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Activision Blizzard goes into the black box | This Week in Business

The Call of Duty publisher has been good at detailing its business, but that won't happen under Microsoft

This Week in Business is our weekly recap column, a collection of stats and quotes from recent stories presented with a dash of opinion (sometimes more than a dash) and intended to shed light on various trends. Check every Friday for a new entry.

As you may have heard, Microsoft finalized its acquisition of Activision Blizzard last week.

I've used this space previously to talk about why I'm not a fan of the deal given Microsoft's historical abuse of its dominant position in operating systems and its behavior whenever any kind of governmental oversight threatens to rein in its business somehow.

Those concerns haven't changed and remain of primary importance, but there's a good chance you've heard me or plenty of other people complain about them already. So today I'm going to complain about something smaller, but still significant:

What this means for Activision Blizzard's investor relations website.

Wait, wait! Come back, let me explain!

Last year I did a clickbait listicle on The Top 5 Investor Relations Pages as a joke. Well, the premise of it being a way to attract traffic was a joke, but the praise I gave out to the companies involved was real.

As much as I give Activision Blizzard a hard time, I genuinely appreciate its investor relations website

Some companies run their investor relations sites like they don't want anyone to be able to find anything useful on them, while others are actually pretty upfront and transparent (relative to the rest of the industry), keeping a thorough archive of earnings reports, press releases, and all manner of little details that can be very helpful for a columnist who likes to juxtapose the professional facade of the games industry with the shockingly unprofessional nonsense that transpires at basically every level of this thing.

And as much as I give Activision Blizzard a hard time, I genuinely appreciate its investor relations website, which is living on borrowed time, as Activision Blizzard no longer has investors it needs to relate to.

Activision Blizzard's investor relations site is rationally laid out and features a wealth of financial information and preserved press releases dating back more than two decades.

It also demonstrates the company's commendable commitment to the historical record. I can only imagine the restraint/lack of shame it requires for the company not to have memory holed some of the stuff on there a long time ago.

QUOTE | "I couldn't be more excited at the prospect of being back in court to defend the makers of Call of Duty against this convicted murderer who wants to make a mockery of the US legal system and attack our right to free speech." – Rudy Giuliani in a bafflingly unnecessary press release about defending Activision Blizzard from a Manuel Noriega lawsuit over using the Panamanian dictator's likeness without approval.

As for why Activision Blizzard tapped Giuliani in the first place, I can only assume it's because they have so much in common.

But we get more from Activision Blizzard's investor relation site than just random nonsense like this. We also get more important data about the company we likely wouldn't receive otherwise.

STAT | 0 – Out of 157 executives, senior officials and managers at Activision Blizzard, none of them were Black or African-American, as reported in the company's 2021 EEO-1 report, available on the investor relations site. Only 36 of those executives were women.

STAT | 134 - As revealed in Activision Blizzard's first transparency report (published on the investor relations site), the number of complaints of harassment, discrimination, and retaliation made to Activision Blizzard management in 2022, only 23% of which the company determined were substantiated.

I know there have been other clues that Activision Blizzard might not be the most progressive employer if someone's been paying attention/not comatose for a decade or so, but it's never bad to back up such suspicions, allegations, and/or legally binding settlements with hard data, particularly when that unflattering data is sourced directly from the employer.

Beyond those gestures toward corporate transparency, we're also losing out on the quarter-to-quarter results of the company, which tell us all kinds of things about the company's business. Activision Blizzard reliably let us know where its money was coming from, broken down by console, PC, mobile, and an "other" hodge-podge including licensing and esports. It gave us separate revenues and operating income for Activision, Blizzard, and King so we could chart the relative health of each division over time. Sometimes it even gave us (false) hope.

STAT | 92 million – The number of monthly active users (MAU) reported for the Activision division in the three months ended June 30, 2023, the lowest MAU for Activision since the October 2019 launch of the free-to-play Call of Duty Mobile.

Is that a sign that that the wheels are finally, finally starting to come off the Call of Duty gravy train and I can bring back my favorite recurring wrong prediction again?

Well, maybe not.

But now Activision Blizzard is part of Microsoft, so let's look at what level of insight and clarity into the business we can expect from Microsoft.

QUOTE | "Xbox content and services revenue increased 5% (up 6% in constant currency)." – The only mention of video games in Microsoft's quarterly earnings press release from July.

If we dig into the slides, we also learn that Microsoft's gaming revenue was up 1% for the quarter, and hardware revenue declined 13%.

The post-earnings conference call really spills the beans, with CFO Amy Hood saying she expects Xbox content and revenue services to be up in the mid-to-high single digits for the first quarter "driven by first-party and third-party content as well as Xbox Game Pass," or as I like to call it, "not hardware."

That's it. That's literally it.

How much color will Microsoft give on its gaming business? About this much.

And Microsoft has gotten worse over the years. Once upon a time, the company actually gave us hardware sales figures, but stopped in 2015 when it became clear that wasn't going to be making them look good next to Sony's numbers anytime soon.

Microsoft is terrible at reporting on its games business

It also used to be a little more open with Xbox Game Pass subscriber numbers, but again, stopped that when the growth slowed and now we only get it from incompetently redacted lawsuit exhibits and SEC filings detailing whether or not Satya Nadella hit the Game Pass growth target required for his bonus.

If you were one of the people who read last year's Top 5 Investor Relations column, first off, you're a filthy liar and I have the site traffic reports to prove it. Second, you might remember I gave Microsoft an honorable mention in that column, but it was strictly for their impressive archive of press releases. (To date, Microsoft is still the only modern platform holder to recognize Sega's Dreamcast as "The Ultimate Home Video Game System," and frankly, Sony and Nintendo's silence on the subject is deafening.)

Microsoft is terrible at reporting on its games business. And it's not entirely without reason. The company is truly massive, after all, and gaming is such a small part of the business.

STAT | $56.2 billion – Microsoft's revenue last quarter.

STAT | $13.9 billion – The revenue of Microsoft's More Personal Computing division, which includes Xbox, but also Windows, Surface devices, and search and news advertising.

Even with Activision Blizzard in the fold, that would only have added $2.2 billion to the revenue total last quarter. This is far and away the single biggest acquisition in the history of the games industry, and it would have made about a 4% difference to Microsoft's revenue.

I don't think we're going to be hearing about how Hearthstone is doing anytime soon.

This isn't just a Microsoft problem, either.

QUOTE | "In the US, we only have two big, publicly traded video game studios left – and even those have been perpetual acquisition targets for several years now, although I personally hope they stay independent as long as possible." – In our round-up of reactions to the acquisition going through, Kantan Games CEO Dr Serkan Toto notes that we're basically down to Take-Two and Electronic Arts when it comes to American third-party publishers giving mandated disclosure on their business every quarter.

Back in the day, earnings season was much more lively, both in the US and abroad. Beyond the companies we already mentioned, you had Midway, THQ, Atari, Majesco, Mad Catz, Jamdat, Eidos… But through a combination of consolidation, collapse, and going private, we've lost those reports, each one representing a window into the health of a very specific section of the games industry.

Now we might be lucky to get Satya Nadella giving a vague idea of whether Call of Duty is growing or shrinking, just like new Mortal Kombat games used to be a tentpole event for Midway Games and now the September launch of Mortal Kombat 1 doesn't even register for Warner Bros Discovery.

QUOTE | "Games revenue was lower due to the release of Lego Star Wars: The Skywalker Saga in the prior year." – The entirety of the insight into WB Games' business that we got from the latest Warner Bros Discovery's earnings report (unless you think a revenue number that lumps games in with the media giant's film and TV content rights revenue somehow qualifies as insight).

When we lose this detail on the specific smaller-scale activities of the games industry, we lose a significant amount of what little transparency the industry has.

Take Zynga for example. Last year, Zynga's investor relations page was very helpful for me in putting together a column on how free-to-play models work and why publishers don't like to talk about the details very much. As a free-to-play mobile company, Zynga gave out details like average bookings per mobile user on a quarterly basis. In its annual reports, it included the fact that only 3.8% of the player base paid money as a risk factor. That was enough to work out a stat you can bet the company wasn't going to be putting in any press releases.

STAT | $1,825 – Roughly how much the average paying customer for Zynga spent on its games in the prior year.

These days, we only find out horrific details about Zynga's callously exploitive business when they are silly enough to tell us

That column was actually published shortly after Take-Two's acquisition of Zynga was finalized. Zynga's investor relations site is gone now, the link on the company's website simply forwarding to Take-Two's investor relations page. And while some of the material that was on Zynga's site can still be found in the SEC's archive of company filings, that doesn't give us insight into Zynga's business since it became part of Take-Two. And Take-Two's earnings reports haven't meaningfully expanded to replace the insight into Zynga's business that we lost when it was acquired.

These days, we only find out horrific details about Zynga's callously exploitive business when they are silly enough to tell us. Granted, they have been that silly, but I expect over time they will revert to not talking about such things in public because as we've established, the industry hates transparency, and transparency around free-to-play in particular looks bad.

The consolation prize with the Activision Blizzard acquisition is that it means thousands of people will no longer have Bobby Kotick as a boss, and workers at the company will no longer have to deal with overt union-busting. That's not nothing, but weighed against the loss of insight into the operations of the industry and especially the competitive harms of letting an 800-pound gorilla stock up on protein shakes to add some bulk, I'm not sure it's enough.

Close-up picture of a blackjack table with cards in play, several players' hands, and stacks of casino chips visible
Nothing to see here, just some good old fashioned interactive entertainment for the kids | Image credit: Pexels photographer Drew Rae

All bets are off

This next bit isn't about this week in business but we don't really have anywhere else to put follow-ups on earlier columns, so here we go.

Back in March, we wrote about trade group testimony before an Australian governmental inquiry into online gambling, which naturally included talk of loot boxes.

We took a particularly close look at the testimony from Ron Curry, the head of the Australian video games trade body Interactive Games and Entertainment Association (IGEA), who emphasized that the group's members had very consciously avoided even the slightest whiff of gambling for the past 20 years.

QUOTE | "We're in the business of video games: the business of fun, positive experiences for players. We're not in the business of gambling. None of our members run gambling services or even make simulated gambling games. The notion that our industry is providing gambling services to children is antithetical to everything our members stand for." – Curry goes to bat for the industry.

Predictably, we then took a look at IGEA's members list and rattled off a less-than-comprehensive account of IGEA members who ran gambling services or had simulated gambling in their games, just enough to make the point that Curry's assertion was a laughable mischaracterization of reality. We also noted that providing misleading or false testimony could be considered contempt of parliament, something Curry was warned about before his appearance.

Curry apparently agreed with us that his testimony was misleading and false

We don't know if Curry read the column, but he apparently agreed with us that his testimony was misleading and false, because as we just discovered this week, he would follow up a few weeks later with a sheepish apology letter to the committee running the inquiry. (Submission 60.1 if you want to see the original.)

QUOTE | "We do not represent studios that are primarily focused on making simulated gambling games, which are instead generally represented by the International Social Games Association (ISGA). However, since our hearing, I have been made aware that a very small number of our members, or their affiliated companies, do make such games as part of a diverse slate of game types or have some games within their portfolio that include simulated gambling elements as a limited feature of their overall gameplay experience. This is information that I was not aware of at the time that I made the above comments and I apologise for the error." – Curry revises his testimony to say that providing gambling services to children is actually very thetical to what IGEA's members stand for.

I particularly like that Curry says it's "a very small number of our members" as if quantity matters more than size, like the impact of Google or Tencent being involved in gambling is the same of Unpacking developer Witch Beam.

For the record, our own off-hand list of IGEA members involved in actual or simulated gambling over the past 20 years included Google, Facebook, Tencent, Take-Two, Roblox, Twitch, Sega, and Mindscape. We didn't talk about Unity's real-money gambling services, or Ubisoft's NFT nonsense. We didn't even include companies using loot boxes, which should meet any "simulated gambling" criteria even if some people don't feel it qualifies as actual gambling and would make that "very small number" considerably larger.

Let me tell you, the best feeling for a journalist is to know that you made a difference.

And until I know what that's like, I'll settle for the second-best feeling: embarrassing someone in a position of power selling some straight nonsense to people because he thinks they don't know any better and nobody's watching anyway.

The rest of the week in review

QUOTE | "We hadn't really ever discussed the idea of going public, but we understood that we needed to transform our model so that we could respond to this." – Devolver COO Graeme Struthers explains that the wave of consolidation in the industry pushed the indie publisher to go public because its expected long-term development partners were being acquired left and right.

QUOTE | "If you were the player, would you feel a little hard done by, confused or even manipulated when using the game, website or app interface?" – The most important question for developers to ask themselves, according to Fleur Chenevix-Trench and Nick Allan of the law firm Lewis Silkin, in a guest column about whether common monetization practices are about to become illegal under new laws and oversight from the UK and EU.

QUOTE | It's not about the platform, it's about the experience. We're drug dealers of experiences. How people feel, the culture, the gameplay experience." – 10 Years Ago This Month, Wargaming CEO Victor Kislyi gives us an idea of why governments would eventually feel the need to slap limits on game monetization.

QUOTE | "I haven't got an infinite number of games left in me, and I really wanted to return to my roots. I've only got one game left in me probably [and] I've had this idea brewing around in my mind for a long time, so let's put all of my energy and effort into this last game." – 22cans founder Peter Molyneux, in an interview with us at last week's EGX.

QUOTE | "I'm only going to make one more game, I think. And that thought – the thought of every ounce of my energy, every ounce of my experience, every mistake that I've made in every single game – if I can learn from that, and use that energy to make one game…that's what I'm trying to do." – Peter Molyneux, in a 2012 interview. (Although to be fair, he did backtrack a bit from that shortly after.)

STAT | 67% - The percentage of developers who think game studios and developers are primarily responsible for making their games safe and inclusive for players, according to Unity's 2023 Toxicity in Multiplayer Games Report. I thought that was low, but then I saw that only 42% of players thought studios and developers should be the responsible ones. (Just kidding, they're both low. Demand more from the businesses running these businesses, people!)

STAT | 10% - Launch month sales of EA Sports' FC 24 were down 10% compared to last year's FIFA 23, but that didn't stop the game from beating Starfield to the top of the European sales charts for September.

STAT | 10% - US consumer spending on games was up 10% year-over-year for September, according to the latest Circana numbers.

STAT | 5 – The number of consecutive months Circana's report has shown year-over-year growth in US consumer spending on games. Despite some rough months early on, overall spending year-to-date is up 2% as well.

STAT | Nothing – What that run of growth has apparently done to stem the tide of industry layoffs. This week we saw news of cuts at Six to Start, Zen Studios and Frontier, and we found out that Epic's sale of Bandcamp meant half of the company's workforce was laid off.

QUOTE | "Roblox is an innovation company [that] needed to get back to working in person." – Roblox CEO David Baszucki explains that because Roblox is an innovation company, it could not adapt to remote work and everyone has to go back to the old way of working or they will be fired.

STAT | $725 million - Faze Clan's value when it went public last July.

STAT | $18.5 million - Faze Clan's value when it sold to GameSquare this week.

QUOTE | "With increasing urbanization and access to shooting/hunting areas in decline, a primary means for young potential shooters to come into contact with firearms and ammunition is through virtual gaming scenarios." – An internal memo from the firearm maker Freedom Group that came to light this week alongside a secret deal its Remington brand made with Activision to feature a gun in 2009's Modern Warfare 2, reinforcing what we already know about how the games industry exacerbates and profits off of a deadly cultural obsession with guns.

QUOTE | "I am retiring and will begin an exciting new chapter of my life exploring interests and passions, donating my time where I can, and taking more time to enjoy life." – Bethesda head of publishing Pete Hines announces his retirement after a long run with the company. Enjoy your retirement Pete.

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Brendan Sinclair avatar

Brendan Sinclair

Managing Editor

Brendan joined GamesIndustry.biz in 2012. Based in Toronto, Ontario, he was previously senior news editor at GameSpot in the US.