So, I FINALLY opened up the ATVI 10-Q, looking for evidence of Blizzard’s alleged revenue gains for Q1 2021.
This is what I found instead:
http^s://docs.google.com/spreadsheets/d/1nRBiCWTxFfhuxq8HzOW_HfHI4cPmPWVl0Eiu_SWU80o/edit#gid=0
There are a few things to note:
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Movement in Blizzard’s segment net revenues can be tied pretty easily to World of Warcraft releases. The green for instance are the first two quarters of BFA. The orange is for Classic (with most of the bump being seen in Q4 due to release timing), and the light blue are the first two quarters of Shadowlands.
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This being said, do note that Overwatch and Hearthstone declined at the same time - this can’t be taken as a pure comparison of expansions. Looking in particular at 2018 data, it would be improper to compare it with 2020 to assess the tail end of Legion vs. BFA, because there’s more Overwatch/Hearthstone revenue in 2018 than in 2020.
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Add to that - classic in the 2020 data complicates things further. Adding classic has the effect of adding a second game on top of the first one. On balance, however, post-classic data should be stronger than pre-classic data. This can be seen in Q1 2019 through Q3 2019, which saw net revenues dip into the mid to high 300s.
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Monthly Active Users (MAUs) are still down, this time by 2 million. The financials do not disclose the reasons for this.
One thing I want to note in closing - Blizzard’s Q1 Presentation reports this with respect to World of Warcraft:
“World of Warcraft’s Shadowlands expansion continued to drive strong results following its record-setting release in November, with first quarter franchise net bookings growing sharply Y/Y. The Shadowlands expansion has built on the substantial increase in World of Warcraft’s scale seen since the launch of Classic in 2019.”
Y/Y stands for “Year over Year” - meaning that they’re comparing Q1 2021 with Q1 2020, which allows them to make statements like that, but those statements mask the dynamics of the company’s revenue trends. Release periods are expected to have higher net revenues because they are realizing a wave of returning players and box sales, and these are most appropriately compared to other release periods - rather than comparing a release period to a mid-expansion period. I can’t really say that they’re being intentionally misleading because you tend to present accounting data in this way (years are seen as ‘safe’ comparisons because you account for seasonality - which doesn’t get us to where we need to be when you’re dealing with a “hit” driven industry like video games, with the revenue trends that said industry has) - but I also saw statements like this one being carried around by the gaming press. But it IS still misleading, and suggests a picture of strength that, when I look at this, I can’t really support given that this is two games in one for a franchise that drives changes in Segment Net Revenues producing 581 and 470 versus 635 and 687.
Source for Q1 2021, previous quarters also collected from publicly available 10-K, 10-Q forms and publicly available press releases: http^s://www.sec.gov/ix?doc=/Archives/edgar/data/718877/000162828021008889/atvi-20210331.htm