjoyed this super quick look at where we’re at right now, and we’ll continuing sharing more in-progress art as we go forward. The next article in the Artcraft series we’re planning is a look at the creation of the Spires of Arak, a new zone coming in Warlords of Draenor. Thanks for stopping by!

Senior Character Artist Joe Keller did the majority of the work on this revamp, with direction from our Lead Character Artist Tyson Murphy (@tysmurph), and myself (@artofcgrobinson).

 

Activision Blizzard Q3 2013 Financial Results Conference Call – Mike Morhaime Transcript

The Activision Blizzard Third Quarter Financial conference call took place on November 6th, 2013 at 1:30pm PDT.

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Bobby Kotick, Chief Executive Officer of Activision Blizzard, said: “Our third-quarter results exceeded our expectations, and we are able to raise our outlook for 2013 net revenues and earnings per share.

Robust continued engagement with our core franchises drove digi tal revenue, which constituted a majority of all revenue. This quarter demonstrates that games like Call of Duty and World of Warcraft engage and entertain our fans year round.”

Kotick added, “We recently released new titles in two of the most popular franchises in entertainment, Call of Duty: Ghosts and Skylanders SWAP Force. We are thrilled by the quality of those games and we are excited to show what we can do with them on next-generation consoles in the coming weeks. We are also in the process of a beta launch for our first major free-to-play game, Hearthstone: Heroes of Warcraft.

However, we continue to believe that the fourth quarter this year presents a unique and challenging landscape due to increased competition and uncertainties surrounding the console transition.

We are confident in our ability to navigate these challenges successfully, particularly in light of the recent completion of our transaction with Vivendi and the focus and flexibility provided by our return to independence.”

  • As of September 30, 2013, Blizzard Entertainment’s World of Warcraft remains the #1 subscription-based MMORPG, with approximately 7.6 million subscribers.
  • In North America, Blizzard Entertainment’s StarCraft® II: Heart of the Swarm® was the #1 PC game for the first nine months of 2013.

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Morhaime: Q3 was an eventful quarter for Blizzard. We launched our first console game in many years with Diablo III. We also announced an expansion pack for Diablo III — Reaper of Souls.

Additionally, beta testing for Hearthstone kicked off and we released significant content update for World of Warcraft.

All of this activity has netted out to a strong quarter where we ended higher in net revenue and operating income versus Q2 mostly due to the Diablo III console launch on September.

Revenues and income were down year over year — as expected — due to the successful launch of Mists of Pandaria and the ongoing sales of Diablo III during the same quarter last year.

Going into more specific details with World of Warcraft, we’re very pleased with the response to Siege of Orgrimmar — the massive content update we released in September. This update included a huge new raid dungeon with major story elements, as well as a new area to explore and features that improved the game’s accessibility.

Flexible rates now allow groups of variable size to participate in the end-game raiding dungeons. Meanwhile, the Proving Grounds feature trains players to improve their play in specific roles, preparing them to participate in end-game content. Player response to the content has been good, and we saw increased engagement that has contributed to maintaining relatively stable subscribership quarter-over-quarter. We’ll continue to invest heavily in World of Warcraft to deliver frequent, high-quality content to our players.

Moving on to Diablo III, we are pleased with the response to the games launched on PlayStation 3 and Xbox 360. Lifetime sell-through of the game across all platforms has reached over 14 million copies, and reviews have been very positive about how the game plays on console. Much of the praise has been centered on changes we made to the loot system and our decision to keep the auction house off of the console platform. Players and critics alike have noted that these changes have resulted in a more fun and satisfying game experience. That reaction factored in our decision to remove the auction house from the PC version of Diablo III effective next March, which players have also responded very positively to.

We’re building upon those design philosophies for loot and incorporating them into Reaper of Souls, the Diablo III expansion pack — which is coming for PC and PS4 in 2014.

In addition to the new loot system, Reaper of Souls will include an additional player class, the Crusader, and more gameplay modes for the endgame to keep players engaged. The reaction to Reaper of Souls at Gamescom was very positive, and we are looking forward to revealing more about the game at BlizzCon.

It was also a busy quarter for Hearthstone, our free-to-play digital card game for PC and iPad based on the Warcraft universe. In Hearthstone, players build decks of cards that feature familiar spells and creatures from World of Warcraft, and battle against each other using the cards. Players can collect cards simply by playing or by purchasing digital packs. They can also purchase entries into a special competitive mode of play called The Arena in exchange for either in-game currency or a small fee.

We’ve seen a great response from the community with the closed beta test, which kicked off in August. Hearthstone quickly became one of the most popular streaming games on Twitch, and we have been expanding the beta test to encompass more regions and a wider group of players. We’re continuing to work on polishing the game as we drive towards open beta testing.

Rounding out our big announcements since the last call is the name change of Blizzard All-Stars to Heroes of the Storm, which is our take on free-to-play hero brawlers. We’ve done an extensive internal test on Heroes over the past several months, and as the game has evolved, we felt it was appropriate to change the name to something more fitting of the gameplay experience.

We’re looking forward to sharing more details about Heroes at BlizzCon, which is taking place this weekend at the Anaheim Convention Center. This is another sold-out show, with more than 20,000 attendees coming to Anaheim from more than 40 different countries.

Our global community will also follow along through DIRECTV, online pay-per-view on blizzcon.com and partner broadcast in other regions. We will be showcasing our biggest pipeline of games ever and showing our appreciation for our community through contests, meet-and-greets and of course, major eSports spectacles.

The World of Warcraft Arena invitational and the global grand finals of the StarCraft II World Championship Series will be taking place, along with an invitational tournament for Hearthstone, featuring popular community personalities.

All of us at Blizzard can’t wait to get back to BlizzCon and connect with our players. We hope you’ll join us there or follow along online with a virtual ticket available online at blizzcon.com.

We are looking forward to celebrating a shared passion of gaming with our players, hearing their feedback on our newest game content and taking that energy and knowledge back to work as we drive towards an exciting 2014 for Blizzard.

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HORDE BIAS! A Red Shirt Guy Editorial on the “Faction Bias” Arguments

Orgrimmar

Hi readers and welcome to my first editorial type article. With the release of Patch 5.4’s trailer (see it here if you haven’t already), the debate on whether or not Blizzard is biased towards the Horde in content development has risen again. Its a subject that really came to a head with the release of Cataclysm, enough so that Blizzard actually had Dave Kosak make a blog post, “Dev Watercooler: Faction Favoritism“. It was very negatively received, and in fact was seen by many as further proof there was faction bias favoring the Horde enough to be detrimental to the Alliance among Blizzard’s developers. So, does this faction favoritism really exist? Is Blizzard ignoring half their playerbase because they can’t muster the effort to to create content for a faction they don’t like? Or is this all overblown outcry from WoW’s notoriously unpleaseable fanbase?

ATVI – Activision Blizzard 2013 Q2 Financial Results Conference Call

Activision Blizzard celebrated today their 2013 Second Quarter financial results conference call where Bob Kotick addressed their independence from Vivendi after purchasing their shares.

activision-blizzard-logoBobby Kotick, Chief Executive Officer of Activision Blizzard, said, “We are pleased with our second-quarter results, which confirm the preliminary results we released last week when we announced our transaction with Vivendi. The agreement we reached with Vivendi will make us an independent company and should deliver meaningful earnings per share accretion to our shareholders. Our solid performance across our franchises and strong digital sales, including continued significant growth this quarter in our Call of Duty® downloadable content business over the previous year, validate our belief that we will enter this new period of independence in a position to leverage the flexibility and focus that it provides.”

On July 25, 2013, Activision Blizzard announced that it reached an agreement under which the company will acquire approximately 429 million company shares and certain tax attributes from Vivendi, in exchange for approximately $5.83 billion in cash, or $13.60 per share acquired before taking into account any future benefit from these tax attributes. In a related transaction, ASAC II LP, an investment vehicle led by CEO Bobby Kotick and Activision Blizzard Co-Chairman Brian Kelly, will purchase approximately 172 million company shares from Vivendi for approximately $2.34 billion in cash, or $13.60 per share. Following the completion of the transactions, which are expected to close by the end of September 2013, Vivendi will no longer be the majority shareholder, but will retain a stake of approximately 83 million shares, or approximately 12%.

 

Main Highlights

  • World of Warcraft subscribers: 7.7 Million
  • Next-Gen MMO Titan is likely to be a non-subscription based MMO
  • Titan staff was moved to World of Warcraft, Diablo III and Blizzard All-Stars

Transcript

The second quarter was a relatively quiet quarter when compared against last quarter, which included the StarCraft II: Heart of the Swarm launch; and Q2 2012 when we launched Diablo III. We’ve been making great progress on Diablo III console and Hearthstone along with other ongoing projects, which I’ll discuss shortly.

Starting off with World of Warcraft, we ended the quarter with about 7.7 million subscribers worldwide, with the declines split about evenly between East and West. The most recent content update in late May has had a positive impact on stabilizing the churn rate in both regions.

Our next major content update, “Siege of Orgrimmar” is currently in the public testing phase. This update includes a massive new raid dungeon and a new questing area, as well as some new features. Proving grounds is a way for players to learn the skills they need for in-game contents and flexible raids allows groups of varying sizes to enjoy in-game rating. This will make it easier for players to experience compelling in-game contents with their friends. In addition to sustaining engagement for existing players, we believe these features can help make the transition back to the game more compelling for returning players as well. We look forward to releasing this update in the coming weeks.

Before I get into the other game updates, I want to say a few words about our unannounced project codenamed Titan. We’re in the process of selecting a new direction for the project and re-envisioning what we want the game to be. And while we can’t talk about the details yet, it is unlikely to be a subscription-based MMORPG. I also want to reiterate that there has not been an official announced or projected release date. What I can say is that the commitment to quality has always been at the core of Blizzard values. And we’ve gone through this type of iterative development process several times in the past on the way to creating genre-defining games. As we continue our assessment, we have shifted some of the resources from the team to our other franchises, including World of Warcraft and Blizzard All-Stars, which we believe will add immense value to those projects.

On the Diablo III side, we announced a September 3rd date for the Xbox 360 and PlayStation 3 versions to the game. Our showing at E3 was a great opportunity to reinsure ourselves to the console gaming audience. The development team has done a lot of work to tailor Diablo III for a living room experience and these subtle changes have been very well-received by the press. We’ll be sharing more Diablo-related news at GamesCom later this month.

Moving on to StarCraft II. We just launched Heart of the Swarm in China a couple of weeks ago and in these early stages have seen a jump in concurrency in the region. In addition, our year-long StarCraft II World Championship Series is currently in its second season with the season finals taking place later this month at GamesCom in Germany.

We’ve also been putting a lot of focus on Blizzard All-Stars, our upcoming free-to-play online game. Action RTS games have become increasingly popular over the years. As we have in the past with games like World of Warcraft and the original Diablo, we’re looking to put our own spin on this genre and challenge some of the existing design paradigms. We’ve reached a significant internal milestone with Blizzard All-Stars going into wider internal testing and we’ll have more to say about the game later this year.

Rounding out our announced game projects is Hearthstone, our new free-to-play digital collectible card game. Hearthstone will launch initially on Windows and Mac PC followed by iPad soon after. We’ve made great progress polishing the game through internal testing and will be reaching the external test phase very soon. Our promotions in the last quarter, which included several live streamed game-play demos have generated great budge for the game since we revealed it at PAX East in March. Not only will this be our first game on iPad, it will also be the first time in a very long time that we have announced a game and launched it within the same year. This reflects the philosophy behind a small team of Blizzard veterans developing Hearthstone to create Blizzard-quality games on a smaller scale.

Looking ahead, we have BlizzCon coming up on November 8 and 9 at the Anaheim Convention Center. The show will be a good one with the latest Blizzard news, hands-on with games and development and of course, the global finals for our StarCraft II World Championship Series. We hope to see you there or following along via the online stream or on DirecTV.

As we enter the back half of 2013, what we’re showing at Blizzard is a broadening of our gaming portfolio. Just 3 years ago, we had one active game. Moving into the rest of 2013 and beyond, we will have several active and vibrant games across 3 major franchises on multiple platforms and with different business models. We’ll continue to work hard on creating epic game experiences for our players and look forward to delivering those experiences in a variety of ways.

 

Q&A

Brian J. Pitz: With respect to the wild sub declines, I think last quarter was more Asia based, now it seems to be ramping up more on the West. Can you just give us a little more color there on the split?

Morhaime: Concerning subscription decline, in aggregate in Q2, we did see a smaller decline than we saw in Q1, and I think it’s very important to note the impact that our content updates have had since the most recent update, mid-May. We have seen a very positive impact on the churn rate, and that’s across both regions.

Brian J. Pitz: Got it. And just one more follow-up on WoW. There’s kind of been rumors in and out of the press on a potential movie set with the WoW theme. Any updates there?

Morhaime: I don’t have any updates other than to say that we are continuing to work with Legendary Pictures. Duncan Jones has been selected as the director, who has been actively working on a movie, and we continue to be very excited about it.

Colin A. Sebastian : In the scenario that WoW were to continue declining, I’m wondering whether your priority, ultimately, would be to protect profitability of the franchise or to continue spending on potential growth initiatives?

Morhaime: Our priority is to continue delivering great contents to our players. We feel the WoW continues to be the top most compelling, possibly multiplayer online role-playing game available, and we think it still has a very long life ahead of itself. We think that over time, we have seen players come and go and return to World of Warcraft, and we recognize that there’s a lot that we can do to make the experience of coming back to World of Warcraft and the transition back into the game and meeting up with your friends much easier than it currently. And so I think that’s a big opportunity for us.

 

Brian J. Pitz (Jefferies LLC, Research Division)
Colin A. Sebastian (Robert W. Baird & Co. Incorporated, Research Division)

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Activision Blizzard Second Quarter 2013 Financial Results Conference Announced

Activision Blizzard announced the upcoming Second Quarter 2013 Financial results will take place on August 1, 2013.

activision-blizzard-logoSANTA MONICA, Calif. –(BUSINESS WIRE)– Activision Blizzard, Inc. (Nasdaq: ATVI) intends to release its second quarter 2013 results after the close of the market on Thursday, August 1, 2013 . In conjunction with this release, Activision Blizzard will host a conference call that will be broadcast over the Internet.

Thursday, August 1, 2013

1:30 p.m. Pacific Time ( 4:30 p.m. Eastern Time )

To listen to the call, please log onto:

http://investor.activision.com/events.cfm

Or dial:

U.S. and Canada : 888-339-3466

International: 719-325-2309

Passcode: 3585535

Anyone planning to dial in to the call should RSVP to Pam Beaver at:

E-mail: [email protected]

 

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Previous Activision Blizzard Conference Call Transcripts

Activision Blizzard Announces Transformative Purchase of Shares from Vivendi and New Capital Structure

Activision Blizzard purchased 85% of shares from majority-shareholder Vivendi for $8.2 Billion. The company continues to be a public shareholder entity. No changes should affect Blizzard Entertainment.

This significant purchase makes Activision Blizzard full owner of itself. Vivendi now owns only 12% of Activision, Inc. according to TheWrap

activision-blizzard-logoActivision Blizzard Announces Transformative Purchase of Shares from Vivendi and New Capital Structure Company to Buy Back Approximately 429 Million Shares from Vivendi for $5.83 Billion. Investor Group Led By CEO Bobby Kotick and Co-Chairman Brian Kelly to Separately Purchase Approximately 172 Million Activision Blizzard Shares from Vivendi for $2.34 Billion New Capital Structure Expected to Drive Meaningful Earnings-Per-Share Accretion.

Activision Blizzard Reports Preliminary Second Quarter Results

SANTA MONICA, Calif. –(BUSINESS WIRE)– Activision Blizzard, Inc. (Nasdaq: ATVI) (the “Company”), a global leader in interactive entertainment, announced today that it reached an agreement under which it will acquire from Vivendi ( Euronext Paris : VIV) approximately 429 million Company shares and certain tax attributes, in exchange for approximately $5.83 billion in cash, or $13.60 per share acquired before taking into account the future benefit from these tax attributes. In a simultaneous transaction, ASAC II LP , an investment vehicle led by Activision Blizzard CEO Bobby Kotick and Co-Chairman Brian Kelly , to which they have personally committed $100 million combined, separately will purchase approximately 172 million Company shares from Vivendi for approximately $2.34 billion in cash, or $13.60 per share.

Following the completion of the transaction, Activision Blizzard will be an independent company with the majority of its shares owned by the public. The Company will be led by Bobby Kotick as Chief Executive Officer and Brian Kelly as Chairman. Vivendi will no longer be the majority shareholder, but will retain a stake of 83 million shares or approximately 12%. ASAC II LP—the investor group which, in addition to Kotick and Kelly, includes Davis Advisors, Leonard Green & Partners, L.P. , Tencent, as well as one of the largest global institutional investors—will own a stake of approximately 24.9%.

Activision Blizzard expects that its new outstanding share count and capital structure (which will include approximately $1.4 billion of net debt) will result in expected pro forma 2013 earnings-per-share (EPS) accretion of between 18% and 29% on a GAAP basis and between 23% and 33% on a non-GAAP basis.

Bobby Kotick , CEO of Activision Blizzard , said, “These transactions together represent a tremendous opportunity for Activision Blizzard and all its shareholders, including Vivendi . We should emerge even stronger—an independent company with a best-in-class franchise portfolio and the focus and flexibility to drive long-term shareholder value and expand our leadership position as one of the world’s most important entertainment companies. The transactions announced today will allow us to take advantage of attractive financing markets while still retaining more than $3 billion cash on hand to preserve financial stability.”

Mr. Kotick continued, “Our successful combination with Blizzard Entertainment five years ago brought together some of the best creative and business talent in the industry and some of the most beloved entertainment franchises in the world, including Call of Duty® and World of Warcraft®. Since that time, we have generated over $5.4 billion in operating cash flow and returned more than $4 billion of that to shareholders via buybacks and dividends. We are grateful for Vivendi’s partnership through this period, and we look forward to their continued support.”

Activision Blizzard will fund the acquisition with the combination of approximately $1.2 billion of domestic cash on hand and approximately $4.6 billion of debt proceeds, net of fees and upfront interest, accessed through the capital markets and bank financing. The Company has received committed financing for the transaction from Bank of America Merrill Lynch and J.P. Morgan . The transaction is expected to close by the end of September 2013 , subject to customary closing conditions.

A special committee of independent directors was formed to represent the Company in negotiating and evaluating the transactions.

Please see the Company’s Current Report on Form 8-K being filed with the Securities and Exchange Commission and the exhibits thereto for further information about the terms of the transactions.

Activision Blizzard’s financial advisor on the transaction is J.P. Morgan Securities LLC and its legal counsel is Skadden, Arps, Slate, Meagher & Flom LLP . The Special Committee’s financial advisor is Centerview Partners and its legal counsel is Wachtell, Lipton, Rosen & Katz . ASAC II LP’s financial advisor is Allen & Company LLC and its legal counsel is Sullivan & Cromwell LLP .

Preliminary Second Quarter Results and Full-Year Outlook

For the second quarter, Activision Blizzard expects to report GAAP net revenue of approximately $1.05 billion and Non-GAAP net revenue of approximately $608 million , with GAAP earnings per diluted share of $0.28 and Non-GAAP earnings per diluted share of approximately $0.08 . In addition, the Company will announce full second quarter results on August 1, 2013 and hold its regularly scheduled conference call for analysts and investors at that time.

For the quarter, Activision Blizzard was the #1 independent publisher in North America and Europe combined, including accessory packs and figures, with the #1 and #2 best-selling titles year-to-date— Skylanders Giants™ and Call of Duty: Black Ops II.¹ Additionally, Blizzard Entertainment’s World of Warcraft® remained the world’s #1 subscription-based MMORPG, ending the quarter with approximately 7.7 million subscribers.²

The Company raised its full-year 2013 GAAP net revenue outlook to $4.31 billion and its earnings per diluted share outlook to $0.77 , up from its prior net revenue outlook of $4.22 billion and earnings per diluted share outlook of $0.73 . Additionally, the Company affirmed its full-year 2013 Non-GAAP net revenue outlook of $4.25 billion and earnings per diluted share outlook of $0.82 . These full-year outlook numbers do not yet account for any benefit of earnings per share accretion from the announced transaction.

Conference Call and Webcast Information

Activision Blizzard will host a conference call and live webcast on Friday, July 26, 2013 at 8:30 a.m. ET , 2:30 p.m. Paris time, 1:30 p.m. London time to discuss this announcement. The company welcomes listeners to the call live by dialing (866) 953-6860 in the U.S. or (617) 399-3484 outside the U.S. using the passcode 14828517. The live webcast of the call can be accessed at www.activisionblizzard.com.

For those unable to listen to the live conference call, an audio replay of the call will be available through August 9, 2013 and can be accessed by calling (888) 286-8010 in the U.S. or (617) 801-6888 outside the U.S. and using the passcode: 30609761. In addition, a webcast replay also will be archived on the Investor Relations section of Activision Blizzard’s website.

 

Transcript: Activision Blizzard Q4 2010 Financial Results Conference

Activision Blizzard, Inc. (Nasdaq: ATVI) released its fourth quarter and calendar year 2010 results after the close of the market on Wednesday, February 9, 2011 at 1:30pm Pacific Time.

Mike Morhaime (president, Blizzard Entertainment) said there will be more details about Diablo III Beta at the next Financial Conference Call, which seems to indicate it might start in 2011, and as a guess-timate I’d say 2012 launch date considering beta testing usually lasts around six months. Sounds exciting.

A few days ago, Blizzard Entertainment announced BlizzCon 2011 will take place at the Anaheim Convention Center this upcoming October 21-22.

In previous conferences, Mike Morhaime announced the approximate date of StarCraft II: Wings of Liberty beta test, the plans for a charity-motivated WoW vanity pet sales: the Wind Rider Cub and the Gryphon Hatchling, and he also revealed the date of BlizzCon 2010. This conference is always a platform for some kind of official announcement by Blizzard Entertainment.

TRANSCRIPT

Mike Morhaime: Before I discuss our performance in 2010, I wanted to note that yersterday was the 20th Anniversary of Blizzard Entertainment. It’s hard to believe that the company has grown from a trio of UCLA engineering graduates to one that serves millions of players around the world.

That success has been fueled by continuity. Many of the original Blizzard employees who joined us in the early years are still with us today, and we have worked hard to pass on our core values and reinforce our culture of excellence with our new employees.

We were a company of gamers back then, and we are still a company of gamers today.

We have assembled some of the strongest and most passionate development teams in the industry, and that positions us well to continue delivering epic entertainment experiences.

Blizzard’s 20th year was our best yet. We shipped two games: StarCraft II: Wings of Liberty and World of Warcraft: Cataclysm that was incredibly successful.

StarCraft II and Cataclysm were the Top 2 selling PC Games in 2010 in retail in North America, and Europe combined. These two games have delivered a record year.

At 2010, Non-GAPP revenues exceeded $1.65 Billion dollars, an increase of 38% from 2009. In addition, our non-GAPP operating income reached $850 million dollars, this year, increasing 53% over the prior year.

As we previously announced, World of Warcraft reached 12 million subscribers worldwide last year, and has grown from there following the release of Cataclysm in December. That release with another record-breaking record-breaker for Blizzard Entertainment.

Worldwide sales as of day one topped 3.3 million units, and one-month sales hit more than 4.7 million units.

These sale numbers are a reflection of the ongoing strength of World of Warcraft and our community. Even as the game has passed the sixth year mark., the critics have also reacted positively with the game currently holding a 90 average of metacritic, and end of the Year Awards.

Our developers have continued to raise the bar for quality, and creativity in the MMO space. The award-winning content they have created in Cataclysm will help us maintain our competitive advantage as new competitors come online in the future.

In addition to Cataclysm, we are seeing continued success with StarCraft II. The game has won several major gaming awards including a spot in the Time Magazine Top 10 Games for 2010, and Wired overall Game of the Year.

Sales continue to be strong with StarCraft II approaching 4.5 Million units sold to date worldwide. With our developers working hard to support this huge new community, we have added new features such as Chat Channels on Battle.net at the request of our players.

We also just released a trio of official custom games a few weeks ago. These custom maps are important to the longevity of StarCraft II, as they showcase pluzzle and party game modes that are popular with casual players.

The new map releases also include a lot of artwork for the community to use in creating their own custom maps. To date, worldwide, StarCraft II community developers have uploaded more than 150,000 maps to Battle.net.

As we head into 2011, we want to build upon the momentum from the launches of Cataclysm and StarCraft II. We will focus on growing our World of Warcraft community by supporting our players. The developers are already hard at work on additional updates for the game. We’re also working with our partner NetEase to prepare Cataclysm for launch in China, which includes getting the proper government approvals. Our goal is to reduce the amount of time between our game launches in China versus the rest of the world.

On the StarCraft II front, we will continue to improve the Battle.net experience, as well as create new content for our players. We recently began public testing on a handful of the ladder maps to keep the game fresh for our multiplayer community. And as with Cataclysm, we’re working with our partners at NetEase to prepare StarCraft II for launch in China.

However, we have no specific updates to share at this time. Finally, the development team is hard at work on Heart of the Swarm, which is first expansion to StarCraft II. We are looking forward to sharing more information about that expansion, as I said, in the coming months.

As for Diablo III, development continues to go well, and we’re very excited about the game. Our most recent public showcase for Diablo III was at the G-Star show in Korea, where demo stations attracted huge lines of players. I’m looking forward to sharing some more news about the game and our upcoming beta on the next call.

Finally, I wanted to remind everyone that we just announced our BlizzCon show for 2011, which will be taking place on October 21 and 22 at the Anaheim Convention Center. Our shows keep getting better and better every year, and we are looking forward to meeting with our players and sharing exciting news about Blizzard at the event.

In summary, 2010 was a great way to cap off an amazing 20-year run at Blizzard Entertainment. We added more titles our stream of best-selling, award-winning games, and more gamers around the world are playing Blizzard games today than ever before.

The next 20 years promise to be even better. The games we operate today and the games we have in the pipeline represent the best and widest slate of content that Blizzard has ever produced. The future looks bright.

As more and more people around the world get access to broadband and become interested in online gaming, Blizzard is in a unique leadership position to attract those players to become part of our community.

Q&A

Jeetil Patel (Deutsche Bank): Your 2011 guidance for the year, you have a comment in there in that it does not yet include a Blizzard title. I guess what is the qualifier to get a Blizzard title out this year? I guess it seems like the commentary seems awfully interesting in that. Are you waiting for some sort of percentage completion, competitive slate? Can you just maybe elaborate more as to why there isn’t a Blizzard title this year? Second, can you or do you plan to leverage your World of Warcraft or Call of Duty kind of user base to reach and offer a services model similar to Netflix? I mean it’s interesting that you’ve got a great content offering as a services offering at Netflix, can you leverage your two major IPs or two significant subscriber bases today to do something similar in gaming? Or do you think you need a new or different platform to deliver content in the form of gaming as a service?

Thomas Tippl: I don’t know how many questions those were but hopefully we kept track of all of them. On the first one, with regards to the commentary around the Blizzard title. As you know and, as we said before, we think that in the long run Blizzard is good for one major release a year. But of course, what always rules is the quality of the game has to be there. And that’s why, for example, we didn’t have a release in 2009, but we had two releases in 2010. And as you can see, the results speak for themselves. I think that has played out well for our shareholders. With regards to Diablo, we don’t have a date yet. So we felt it was prudent not to bake it in, because again we don’t want to find ourselves in a situation where we either disappoint or would have to make any compromises on the game quality which we would never do. If the title ships, obviously, that will present material upside to the outlook that we have provided.

Jeetil Patel – (Deutsche Bank): I guess going back to the Diablo question, I guess can you talk about how far along it is in terms of percentage of completion?

Michael Morhaime: I don’t have a percentage of completion rating for you today, other than to say that the game’s coming along very well. We are very happy with the development progress that the team is making, but until we get to beta and we have the community help us test the game, we aren’t going to lock in a release date. And so I just want to clarify that we are not setting a date. I am not saying that it’s going to be 2012. I am just saying that there isn’t a date yet. And so given that we haven’t locked into a date, we fully support the decision not to include it in guidance.

Activision Blizzard Reports December Quarter and Calendar Year 2010 Financial Results

  • Company Achieves Record CY 2010 Operating Cash Flow of $1.4 Billion
  • CY 2010 GAAP Net Revenues Increase Year Over Year to $4.45 Billion
  • Company Delivers Record CY 2010 EPS
  • 2010 Revenues From Digital Channels Grow Over 20% to More Than $1.5 Billion
  • Company Announces New $1.5 Billion Stock Repurchase Program
  • Company Announces 10% Increase in Cash Dividend to $0.165 per Common Share

SANTA MONICA, Calif. , Feb. 9, 2011 /PRNewswire/ — Activision Blizzard, Inc. (Nasdaq: ATVI) today announced financial results for the calendar year and quarter ending December 31, 2010 . Activision Blizzard reports results on both a GAAP and a non-GAAP basis. A reconciliation of the company’s GAAP and non-GAAP results can be found in the attached tables.

For calendar year 2010, Activision Blizzard’s GAAP net revenues increased to $4.45 billion , as compared with $4.28 billion for 2009. On a non-GAAP basis, the company’s net revenues were $4.80 billion , as compared with $4.78 billion for 2009. Revenues from digital channels for the calendar year were more than $1.5 billion , an increase of more than 20% year over year.

For calendar year 2010, Activision Blizzard’s GAAP earnings per diluted share increased to $0.33 , as compared with $0.09 per diluted share for 2009. The 2010 results include a $0.16 per share non-cash reduction in the valuation of intangible assets reflecting weaker retail sales in the casual and music genres, while the 2009 results included a similar non-cash charge of $0.19 per share. On a non-GAAP basis, the company’s earnings per diluted share grew 14.5% to $0.79 , as compared with $0.69 per diluted share for 2009.

For the quarter ended December 31, 2010 , Activision Blizzard’s GAAP net revenues were $1.43 billion as compared with fourth-quarter 2009 net revenues of $1.56 billion . On a non-GAAP basis, the company’s net revenues for the quarter were $2.55 billion , as compared with fourth-quarter 2009 non-GAAP net revenues of $2.50 billion . Revenues from digital channels for the quarter were more than $470 million , an increase of 40% year over year.

For the quarter ended December 31, 2010 , Activision Blizzard had a GAAP loss per share of $0.20 , inclusive of the $0.16 per share non-cash charge mentioned above. On a non-GAAP basis, the company’s earnings per diluted share grew to $0.53 . For the comparable quarter in 2009, the company had a GAAP loss per share of $0.23 , inclusive of the $0.19 per share non-cash charge mentioned above, and non-GAAP earnings per diluted share of $0.49 .

Robert Kotick , CEO of Activision Blizzard , stated, “Because of focus and disciplined execution, 2010 was another extraordinary year for Activision Blizzard . We made some of the best games we have ever made in over 30 years of being in the interactive entertainment business. We benefited from new content releases for two of the world’s most successful online entertainment franchises: Activision Publishing’s Call of Duty®: Black Ops and Blizzard Entertainment’s World of Warcraft®: Cataclysm™, a new installment in the world’s largest subscription-based massively multiplayer online role-playing game. During the year, we grew our net revenues, delivered record earnings, achieved record GAAP and non-GAAP operating margins of 11% and 29%, respectively, and generated $1.4 billion in operating cash flow.”

Kotick added, “Activision Blizzard’s key franchises have larger audience bases than ever before and we continue to see significantly enhanced user activity and engagement for our expanding online communities. Our revenues from digital channels, which now account for over 30% of our overall revenues, were driven by increased sales of Activision Publishing’s Call of Duty map packs and value-added services for Blizzard Entertainment’s World of Warcraft. Blizzard significantly evolved its direct digital distribution capabilities with the launch of its new Battle.net® service and saw players embrace its service offerings in record numbers. Notably, since Call of Duty: Black Ops was launched in November players have spent an average of 52 minutes per day playing online, roughly equivalent to the 55 minutes that the average user spends each day on Facebook.(1) As of February 2, 2011 , more than 27 million gamers have played Call of Duty games online, logging more than 2 billion hours, or the equivalent of more than 229,000 years of gameplay.(2)”

Kotick concluded, “Online gaming continues to broaden its appeal. Our shareholders continue to be well positioned to benefit from these trends and the focus of our incredibly talented employees around the world continues to allow us to lead our industry. We expect to continue to drive long-term growth, increase our return on invested capital and generate strong cash flow as we have over the last few years. Our strong balance sheet affords us the financial flexibility to invest in games that few companies have the ability to create and allows us to provide our shareholders with value through dividends and share repurchases.”

Business Highlights

  • Activision Blizzard was the #1 publisher overall in North America and Europe for the calendar year.(3)
  • Activision Blizzard was the #1 publisher in North America on the Xbox® 360, PlayStation® 3 and PC collectively for the calendar year.(4)
  • Blizzard Entertainment’s World of Warcraft: Cataclysm, which was launched on December 7, 2010 , sold through more than 3.3 million copies worldwide during its first 24 hours of release, making it the fastest-selling PC game of all time. It continued to sell through more than 4.7 million copies in its first month.(5)
  • As of December 31, 2010 , more than 12 million gamers worldwide are subscribed to play Blizzard Entertainment’s World of Warcraft.(6)
  • For the December quarter, in North America and Europe, Call of Duty: Black Ops was the #1 best-selling console title in dollars ever during a single quarter and the Call of Duty franchise was the #1 franchise overall.(3)
  • In November 2010 , Call of Duty: Black Ops became the first video game ever to surpass $650 million in retail sales in its first five days of release.(2) To date, the game has achieved more than $1 billion in retail sales worldwide.(3)
  • As of January 31, 2011 , total unique gamers playing Activision Publishing’s Call of Duty: Black Ops increased by more than 49% over the number of total unique gamers that played Call of Duty®: Modern Warfare® for the first three months after each game’s release.(7)
  • On February 1, 2011 , Activision Publishing released Call of Duty: Black Ops First Strike, the first add-on pack for Call of Duty: Black Ops, on Xbox LIVE®. The map pack set new Xbox LIVE records with more than 1.4 million downloads in the first 24 hours, an increase of more than 25% over last year’s Call of Duty: Modern Warfare 2 Stimulus Package.(7) The map pack also will be available on the PlayStation® 3 computer entertainment system on March 3, 2011 and on the PC later in the quarter.

Company Outlook

Activision Blizzard will continue to invest its capital and resources in the significant opportunities afforded by online gaming worldwide and will reduce its exposure to low-margin and low-potential businesses. In 2011, the company will allocate the majority of its resources and focus toward opportunities which we expect will afford us the greatest competitive advantages and the greatest potential for best-in-class quality, high-margin digital growth, and long-term success. These opportunities include Blizzard Entertainment’s games currently in development, robust investment in forthcoming Call of Duty titles, the development of a best-in-class digital community surrounding the Call of Duty franchise, a new property from Bungie and an innovative new universe with broad appeal that will be revealed at Toy Fair later this week and will bring the world of toys, video games and the Internet together in an unprecedented way. These investments should better position Activision Blizzard for long-term growth and enable it to continue expanding its position as the largest digital publisher.

At the same time, due to continued declines in the music genre, the company will disband Activision Publishing’s Guitar Hero business unit and discontinue development on its Guitar Hero game for 2011. The company also will stop development on True Crime: Hong Kong™. These decisions are based on the desire to focus on the greatest opportunities that the company currently has to create the world’s best interactive entertainment experiences.

For calendar year 2011, Activision Blizzard expects GAAP net revenues to be $3.95 billion and GAAP earnings per diluted share to be $0.56 . On a non-GAAP basis, the company expects net revenues of $3.9 billion and non-GAAP earnings per diluted share to be $0.70 for the calendar year. Since Blizzard Entertainment has not confirmed a launch date for its next global release, the company’s calendar year outlook at this time does not yet include a new game from Blizzard in 2011.

For the first quarter of 2011, Activision Blizzard expects GAAP net revenues of $1.28 billion , and GAAP earnings per diluted share of $0.28 . The company’s first quarter GAAP earnings per diluted share outlook includes the impact of between $0.02 – $0.03 of expenses related to the restructuring. On a non-GAAP basis, the company expects net revenues of $640 million and $0.07 earnings per diluted share for the first quarter.

Activision Blizzard’s financial outlook is subject to significant risks and uncertainties, including declines in demand for its products, competition, the effectiveness of the company’s restructuring efforts, fluctuations in foreign exchange and tax rates, and counterparty risks relating to customers, licensees, licensors and manufacturers.

The company’s outlook is also based on assumptions about sell-through rates for its products, and the launch timing, success and pricing of its new slate of products. Current macroeconomic conditions increase those risks and uncertainties. As a result of these and other factors, actual results may deviate materially from the outlook presented above.

Board Authorizes Stock Repurchase Program and Declares Cash Dividend

Activision Blizzard today announced that its Board of Directors has authorized a new stock repurchase program under which the company can repurchase up to $1.5 billion of the company’s outstanding common stock. This program replaces the company’s $1 billion stock repurchase plan program authorized in February 2010 , which expired on December 31, 2010 . As of December 31, 2010 , Activision Blizzard had purchased an aggregate of 86 million shares of its common stock for approximately $966 million under the 2010 program.

The Board of Directors also declared a cash dividend of $0.165 per common share payable on May 11, 2011 to shareholders of record at the close of business on March 16, 2011 . This is the company’s second-ever cash dividend and it represents a 10% increase over its first-ever dividend that was issued in 2010.

Conference Call

Today at 4:30 p.m. EST , Activision Blizzard’s management will host a conference call and Webcast to discuss the company’s results for the quarter and year ended December 31, 2010 and management’s outlook for 2011. The company welcomes all members of the financial and media communities and other interested parties to visit the “Investor Relations” area of www.activisionblizzard.com to listen to the conference call and view a brief supporting slide presentation via live Webcast or to listen to the call live by dialing into 877-397-0292 in the U.S. with passcode 8890647.

Non-GAAP Financial Measures

Activision Blizzard provides net revenues, net income (loss), earnings (loss) per share and operating margin data and guidance both including (in accordance with GAAP) and excluding (non-GAAP) the following items: the impact of the change in deferred net revenues and related cost of sales with respect to certain of the company’s online-enabled games; expenses related to share-based payments; Activision Blizzard’s non-core exit operations (which are the operating results of products and operations of the historical Vivendi Games, Inc. businesses that the company has exited or substantially wound down); costs related to the business combination between Activision, Inc. and Vivendi Games, Inc. (including transaction costs, integration costs, and restructuring activities); expenses related to the restructuring of our Activision Publishing operations; the amortization of intangibles and impairment of intangible assets; and the associated tax benefits.

Management believes that the presentation of these non-GAAP financial measures provides investors with additional useful information to measure Activision Blizzard’s financial and operating performance because they facilitate comparison of operating performance between periods and help investors to better understand the operating results of Activision Blizzard .

Internally, management uses these non-GAAP financial measures in assessing the company’s operating results, as well as in planning and forecasting.

Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. Activision Blizzard recognizes that there are limitations associated with the use of these non-GAAP financial measures.

Activision Blizzard’s non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles, and the terms non-GAAP net revenues, non-GAAP net income, non-GAAP earnings per share, and non-GAAP operating margin do not have a standardized meaning. Therefore, other companies may use the same or similarly named measures, but exclude different items, which may not provide investors a comparable view of Activision Blizzard ‘s performance in relation to other companies.

Management compensates for the limitations resulting from the exclusion of these items by considering the impact of the items separately and by considering Activision Blizzard’s GAAP, as well as non-GAAP results and outlook and, in this release, by presenting the most comparable GAAP measures directly ahead of non-GAAP measures, and by providing a reconciliation that indicates and describes the adjustments made.

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