Two of the biggest publishers in the gaming industry have earnings calls later today. And although (spoilers) it'll be good news for each company, it turns out self-quarantine have been a boon to both Activision Blizzard ($ATVI) and Electronic Arts ($EA).
If you're an investor, you've heard of "stay at home" stocks, and video game companies the world over will identify as such to become "buys". Publishers are raking in more profits during the relatively slowest part of the calendar for gamers, Q2/Q3, thanks to digital distribution, more downloads, and increased spending on loot boxes, DLC, and microtransactions.
Let's break down why Activision and EA saw their stocks climb by 7% and 6% respectively, why they're both expected to earn a billion in revenue this quarter, and some other interesting tidbits we found while investigating their data.
Activision and Call of Duty
Activision relies on a few core IPs to generate longterm value, and its moneymaking franchises had big content releases in 2020. Blizzard launched a new Hearthstone expansion and some updates to Overwatch, which should get players more invested in buying in-game packs and watching each game's eSports tournaments long into the summer. Then there's the Modern Warfare 2 Remastered, a nice respite for fans of the original game; it released in April and should get a lot of buzz without any other significant game releases on the horizon.
Most importantly, Call of Duty got a new free battle royale mode, Warzone, which is more popular than last year's launch of Modern Warfare. Call of Duty is an annual fall release, and to see half a million people tune in to something in the Spring certainly refreshed interest in an old franchise.
Activision is also the rare company in America to see an increase in hiring over the last nine months. Job listings went up by 105% since August. So if you're interested in Activision for its earnings call after the bell rings today, the Zacks Consensus Estimate pegs Activision for $0.38 per share this quarter.
EA and FIFA
EA has more franchises and intellectual properties actively running than Activision, but without any new game releases this quarter it's relying heavily on three titles, in particular, to carry the load until this fall. The two mainstays, Madden NFL and FIFA, are annual sports games that offer microtransactions and loot boxes to hook players into spending money on a gamble for in-game items. The same applies to first-person shooter Apex Legends, the other pillar of EA's books, but so far the only game that's managed to increase popularity over time is FIFA.
FIFA miraculously saw its Twitch viewership go up, kicking off 2020 with a bang and only seeing the average increase as more and more people stayed home without any real games to go to, thanks to shutdowns around the globe. Soccer fans are thirsty for sports to come back soon.
Otherwise, engagement with EA's studios and brands is waning, but thankfully EA's Play Live is happening next month. It's a digital event that will reveal new games, updates, news, and more, which should be a shot in the arm to the publisher. The Zacks Consensus Estimate is $0.98 per share for the quarterly earnings report.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales, and app ratings - and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.