05May

Activision Blizzard Q1 2020 Financial Results Transcript

Daniel Alegre: I am glad to be with you all for my first earnings call as COO, and really proud to be part of a company so deeply connected to its mission during this really challenging time.

I want to start by first expressing my deepest sympathies to all those affected by this health crisis, and expressing thanks on behalf of the entire company to all those on the frontlines of the battle against the COVID pandemic.

I would also like to thank our employees for their commitment to our players and to each other — particularly under such a unique, and difficult environment we are currently living in; but before I discuss our recent operational highlights, I would like to share with you my focus and priorities. They are simple: execution, execution, and execution.

We have great franchises, and we will get back to what we are known for: superb execution.

As Bobby said, the health and safety of our employees, and their families, remains our priority.

I would like to expand on the measures we are taking to keep our employees, and their families safe; and address our expectations for our development pipeline for the remainder of the year.

All our offices had moved to work-from-home environments by mid-March, and we are fortunate to have had very few cases of COVID-19 across the company.

Now we are ensuring our employees and their family members are receiving the best possible care; and we are covering all costs of testing and treatment for affected employees, and their families.

We have increased access to tele-health resources, and contracted private doctors, and medical support in regions where employees live and work.

We have had additional services to our already best-in-class health benefits, and ensured that employees have access to the mental and physical well-being; and the support they need while at home; and we are continuing to find other ways to support our employees, and their families, including services to help families balance work and home life.

Now turning to development, the digital nature of our content means our creative talent can continue to work on our product pipeline from home. Although the shift to remote working does add complexity and challenges in some areas of the game development process, including: creative collaboration, motion capture, voiceover work, localization, and quality assurance — we are implementing mitigation measures to each, and to address each of these areas.

Importantly, based on the work to date, we still expect to deliver a robust slate of content over the remainder of the year.

This includes the next premium release of Call of Duty, 2 titles based on library IP from Activision, the World of Warcraft: Shadowlands expansion, regional testing for new mobile titles, and ongoing live operations across our key franchises.

Regardless of location, our teams remain focused on executing against our four strategic growth pillars, as Bobby has laid out:

  1. Delivering a strong consistent cadence of major new content releases.
  2. Driving live operations with ongoing in-game content, services, features, and events
  3. Expanding King’s industry leading mobile success; and extending our acclaimed console and PC franchises to mobile.
  4. Building new engagement models around our franchises, including advertising, eSports, and consumer products.

Now more than ever, new and existing players are looking for connection through epic entertainment; and our mission is to make that available to them in whatever form they find most convenient.

Now turning to our first quarter results. We saw continued momentum for World of Warcraft, and better than expected results for other key franchises in the second half of March, as populations sheltering at home in many of our key regions turned to our content for entertainment and social connection.

These trends have continued so far in the second quarter, with business performance accelerating further in April.

MAUs were 32 million in Q1 with each of Blizzard’s key franchises experiencing a month-on-month increase in reach in March. World of Warcraft continued its strong momentum in the quarter as a team continue to deliver more content between expansions than ever before.

Having doubled its active community in the second half of last year, the number of players on monthly or longer term subscription plans increased further in Q1.

Reach and engagement were particularly strong as regions introduced shelter-at-home measures through the quarter, with momentum increasing further in April.

The community continues to engage deeply in World of Warcraft Classic — a recreation of our original WoW from 15 years ago, which has delivered substantial content drops in recent months, and has much more to come later in the year.

Reach and engagement also increased for modern WoW, which again received a major content drop in Q1; and this increased activity drove accelerating pre-sales of Shadowlands, the next expansion from modern WoW, which is slated for the second half of this year.

Hearthstone continues to deliver improved engagement trends in the first quarter, driven by the launch of the new Battlegrounds’ auto battler mode in November, and strong execution in live operations.

Overwatch also experienced a meaningful increase in engagement in March, as its latest seasonal event coincided with stay-at-home effects, and fans continue to engage with the franchise through the Overwatch League, which successfully moved to online play and remote production during the quarter.

And finally, Diablo Immortal is shaping up very well. We remain on track to begin regional testing for the game in the middle of the year.

So in summary, we entered the year with strong momentum in some of our biggest franchises, which only increased further through the quarter.

Our employees are showing remarkable dedication as they take on the responsibility of delivering the highest quality content to our expanded communities; and I couldn’t be more excited to be part of this great and dedicated global team.

I am focused on executing on our priorities as we deliver against the substantial opportunity to extend our largest IP across new platforms, geographies, and business models, and work on the strongest pipeline in our company’s history.


ACTIVISION BLIZZARD Q1 2020 TRANSCRIPT
SummaryTranscript (Part 1)Transcript (Part 2)Transcript (Part 3)Q&A

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