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Activision Blizzard (NASDAQ:ATVI) have released their earnings for the quarter ending June 30, 2021, and at least financially, it was another good three months for the company. Acti-Blizz delivered $2.3 billion in net revenue in Q2 (their fiscal year coincides with the regular calendar year), above the $2.14 billion they were expecting. GAAP earnings per share for Q2 were $1.12, above guidance and the $0.75 investors were expecting. Activision Blizzard stock has jumped nearly 7 percent in after-hours trading following the positive financial report.
The Elephant in the Room
Of course, the specter hanging over the Activision Blizzard’s Q2 earnings report and subsequent Q&A are the allegations of workplace discrimination that have come to light over the past week. California’s Department of Fair Employment and Housing (DFEH) has filed suit against Activision Blizzard, alleging widespread gender-based discrimination and sexual harassment at the Call of Duty and World of Warcraft publisher. Activision Blizzard’s official response to the suit accuses the DFEH of “distorted […] and false” descriptions and insists the picture painted is “is not the Blizzard workplace of today.” An open letter objecting to the official response was signed by thousands of current and former Acti-Blizz employees, and a walkout was staged on Wednesday. Acti-Blizz CEO Bobby Kotick would eventually apologize for the company’s initial response, calling it “tone deaf.” Earlier this morning it was announced Blizzard president J. Allen Brack is being replaced by relative newcomers to the studio, Mike Ybarra (previously of Microsoft) and Jen Oneal (former leader of Vicarious Visions).
Throughout Activision Blizzard’s Q2 press release and subsequent earnings call, CEO Bobby Kotick and other leaders took pains to repeatedly ensure investors and fans discrimination and harassment have “no place” at the company, and that they’re reviewing policies, procedures, and management following the allegations. It was largely what we’ve already heard, although Kotick took a stronger stance than in the past, strongly hinting we may see more terminations going forward, including for management that facilitated or ignored abuse, regardless of whether they personally engaged in it.
Will Blizzard Weather the Storm?
Another theme of Acti-Blizz’s Q2 earnings report and call were continual reassurances about the future of Blizzard, which has been the subject of much speculation given years of sub-par productivity and the most recent round of controversy. In addition to new leaders Mike Ybarra and Jen Oneal, Bobby Kotick was eager to point out that Blizzard co-founder Allan Adham was back with the studio and in charge of new project incubation. For her part, Blizzard’s new co-president Jen Oneal insists the studio will be applying its passion for creativity to solving its workplace problems.
Blizzard had 26 million monthly active users (MAUs) in Q2, down slightly from 27 million in Q1. It remains to be seen what affect the current bad publicity may have on that, although Acti-Blizz is promising the next 18 months will be “very significant” for WoW content releases. Allan Adham provided some more specific details about what Blizzard has in the works, including a “few” new games that have yet to be revealed…
Call of Duty to the Rescue as Usual
Despite the turmoil currently engulfing Activision Blizzard, the company remains confident about this year’s Call of Duty offering, which they confirm will take place in a setting fans “know and love.” Here’s what Activision Blizzard president Rob Kostich had to say about this year’s premium CoD title (rumored to be titled Call of Duty WWII: Vanguard) and Warzone updates.
Activision Blizzard Outlook
Despite the company’s ongoing PR nightmare, Activision Blizzard have nevertheless adjusted their future outlook upward, as they’re now expecting revenue of $8.52 billion from FY 2021, up from their previous outlook of $8.37 billion. That said, they company does acknowledge their current cultural reckoning could result in “prolonged periods of adverse publicity, significantly reduced productivity, or other negative consequences” that could result in their business being “adversely affected.”
Is Activision Blizzard serious about addressing workplace discrimination and harassment? Will the solutions and assurances they’ve offered make any real difference? Financially speaking, does it really matter, or will the company be allowed to coast on the success of Call of Duty with the blessing of investors and fans alike? Activision Blizzard remains a reliable money-making machine for now, but its future remains uncertain regardless of what the company’s executives say.
