How Activision Blizzard Makes Money: Console, PC, and Mobile games

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Activision Blizzard Inc. (ATVI) is a global entertainment holding company that develops and publishes interactive video content and services. It’s best known for franchises including World of Warcraft, Call of Duty, StarCraft and Bubble Witch. Founded in 2008 from merger of Activision Inc. and Vivendi Games, the company develops and distributes its video games and services on game consoles, personal computers (PCs), and mobile devices. Activision Blizzard also operates eSports leagues and sells digital advertising.

The company faces competition from other interactive entertainment companies, as well as competitors that provide other forms of entertainment, including film, television, social networking, music, and other types of consumer entertainment. Activision Blizzard’s biggest competitors within the gaming industry include Microsoft Corp. (MSFT), Sony Corp. (SNE), and Nintendo Co. Ltd. (7974).

Key Takeaways

  • Activision Blizzard develops and publishes interactive entertainment for use on video game consoles, PCs, and mobile devices. It also operates eSports leagues.
  • The Activision segment, which develops and sells video games, is the company’s biggest revenue and profit generator.
  • The company is focusing on sharply expanding revenue from its eSports offerings and advertising.
  • Activision Blizzard’s Average Monthly Active Users rebounded in late 2019, helping MAU to rise nearly 15% for the year.

Activision Blizzard’s Financials

Activision Blizzard’s revenue and net income has been highly volatile in recent years, fueled by changing U.S. tax laws and stiffening competition from a growing number of well-financed, large rivals. The company posted net income of $1.5 billion on $6.5 billion of revenue in fiscal year (FY) 2019, which ended December 31. Net income declined 18.7% partly due to lower revenue, which fell 13.5%. The decline in net income was partly due to artificially-inflated net income growth in FY 2018 related to the 2017 U.S. Tax Reform Act.  Net income also was volatile in FY 2018 and FY 2017.

The company’s revenue decline also was driven by lower consumer engagement with some of the company’s key franchises, including Hearthstone, World of Warcraft, and Candy Crush. The company’s disinvestment of the Destiny franchise in 2018 also was a factor.

Activision Blizzard generates revenue from three main distribution vehicles: content distributed via digital online channels accounted for 76% of total revenue; retail channels accounted for 14%; and Other sources accounted for 10%.

As for separate gaming platforms: content designed for video game consoles accounted for 30% of total revenue; PC-related content accounted for 26%; mobile and ancillary accounted for 34%, which includes non-platform-specific game-related revenues such as standalone sales of toys and accessories; and Other sources comprised 10%.

Activision Blizzard’s Business Segments

The company conducts its business through the following three segments and breaks out the revenue and operating income for each: Activision Publishing Inc. (“Activision”); Blizzard Entertainment Inc. (“Blizzard”); and King Digital Entertainment (“King”).


Activision develops and publishes interactive software products and entertainment content. The segment creates content mainly for video game consoles but its key product franchise, Call of Duty, is also available on PC and mobile platforms. The segment delivers content and generates revenue both through retail stores and online digital channels. Activision also includes revenue from activities related to its Call of Duty League, a global professional eSports league. Revenue fell 9.7% during FY 2019 to $2.2 billion, comprising about 37% of the company’s revenue. Operating income fell 15.9% to $850 million, comprising over 41% of the operating income for all segments.


Blizzard develops and publishes interactive software products and entertainment content, particularly for the PC. Its key product franchises include World of Warcraft, Diablo, Hearthstone, and Overwatch. Like Activision, it delivers content and generates revenue through both retail and digital channels. Blizzard also includes activities related to the Overwatch League, a global professional eSports league. Revenue fell 25.0% during FY 2019 to $1.7 billion, comprising nearly 29% of Activision Blizzard’s total revenue. Operating income fell 32.3% to $464 million, comprising about 23% of operating income for all segments.


King develops and publishes interactive entertainment content and services, particularly for the mobile platform, but some are distributed via PCs. Its key product franchise is Candy Crush, available for both mobile and PC users. The segment’s games are free, but players can make in-game purchases using either virtual or real currency. One of King’s growing sources of revenue is in-game advertising. Revenue fell 2.6% during FY 2019 to $2.0 billion, comprising 34% of Activision Blizzard’s total revenue. Operating income fell 1.3% to $740 million, comprising 36% of the operating income for all segments.

A note to readers that Activision Blizzard also generates some revenue and operating income from its distribution business, which is not represented as a reportable segment and falls under the company’s “Other” category. The segment breakdowns above and pie charts exclude data from this “Other” category.

Activision Blizzard’s Recent Developments

Activision Blizzard’s average monthly active users (MAUs) plunged sharply for the first three quarters of 2019 and then rebounded in the last quarter. They rose 14.9% year-over-year (YOY) to 409 million in FY 2019. MAUs is one of the company’s key measures for gauging the overall size of its user base. The company attributed the boost to the October 2019 launch of Call of Duty: Mobile and Call of Duty: Modern Warfare.

Source: Investopedia

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