Shift toward digital products
Similar to other product categories, the gaming space has also seen a transition toward digitalization. In November 2015, Activision Blizzard (ATVI) announced the signing of a definitive agreement to acquire King Digital Entertainment (KING), a major player in the online gaming sector. This acquisition was completed in 1Q16.
In its last reported quarter (fiscal 2Q16), Activision’s digital revenues accounted for 72.7% of total revenues—an increase from 54.5% in fiscal 2Q15 and 63.6% in fiscal 1Q16. Digital revenues rose to $1.14 billion in 2Q16, touching the billion-dollar mark for the first time in a fiscal quarter.
In 2Q16, Electronic Arts’ (EA) digital revenues accounted for 83.2% of its non-GAAP (generally accepted accounting principles) revenues.
Rising revenues in 2Q16
Activision’s revenues rose by 50.4% YoY (year-over-year) in 2Q16 to $1.57 billion from $1.04 billion in 2Q15. Revenues also rose 7.9% QoQ (quarter-over-quarter) in 2Q16. Non-GAAP EPS (earnings per share) also rose 45% YoY to $0.45.
Notably, Activision CEO Robert Kotick stated: “We remain focused on the priorities that we have outlined to you before: building our audiences around the world, growing engagement by continuously investing in new content for our audiences, celebrating our players through initiatives like competitive gaming and making certain we continue to be a great place to work.”
In the next part, we’ll analyze Activision’s performance by segment.