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What's in Store for Activision Blizzard (ATVI) in Q4 Earnings?

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Activision Blizzard (ATVI - Free Report) is set to report its fourth-quarter 2022 results on Feb 6.

The Zacks Consensus Estimate for revenues is pegged at $3.22 billion, indicating an increase of 29.5% from the year-ago quarter’s reported figure.

The consensus mark for fourth-quarter earnings has improved by a penny to $1.51 per share in the past 30 days.

The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters and missed in the remaining two. Activision has a trailing four-quarter negative earnings surprise of 2.99% on average.

Let’s see how things have shaped up prior to this announcement.

Activision Blizzard, Inc Price and EPS Surprise

Activision Blizzard, Inc Price and EPS Surprise

Activision Blizzard, Inc price-eps-surprise | Activision Blizzard, Inc Quote

Factors to Consider

Activision’s fourth-quarter 2022 performance is expected to have benefited from its game portfolio of popular franchises, including Call of Duty, Hearthstone, World of Warcraft, Candy Crush Saga and Candy Crush Friends Saga in the to-be-reported quarter. The franchises have seen new releases and expansion packs, which are expected to have added to the company’s top line.

New releases and expansion packs in the to-be-reported quarter, including Crash Team Rumble, World of Warcraft: Dragonflight and Overwatch 2, which reached 25 million players in the first ten days of release, have aided active user growth in the to-be reported quarter.

On Nov 7, ATVI announced that Call of Duty: Modern Warfare II crossed a $1 billion sell-through within ten days of release. This has set a record for being the fastest in franchise history.

This Zacks Rank #3 (Hold) company also expanded its digital card game Hearthstone with the launch of The March Of The Lich King, which contained drama and mystery. This seemed to have gained traction with users as it brought a new experience of style and energy to the whimsical world of Hearthstone. You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.

The recent improvement in video game spending in the quarter is expected to have been reflecting in ATVI’s top-line growth. Per VentureBeat, which cited NPD data, consumer spending on video games remained unchanged in October, while increasing 3% and 2% year over year in November and December, respectively.

Intensifying competition from game publishers like Take-Two Interactive (TTWO - Free Report) and Electronic Arts (EA - Free Report) is also expected to have hurt Activision’s top line in the fourth quarter.

In the fourth quarter, Take-Two’s 2K and Marvel Entertainment announced the launch of Marvel's Midnight Suns. The company’s Private Division and Roll7 also rolled out OlliOlli World: Finding the Flowzone, the second and final expansion to the critically acclaimed skateboarding action-platformer OlliOlli World.

Electronic Arts celebrated a record-breaking launch of EA SPORTS FIFA 23 with more than 10.3 million players within the first week, signaling the biggest launch period in EA SPORTS FIFA franchise history.

Electronic Arts released Need for Speed: Unbound, the street racing game and It Takes Two, winner of more than 90 awards, including The Game Awards and DICE’s Game of the Year, on Nintendo Switch.

Major Developments in Q4

Activision Blizzard recently announced that its employees in Boston have filed for union representation. This marks the third unionization at the gaming company in just one year after Activision’s Raven Software employees and Blizzard’s Albany game testers voted for the same.

This gaming union at Boston comprises the quality assurance team, which tests video games for bugs and performance and is widely considered underpaid across the industry. For the first time at Activision Blizzard, the union also includes designers, animators, engineers and producers.

Besides the unionization, a bigger threat that is hovering over Activision Blizzard is its acquisition by Microsoft (MSFT - Free Report) , which is receiving immense opposition from authorities in UK, Europe and America as they believe that this deal would harm competition in the gaming industry.

On the heels of this, 10 gamers filed a lawsuit in the U.S. Federal court as they feared that this acquisition would give Microsoft an outsized market power and create a monopoly in the video gaming industry.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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