Earnings Report: Is Activision/Blizzard Going Mobile?
Activision/Blizzard reported strong second quarter earnings last night: the first full quarter after its $5.9 billion acquisition of mobile games giant King beat analyst and Wall Street expectations. The merger reportedly created the largest game network in the world, a claim backed by the latest Verto Analytics data: Activision/Blizzard boasted 41.2 million users during July 2016 (U.S. adults, 18+), putting it well ahead of Supercell (also recently acquired), EA, and Zynga, its closest competitors.
A Play for Mobile
While Activision/Blizzard is best known for titles such as Call of Duty, Diablo, and Hearthstone, top-selling MMOs in the PC and console games markets, the King acquisition was intended to boost Activision/Blizzard’s foothold in the mobile gaming space. At first glance, it appears the strategy has already paid off: Activision/Blizzard continues to have the greatest net reach (17%) compared to its competitors, and more than half of its monthly users are mobile-only.
But the company lags in stickiness (how Verto quantifies the most engaged users by comparing daily users to monthly users), and particularly in the number of monthly sessions per user and time spent per user per month. This is worrying for a company that still has a significant number of console and desktop titles, which tend to attract longer session times. And it’s even more concerning when you take a look at Supercell’s numbers – the vast majority of its users are also mobile-first or mobile only, yet it attracts a greater amount of user time spent per month and sessions per user per month – indicators of an engaged, loyal audience.
A Quick Way to the Top of the Charts
The King acquisition has also had a profound effect on Activision/Blizzard’s most popular titles; four of the top five Activision/Blizzard games (based on number of monthly users) are King mobile game titles, including three variants of the wildly popular Candy Crush franchise. In fact, the only original Activision/Blizzard game on the list is Battle.net, a single sign-on desktop app that serves as a gateway to Blizzard’s MMO titles including World of Warcraft, Diablo, and Starcraft. It’s the second most popular game based on user numbers, but comes in last in terms of average time spent per user per month and average session duration. Whatever they have planned for the future, King’s top brass may be able to teach its new management a few lessons about developing user loyalty and retention.
King’s audience also presents a new challenge and opportunity to Activision/Blizzard’s marketing and user engagement teams: a new audience. Verto data has shown the mobile games have a different user demographic than console and PC games. Casual games players in particular tend to skew older and female – in fact, Verto’s latest report on the mobile gaming industry shows that nearly 75% of Candy Crush’s adult user base is female. Activision/Blizzard may need to make major changes to the way it markets to and retains its user base.
So, Was the King Acquisition Worth the Cost?
It’s too early to say if Activision/Blizzard is actively pursuing a mobile-centric strategy moving forward (it still has a strong and large console and PC user base), but the King acquisition may certainly revolutionize their monetization efforts.
“There are tremendous opportunities for Activision/Blizzard to build a strong growth engine and pillar in mobile via King,” observes Verto Analytics CEO Hannu Verkasalo. “Based on Verto’s data, the mobile gaming audience is growing continuously, and monetization opportunities are evolving. Activision/Blizzard has boosted its role within mobile devices with the acquisition of King, which was still a cheaper acquisition for Activision than a company of similar size – Supercell – was for Tencent,” notes Verkasalo, referring to the other big mobile gaming acquisition of 2016.
Prior to the big acquisition, King CEO Riccardo Zacconi had already started looking at incorporating more mobile ads into the company’s games – something that key competitors such as Supercell had not yet implemented. “Will mobile game-driven growth in terms of audience reach and monetization continue over the next 2-3 years? That will ultimately determine whether the acquisition was worth it or not,” says Verkasalo.