Earnings Calendar Jul & Aug 2017: Gaming, Media & Tech Companies

July 25, 2017August 4, 2017 DomsPlaying1 Comment

Welcome back friends! Time to get excited for numbers, and charts, and graphs. Lots of ’em.

This post is a little later than usual as the “quarterly earnings season” is already well underway, but there’s still plenty of companies within tech and gaming that have yet to announce how their business have been faring during the past few months.

Per usual, above you’ll see a full calendar of public companies and the dates on which earnings results are posted. Then below is a link to a Google Doc containing this same information for easy access to investor relations websites for your viewing pleasure.

Working Casual Earnings Calendar Jul & Aug 2017: Gaming, Media & Tech Companies

Some companies on my radar this quarter are as follows:

Amazon $AMZN: The massive online retailer based in the States announced its whopping $13.7 billion acquisition of grocer Whole Foods $WFM in June, so it may provide some sort of update on the status of this deal when it reports this Thursday, July 27th. The deal itself is a key development in the retail space as it cross over between digital and brick-and-mortar sellers, however that’s part of the reason it’s under continued scrutiny from the U.S. government and no formal approval has been given thus far.

Take-Two Interactive Software, Inc. $TTWO: The owner of studios Rockstar and 2K Games has seen growth lately based on the ongoing success of Grand Theft Auto V, in particular its online component. However, GTAV released all the way back in 2013, plus Take-Two doesn’t have any triple-AAA game releases this year now that Rockstar’s widely-anticipated Western Red Dead Redemption 2 was delayed. In an interview recently with GamesIndustry Biz, CEO Strauss Zelnick acknowledged the thin release schedule and commented that ideally the company would release more big titles on a regular basis. I don’t think we’ll hear much in terms of RDR2 status other than it’s still in the development phase, but the company needs to reassure investors that its line-up can support big gaps between Rockstar’s heavy-hitting games.

Activision Blizzard $ATVI: Activision Blizzard reports on Thursday, August 3rd and is in arguably the best position this year of all the major worldwide video game publishers. Blizzard’s multiplayer hero shooter Overwatch continues its widespread appeal more than a year after release, surpassing 30 million registered players and transitioning to a viable eSports franchise with the announcement of the Overwatch League this month. The company’s Crash Bandicoot N. Sane Trilogy, released in late June, is vastly exceeding expectations as it was the best-selling game in the world during its release month. Not to mention upcoming releases, where Activision boasts two games with huge upside that I believe will end up in the Top 5, if not Top 3, games by sales this year: (the Game of the Year contender and what might be the best game this generation if it was up to me, hah) Destiny 2, out September 6th, and Call of Duty: WWII, releasing on November 3rd. Oh, and it also now has fully integrated King Digital into its structure so it has significant mobile exposure too.

Vivendi SA $VIV: Lastly, as I’ve noted in the past, whenever French media firm Vivendi reports, there’s the potential it could formally announce a bid to purchase Ubisoft Entertainment SA $UBI, which has already reported stellar results itself for its last fiscal year. As of Vivendi’s latest annual report, it now owns 26.8% of Ubisoft’s outstanding shares, meaning that my prediction the acquisition will not happen anytime soon less and less likely by the quarter.

Thanks as always for checking out the calendar and my thoughts on some of the companies on the list. Any announcements you’re looking forward to in particular? Will the publisher of your most-anticipated game this year

-Dom

Sources: Company Investor Relations Websites/Press Releases, MarketWatch, GamesIndustry Biz, Business Wire.

2016 Year-In-Review: Top 3 Impactful Deals of the Year

January 4, 2017 DomsPlaying

During this Year-In-Review post, I wanted to acknowledge some of the merger and acquisition activity impacting the sectors I cover.

The following are three of the most “impactful” deals of 2016, which will lead the involved companies into growth areas for 2017 and beyond. Two of them revolve around mobile gaming companies and the last involves a major wireless firm with a media conglomerate in one of the largest mergers announced last year.

In chronological order, here are three of the deals that impacted gaming, media and technology markets in 2016:

February: Activision Blizzard completes its purchase of King Digital Entertainment PLC for $5.9 billion, allowing the major game and software publisher exposure to the ever-growing mobile market via the Candy Crush series in particular.

June: Chinese tech giant Tencent announced it is set to purchase Supercell for $8.6 billion, further strengthening its mobile dominance and expanding to markets outside of Asia with the Clash of Clans franchise among others.

October: AT&T agrees to purchase Time Warner Inc for a monumental $85.4 billion, establishing the wireless giant as a gargantuan media conglomerate with not only ownership of physical and digital distribution channels but content creators themselves such as CNN, HBO and Warner Bros.

Sources: King Digital Entertainment PLC, Supercell, Time Warner Inc, Wall Street Journal

-Dom

2016 Year-In-Review: Top 5 Influential Gaming Companies of the Year

January 3, 2017 DomsPlaying

Back again with another 2016 Year-In-Review post!

This time, let’s keep it a bit free form. I wanted to post about some of the companies that have influenced my gaming habits this year, or those that have had significant impact on the industry as a whole.

So, in alphabetical order, here are five of the most influential companies in gaming for 2016 and a quick note about each. Which companies, developers or publishers influenced your habits this year?

Activision Blizzard, Inc.

Annual Revenue: $4.6 billion

Major public publisher produced some of the year’s most recognizable and top-selling games, including Call of Duty: Infinite Warfare, World of Warcraft: Legion expansion and newcomer Overwatch.

Bethesda Softworks (Subsidiary of ZeniMax Media)

Annual Revenue: $89.2 million (Parent Company)

Independent, private publisher responsible for various notable titles in 2016, in particular: id Software’s DOOM and Arkane Studios’ Dishonored 2.

Electronic Arts

Annual Revenue: $4.4 billion

Along with its usual annual sports titles, which it continues to support with “Ultimate Team” fantasy-type modes, EA produced a pair of notable FPS games: the resurgent title in the Battlefield series, Battlefield 1, and critical darling Titanfall 2.

Sony Corp

Annual Revenue: $72.1 billion

Sony manufactures what continues to be the highest-selling console this generation, the PlayStation 4, which saw an upgraded “Pro” version in 2016 plus the firm launched its foray into virtual reality with the PlayStation VR headset.

The Pokémon Company & Niantic, Inc.

Annual Revenue: NA

TPC and Niantic were responsible for the year’s biggest gaming phenomenon in Pokémon GO, not to mention the former published two new entries in the Pokemon handheld franchise late in 2016 in Pokémon Sun and Moon.

-Dom

Introducing: Casual Friday, August 5th, 2016

August 5, 2016August 5, 2016 DomsPlaying

Isn’t Friday just the best?

In honor of the greatest day of the week, I am happy to introduce a new weekly article series dubbed Casual Friday (of course)! During Casual Friday, I’ll make a few notes about items or stats or really just anything around the industries I cover that we might have missed during the busy week. I often post such tidbits on Twitter, but this is the best place to view them as it will be in a round-up fashion.

With that said, the highlights this week are as follows:

Electronic Arts (EA) CFO Blake Jorgensen said on the company’s earnings call this week that the original Titanfall game, released in 2014 on Xbox platforms, sold 7 million units. This sales figure was previously (incorrectly) reported as 10 million based on a tweet by Vince Zampella, studio head of developer Respawn Entertainment. Many like me had been waiting for a clarification on this number, especially leading into this fall when the sequel Titanfall 2 is set to release but this time on both Xbox and PlayStation platforms. Jorgensen says the firm expects 9-10 million units sold for the sequel.

Time Warner (TWX) reported that Season 6 of HBO’s Game of Thrones, which debuted back in April, averaged 25 million viewers per episode. This is a record number for the show. For perspective, the company also said that Game 7 of the NBA Western Conference Finals between the Golden State Warriors and the Oklahoma City Thunder, which aired on their TNT network, was the most-viewed NBA telecast of all time on cable. It had 16 million viewers.

Activision Blizzard (ATVI) revealed what most industry followers and regular gamers already assumed: Blizzard’s new hero shooter Overwatch is a huge commercial success. Since its release only three months ago, the game has amassed 15 million players, which is the earliest that any Blizzard game has hit this milestone. These players have devoted around 500 million hours to the game, and the company estimates the game has raked in a half billion dollars so far.

In an interview with GameIndustry.biz, Take-Two Interactive Software (TTWO) CEO Strauss Zelnick said that the company’s guidance for 2017 does not include any contribution from Nintendo (7978)’s upcoming hardware, code-name “NX.” This implies that the company is not developing any launch titles for NX, as the console’s release date of March 2017 corresponds to the end of TTWO’s fiscal year. No mention of NX games in the pipeline beyond next March, either.

Sega Sammy Holdings (6460) announced its Total War strategy game series has sold more than 20 million copies over its 16-year history. The latest title is this year’s Total War: Warhammer. And yes, it should have been called Total Warhammer, I agree. Golden opportunity, missed.

And finally, it wouldn’t be an article in the summer of 2016 if I didn’t mention Pokemon GO! According to SurveyMonkey Intelligence, 63% of Pokemon GO players are women. Niantic & The Pokemon Company’s super-duper-megahit is most popular among folks ages 18-29, which comprise 46% of the game’s overall player base. Oh, and a Japanese Olympian racked up around $5,000 in data charges playing the game in Brazil. Now that’s addictive!

Any tidbits or topics that caught your eye this week? Leave a comment if so, and as a reminder you can now subscribe to email alerts by signing up in the sidebar to the right.

-Dom

Bottom Line: What is Activision Blizzard’s Actual Business Mix After KING Acquisition?

May 5, 2016 DomsPlaying1 Comment

Now that Activision Blizzard, Inc. (ATVI) today has reported its first quarterly earnings since its acquisition of King Digital Entertainment PLC (KING) in February, how does its business mix actually look now and does this indicate potential upside going forward?

I predicted a few weeks back that based on KING’s financials, the combined firm’s Mobile segment would now comprise approximately a third of revenue, operating income and distribution channels (latter of which is the means by which customers purchase its products). This would mean that after Activision Publishing, Inc., the firm’s interactive entertainment and games segment that produces titles like Call of Duty and Skylanders, its new KING unit would be the next-largest contributor to overall business. Note that KING is the maker of mobile games like Candy Crush and Farm Heroes. I wasn’t exactly right about this, yet, but keep reading below to see details.

Additionally, I noted that the post-acquisition geographical breakdown would be interesting to see as the two companies presented these classifications differently. After looking at operating units, we will peek at what locales are driving the firm’s new business structure as well.

The results are in for this past quarter, and revenue plus income figures across its units are as follows:

For context, I have tabled these actual numbers against my predictions and earlier years below. Note that the earlier figures are fiscal, and they account for KING’s earlier financials inserted alongside ATVI’s original businesses, so focus on the percentages instead of the totals as a comparison:

You’ll see that my estimates were a bit high, at least for now, as actual revenue contribution by KING is 23% while it accounts for almost 27% of income. I still think that over the next three quarters, this could increase to a third of ATVI’s overall business as mobile grows and Blizzard potentially stagnates. Unless Blizzard’s online FPS Overwatch (releasing 5/24) performs extremely well, but that’s a discussion for a different day.

Now I will present the same exact values as charts showing the percent of each in the context of the overall business. Again, everything prior to 2016Q1 is an illustration using KING’s financials inserted, as was done above:

The next shot is an overview of Distribution Channels from the earnings report. Quick reminder that this is how consumers purchase content and services provided by ATVI:

Below are these actual distribution numbers compared with earlier fiscal numbers. Basically, these are as expected though I believe Mobile is now included in Digital which accounts for the bump:

One more perspective which I did not have in my earlier article is revenue by platform. I think it’s especially relevant now after KING’s contribution. You’ll see console is still the dominant platform at 53% of sales:

As for geographical profile, a quick snapshot shows that North America is still the main contributor followed by Europe:

My last comparison across years, this time for percentages from different geographies:

What these figures tell me overall is that despite KING/Mobile still being a smaller contributor than I initially anticipated, I still think it’s a key strategy going forward as its upside is more than Blizzard’s. Digital is already the main means by which consumers purchase the publisher’s games and services, so its diversification into Mobile as an additional revenue source and channel is a natural progression of its business model as a broad software publisher. This is especially relevant given my expected future decline of Blizzard subscriptions and traditional physical retail sales of ATVI’s games and software. And based on its stock price movement since the acquisition’s February close, where its shares are up more than 10%, investors seem mostly positive on this move as well.

In my opinion, the $5.9 billion bet on an expansion into mobile via KING is a crucial one despite its high cost. At the current rate of earnings (around $270 million per year, given this quarter’s performance), the breakeven on its KING investment is something like 22 years. However, this is conservatively assuming mobile does not grow; I think it will, which will move up that breakeven point. It will still be well worth it in the long-run. as the company diversifies its revenue streams and continues to finance more traditional projects such as console games (for instance new Call of Duty, Destiny titles) and full-price or subscription-based Blizzard entries (Overwatch, potentially new World of Warcraft content) to keep its core fanbase intact.

(Note that I do not know about any new Call of Duty, Destiny, Overwatch or World of Warcraft content other than what’s already been publicly announced. I’m just stating that new projects can be financed through sales of mobile games now that KING is assimilated into the ATVI structure.)

Do you agree that a foray into mobile was essential for ATVI, or should it have built organically from within and focused on core business such as console and subscription-based gaming platforms?

Sources: Activision Blizzard, Inc., Google Finance

-Dom

Bottom Line: How Will King Digital Acquisition Impact Activision Blizzard’s Business Mix?

April 13, 2016 DomsPlaying

King Logo (PRNewsFoto/King Digital Entertainment plc)

Bottom Line: Activision Blizzard, Inc. (ATVI) derived most of its overall sales and income from its Activition publishing arm prior to its recent acquisition of King Digital Entertainment PLC (KING) in February 2016, while its dominant distribution segment was digital channels and its operations were mainly in North America. Now that the deal is complete, what will be the impact on the business mix of ATVI from both an operational and geographical perspective?

Before the deal, ATVI had two main operating businesses, both well-known as industry leaders in their specific areas, and an additional catch-all category:

Activision Publishing, Inc.: Publishing interactive entertainment software products and downloadable content. Major brands include Call of Duty, Guitar Hero, Destiny and Skylanders.

Blizzard Entertainment, Inc.: Publishing real-time strategy games, role-playing games and online subscription-based games in the MMORPG category. Major brands include World of Warcraft, Diablo, Starcraft and Hearthstone.

Other: Activision Blizzard Media Networks, Activision Blizzard Studios, Activision Blizzard Distribution & Corporate Items.

You’ll see the Activision Publishing arm has been responsible for the most revenue and income for the past three years. This past year it comprised 58% of revenue ($2.7 billion) and 59% of income ($868 million), while Blizzard Entertainment constitutes 34% ($1.57 billion) and 38% ($561 million) respectively. A decline in revenue and income for Blizzard Entertainment was mostly due to bigger releases in 2014 and lower subscriber base for World of Warcraft this past year.

Taking into account KING’s latest statements, my forward-looking estimates for revenue and income including an additional business unit named “King Digital”:

King Digital Entertainment PLC: Developing and publishing mobile games and interactive entertainment, including free-to-play titles and social applications. Major brands include Candy Crush, Farm Heroes, Pet Rescue and Bubble Witch.

Using KING’s latest annual figures and aligning them with the other segments within ATVI overall, you’ll see KING could contribute around 33% of sales ($2.26 billion) and 34% of income ($768 million). This indicates that it would move into the second position in terms of contribution, right after Activision Publishing, meaning that ATVI’s mobile business will eclipse its publishing of Blizzard titles and game types. I expect this to fully continue in the future with the increase in popularity of mobile and casual gaming plus the decline in World of Warcraft subscriptions, unless Blizzard releases a new game within one or more of its established franchises.

Digging further, let’s see revenue by distribution channel which is a breakdown of how consumers are purchasing ATVI’s content. The channels before the deal are:

Retail Channels: Physical distribution of games via brick-and-morter and online retail outlets.

Digital Online Channels: Digitally-distributed games and subscriptions, licensing royalties, value-added services, downloadable content (DLC) and related microtransactions.

Other: Same items as above.

And again, my estimates for after using recent KING reports using a grouping called “Mobile Channels.”

Mobile Channels: Games, services and subscriptions distributed via mobile phones, tablets and other devices.

The trend here first is that last year, Digital Online Channels overtook Retail Channels as the leading distribution type, indicating a more widespread trend toward consumers opting to buy their software digitally. Digital Online Channels contributed 57% of revenue ($2.63 billion). If we insert KING’s revenue under the new Mobile Channels classification, then I estimate it will be the second overall distribution source at 33% of revenue ($2.26 billion). This would be a large shift away from Retail for ATVI, a bet that consumers want to consume their games digitally whether it’s on console, computers or mobile devices.

Lastly, I’ll show a quick glance at which regions are driving ATVI’s business. This is trickier to display as the companies report their geographical breakdowns differently. Before the deal, ATVI reported broad regions:

While KING classifies according to individual countries:

Which leads to a rough estimate, and definitely not a perfect one, because I have to follow KING’s reporting that lumps all countries outside of these three into Rest of World:

Still, it does the job to show that North America will continue to be the driving force behind business operations as half the firm’s sales over the past few years are from this locale.

The highlight overall is that ATVI’s $5.9 billion bet in acquiring KING is a significant shift in the company’s business mix, as its mobile business will overtake Blizzard Entertainment from a games revenue perspective and also will contribute more to revenue than the firm’s retail offerings. Geographic mix for now looks to be unchanged, but that also depends on expansion into new markets and what constitutes the Rest of World classification. By these estimates, it will take around 3 years for ATVI to recoup the almost $6 billion sales price in revenue and even sooner if mobile grows at a faster rate than the firm’s more traditional businesses.

Sources: Activision Blizzard, Inc., King Digital Entertainment PLC, United States Securities & Exchange Commission (SEC)

-Dom

Working Casual

Gaming, Media & Tech Coverage

Tag: Blizzard

Earnings Calendar Jul & Aug 2017: Gaming, Media & Tech Companies

2016 Year-In-Review: Top 3 Impactful Deals of the Year

2016 Year-In-Review: Top 5 Influential Gaming Companies of the Year

Introducing: Casual Friday, August 5th, 2016

Bottom Line: What is Activision Blizzard’s Actual Business Mix After KING Acquisition?

Bottom Line: How Will King Digital Acquisition Impact Activision Blizzard’s Business Mix?