Activision Posts Lower Sales, Profits As ‘Call of Duty’ Slumps

Activision Blizzard posted declining revenues and profits in its first-quarter earnings report Monday, as the video game publisher coped with its flagship “Call of Duty” franchise underperforming as well as pandemic-induced delays to its release of other popular titles.

The Santa Monica-based company reported a roughly 22% drop in total sales, to $1.77 billion, compared to first quarter of 2021—citing lower-than-expected sales for “Call of Duty: Vanguard,” its latest entrant in the popular “Call of Duty” first-person shooter series. Activision’s profits saw an even bigger decline, falling 36% from the year-earlier period to $395 million.

While “Call of Duty” is usually one of Activision’s highest-performing franchises, the latest “Call of Duty: Vanguard” installment, released last fall, has failed to retain fans’ favor. Activision said the franchise generated lower net bookings on both console and PC last quarter, contributing to a nearly 29% year-on-year decline in the company’s total net bookings, to $1.48 billion.

The disappointing earnings come as Activision seeks to get its $69 billion merger with Microsoft, announced in January, over the line. (The transaction, which is still subject to clearance by antitrust regulators, has been approved by the boards of both companies and is expected to close by mid-2023, Activision said.) It also faces challenges including an ongoing union dispute, investigations from state and federal authorities into an allegedly toxic workplace culture, sexual harassment lawsuits from current and former employees and, most recently, insider trading probes involving controversial CEO Bobby Kotick.

Activision also continues to deal with the fallout from the pandemic, which may have boosted the gaming sector at large but has also pushed back release windows for key franchises like “World of Warcraft,” “Diablo” and “Overwatch,” contributing to the drop in sales. Usually, if a “Call of Duty” game underperforms, Activision has other new titles to lean on—but it still has no release date for two of its most-anticipated releases, “Diablo 4” and “Overwatch 2.”

The company cited the Warcraft franchise’s “product cycle timing,” in particular, as contributing to the drag on its Blizzard division’s earnings, but said the current second quarter “represents the start of a period of planned substantial releases across Blizzard’s portfolio.”

Those include “Diablo Immortal,” a free-to-play title geared mostly toward mobile devices that will be released on June 2. Activision’s mobile gaming business was a rare bright spot in its first-quarter report—with mobile platform revenues up 10% year-on-year, to $807 million, and comprising a growing 46% share of its total sales. The company’s “Candy Crush” title remained the top-grossing mobile game franchise in U.S. app stores for the 19th consecutive quarter, it said.