Activision Blizzard released their Q2 2023 financials this morning, and while it's not all rosy for the company, there are some pretty big milestones for the publisher, namely surrounding the release of Diablo 4.
Overall, Activision Blizzard saw its net bookings grow 50% year over year, driven largely by the launch of Diablo 4 this quarter. Operating income for the company was also up year over year, seeing $590 million in operating cash flow compared to 198 million in Q2 2022.
"For the quarter ended June 30, 2023, Activision Blizzard’s net revenues presented in accordance with GAAP were $2.21 billion, as compared with $1.64 billion for the second quarter of 2022. GAAP net revenues from digital channels were $2.01 billion. GAAP operating margin was 26%. GAAP earnings per diluted share was $0.74, as compared with $0.36 for the second quarter of 2022. On a non-GAAP basis, Activision Blizzard’s operating margin was 32% and earnings per diluted share was $0.91, as compared with $0.48 for the second quarter of 2022."
Breaking down each of the major segments of ABK, Activision's revenue grew 17% in the second quarter, driven primarily by Call of Duty. Activision states that Call of Duty: Modern Warfare 2's Season 3 is its "highest-grossing" season, mostly because of "gameplay enhancements and the new BlackCell battle pass offering."
Candy Crush developer King grew its revenue by 9% year over year thanks to its mobile game performance. Candy Crush saw in-game net bookings increase by 10% year over year as well, thanks in part to its Candy Crush All Stars tournament.
Blizzard had a banner quarter, with Diablo 4 driving the bus for the company since its launch in early June. In today's financial disclosure, ABK states that Blizzard had its first $1 billion net bookings quarter thanks to Diablo 4's record-setting launch. According to the release, Blizzard's segment revenue grew 160% year over year, and its "operating income more than tripled" in the same period.
Diablo 4 also saw 10 million players in June, eclipsing over 700 million hours played before the quarter ended on June 30th. This has apparently spilled into Diablo Immortal, which Blizzard states has seen "increased engagement," with its net bookings reaching its highest levels in June since January 2023.
However, Overwatch seems to be struggling more than other games in Blizzard's lineup, with the company admitting that the player base has declined again. This could be due to the lukewarm reception to the news that the promised PvE modes that Overwatch 2 sold players on back during its initial announcement were no longer coming. However, there will still be PvE story missions to play, coming with Overwatch 2: Invasion on August 10th.
World of Warcraft also saw higher subscriber retention this quarter than "at the equivalent stage of recent Modern expansions," though Blizzard didn't give any specific numbers on this statement.
However, despite its record performance with Diablo 4, monthly active users for Blizzard, and ABK as a whole, were down again this quarter. It's not as drastic as Q1 2023's 40% drop compared to Q4 2022, but it is lower overall, with Blizzard seeing 26 million MAUs in Q2 2023 (compared to 27 million MAUs in Q1). Despite the lower numbers, Blizzard still reached the $1 billion net bookings this quarter, which means player spending has not decreased with the MAUs.
It'll be interesting to see if this trend continues as updates and new seasons launch for Diablo 4, Overwatch and the eventual hardcore servers for World of Warcraft Classic in the next quarter. Also, with the recent news that Blizzard is bringing some of its games to Steam, it could see a bolster from tapping into another PC marketplace.
