Activision Blizzard (ATVI) 2Q16 Earnings Call Notes

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The rise of esports feeds into ATVI’s model of strong franchises capable of retaining audiences year after year

“Our esports and film and TV initiatives are not only a driver of audience expansion, but drive deeper engagement which will lead to longer franchise lives with greater profitability. First, on esports. Last year, BlizzCon had its highest livestream viewership ever with over 10 million people around the world tuning in, higher than the viewership for this year’s NBA and MLB All Star games. This November, Blizzard will be hosting its tenth BlizzCon. One of the biggest attractions there will be the culmination of the Road to BlizzCon tournaments with global champions across a number of franchises being crowned, including the champion for the just-announced Overwatch World Cup.” Thomas Tippl – Chief Operating Officer

 

Pokemon Go’s success in bringing in more players to mobile may present an opportunity to ATVI

“In terms of learnings, Pokémon Go has been very successful in expanding the mobile games audience. They have brought the large Pokémon fan base to mobile. And I believe this is very good for the whole gaming industry. What it has also proven is that when you pair innovation to very strong branded IP, there is a huge potential. And so I think this is actually very good, and it’s a great opportunity for Activision Blizzard on mobile.” Riccardo Zacconi – Chief Executive Officer & Executive Director, King Digital Entertainment Plc

 

Strides in digital and digital in-game sales bode well for margins

“The first is just the trend that we’re going to continue to see around the shift from retail to digital on full game sales, and that will continue. But even more importantly and a bigger driver as you saw in Q2 is the deeper player investment that we see once we have players inside of our experience and new opportunities to add micro-transactions, advertising, other things into those experiences, which are all really contribution margin and accretive to the overall margin of the company.” Dennis M. Durkin – Chief Financial Officer

 

Hopes for esports are very high

“Having said that, more people are spectating on video games than ever before. There are more opportunities for spectators than ever before. The live event competitions are providing greater prize pools, greater recognition, greater opportunities for players. And we think that this is one of the areas that’ll present great opportunities for us for the long-term. Getting from here to a place that will allow our franchises to resemble the NFL, the NBA, Major League Baseball, is going to take some time, but I could tell you the best minds of the company, the people who are in this room are all committed to continuing the efforts that we’ve made.” Robert A. Kotick – President, Chief Executive Officer & Director