In the second quarter, Activision brought in adjusted revenue of $1.64 billion, compared with the average analyst's forecast of $1.6 billion. Deferred sales from online purchases are excluded from adjusted revenue. The company's adjusted earnings per share were 47 cents, almost 50% lower than a year earlier and slightly below analysts' estimates.
Activision's fiscal year has been affected by the poor performance of Call of Duty Vanguard last fall. New entries in the popular Halo and Battlefield series competed with the game, which received negative reviews.
Activision's Blizzard division released Diablo Immortal, a new mobile entry in the series, during the second quarter. Diablo Immortal's launch in the world's biggest mobile app market was delayed by about a month by Activision's Chinese partner NetEase Inc. The release date was set for July 25. A revenue figure for the new Diablo game was not provided by Activision on Monday.
There has been a sluggish year for the video game industry due to hardware supply chain problems, inflation, and a lack of big hits. As people resumed outside interests and activities after the pandemic, interest in gaming also cooled off. NPD Group reports that spending in the video game industry is expected to decline 8.7% this year.
Revenue and earnings per share are expected to decline year-over-year in the second half, Activision said. The shares were up less than 1% in extended trading at $80.45.A new entry in the series, Call of Duty Modern Warfare II, will be released on Oct. 28. Bloomberg reports that the series will skip 2023.
Modern Warfare and other Call of Duty-related content will instead be released by Activision. Treyarch plans to release the next mainline game in the series in 2024. The Call of Duty video game series is Activision's most popular video game series. Over 400 million units have been sold since 2003 when the series began.
Besides Overwatch 2, Activision will also release Dragonflight, a new expansion for World of Warcraft, in early access on Oct. 4 and Overwatch 2 in early access on Oct. 5. Besides Overwatch 2, Activision will also release Diablo IV next year. Among the company's acquisitions was Boston-based Proletariat, which will contribute to World of Warcraft expansions, and Sweden-based Peltarion, which will help with artificial intelligence. As a result, it "remains aware of risks, including those related to the labor market and economic conditions."
In January, Microsoft announced its purchase of Activision. A sexual misconduct scandal had plagued Activision's shares last year, so the Xbox maker stepped in. In the months since Activision's January announcement, its stock has gained about 20%, but it is still trading well below the $85.80 offer price, indicating market uncertainty about the deal's success. Newly appointed FTC head Lina Khan plans to take a tough stance against technology mergers. Microsoft's fiscal year ends June 2023, according to Activision.