In-Game Purchases Boosts Q1 Results For Activision Blizzard, Inc. (NASDAQ:ATVI)

Revenues of Activision Blizzard increased by close to 14% year-over-year to reach a figure of $1.97 billion. Profits for the quarter amounted to $500 million which translated to $0.65 per share. This was an increase from $426 million or $0.56 per share which was recorded in last year’s first quarter.

With these results, Activision Blizzard also managed to beat the forecasts the firm had for the quarter with revenue being greater by a figure of $145 million while profit exceeded forecasts by $0.18 per share. The gaming publisher also slightly raised the full-year outlook with revenue expected to reach $7.36 billion while profit will rise to $1.79 per share.

Monthly active players

During the quarter the number of monthly active players for the Activision brand hit a figure of 51 million. The most popular title which was credited with being the driving force was Call of Duty and particularly Call of Duty: World War II. With regard to revenues, this was the second-best first quarter that Call of Duty has ever had and was only eclipsed by the first quarter of 2016 after the launch of Black Ops III.

Despite the impressive results, Activision Blizzard has revealed that sales were being impacted by Fortnite, a shooting game which has taken over the gaming world across the globe. In a little over half a year, the Fortnite title has become a force to reckon with as it has caught the attention of millions of players across the world especially school children. In Fortnite players numbering up to 100 hang-glide to an island where they build defenses and battle it out till only one of them is left alive.

Competitive Threat

The game is available on gaming consoles, personal computers, and mobile devices. Though Fortnite is freely downloadable as well as being free to play the game which is backed by Epic Games is making money by selling in-game purchases and this includes accessories and outfits for the characters. Since it hit a peak of $77.82 earlier in the year shares of Activision Blizzard have fallen by around 15% over concerns that its popular franchises would be abandoned in favor of Fortnite. During an earnings call with analysts the chief executive officer of Activision Blizzard, Bobby Kotick acknowledged that Fortnite posed a competitive threat.

“[Fortnite] is attracting new players of all ages and gender, and it is helping gaming become even more mainstream entertainment. In the long history of our company … we are very quick to figure out how to capture inspirations from innovation,” said Kotick.

Prior to the release of the earnings there had been an error when Dow Jones Newswires inadvertently published wrong figures for Activision Blizzard for the quarter. This resulted in volatility though Dow Jones issued a correction after realizing the error.