Unlike most company earning calls which are too short term focused to have much worth discussing, the latest Activision call had a couple of interesting questions + answers.
These stood out to me:
On Other Franchises Moving to Mobile + Mobile Strategy:
Alex Giaimo, Analyst
Thank you, guys. Just hoping to get a bit more color around the long-term mobile strategy within the portfolio with COD mobile up and running, we know Immortal is coming at some point, but would mobile makes sense for any of the other Tentpole franchises like a WoW or an Overwatch? Thank you.
Coddy Johnson, President and Chief Operating Officer
Sure. Thanks, Alex. This is Coddy. I guess I’d take first just on mobile strategy generally, remember a third of our business is on mobile already and we have the largest mobile gaming presence in the West. And so we want to build on that leadership position and we think it’s a really foundation of strength to do that.
It is a massive opportunity and we think not just for Call of Duty and not just for Diablo Immortal. And it’s worth of pausing and tucking for mobile Call of Duty — mobile for why it’s such a large opportunity. I think first, it shows that the AAA kind of games, we make are ready to work on mobile, because of the improving compute and graphics capability.
We have a growing ability to execute and we’re seeing that franchise, familiarity and awareness matter — matter fundamentally and like, to the tune of hundreds of millions of people that when you reach out in the right way franchises, they’re going to come in. And so that’s the level of opportunity we see. In terms of what will make, you might imagine, we’re looking at all of our franchises.
We want to do where it makes sense and we think about strategically in three main buckets. The first is extending existing game play. This is we call the mobile [ph] taking the best of Call of Duty quite literally maps, weapons, characters and it’s brought that over mobile experience. So that’s one bucket where we are looking at a number of opportunities to go do that.
The second is reimagining the IP on the mobile platform. You can think about it’s like Hearthstone which is really a re-imagination of the Warcraft IP and the card game and that was very well animated. You can imagine we’re pursuing a number of ideas like that. And then developing true cross platform titles that work from the start across mobile.
Some of those take time, but we are anxious to move. And you mentioned one already in the pipeline and there are more to come. And so we’re excited about rolling that out over the next several quarters.
Colin Sebastian, Analyst
Thank you. One question, please. I’m wondering what you took away from the Overwatch Esports experience in ramp, in terms of applying that knowledge to the Call of Duty league on launch next year? Thank you.
Bobby Kotick, Chief Executive Officer
Sure. Thanks, Colin. It’s Bobby. Well, as you can imagine, we’ve learned a lot. Probably the most important thing is that we underestimated, things like the demand for the broadcast rights, sponsorships and even on the licensing front. I think we also underestimated enthusiasm that we would have for — from prospective owners, which is why the price of the teams went up so much over the two-year period.
And then I think operationally we had the benefit of two years in a fixed location to really think about how to optimize production. But as we go out into the local markets next year, which is the big point of differentiation for us in our views between us and anybody else that’s thinking about Esports is really engaging these great local entrepreneurs and professional team owners who are professional groups in actually generating revenues, marketing, new fans, new opportunities for our fans to connect to their favorite players. And so what we’ve learned over the last couple of years is serving us incredibly well as we launch the Call of Duty League. And in fact most of the owners are existing owners and most of them have jumped in at prices that are higher significantly than what they paid for their Overwatch teams and I think we’re going to get the benefits of scale of being the biggest operator of a professional Esports League anywhere in the world. The other thing I think is we probably didn’t appreciate how big the viewing audience was. And if you look at the demographic that we served, principally 18 to 34 year olds, the audience that we’re serving on a global basis is bigger than the MLS for that demographic or Major League Baseball for that demographic. So there’s an untapped opportunity for sponsors, for advertisers, for our licensing partners to be able to reach an audience that has become increasingly difficult to reach.
So I think from every perspective not only we learned a lot, but I think what we’ve done in terms of execution is the best that anybody has expected or seen in professional Esports. And so when you then think about what’s happening in these franchises, whether it’s the announcement we just made about Overwatch 2 or the new 100 million consumers that just came into the Call of Duty marketplace and community, we’re seeing an incredible amount of growth in both the opportunity for spectators but also in audience that will be able to reach for our sponsors or broadcast partners, advertisers. And so when you look out over the course of the next 12 months to 24 months there will just be a lot bigger ecosystem for us to be able to take advantage of. And a lot more of an audience for our players, our professional players to be celebrated by and recognized by. And so we couldn’t be more pleased with the progress that we’ve been making. And I think all these initiatives that are expanding the communities of our franchises. It just service better as we move into the local markets.
All the more interesting that Mike Ybarra, a former executive at Xbox, has joined the company as Executive VP and GM of Blizzard.
Disclosures: I own shares in ATVI. I have no intention to transact in the next 48 hours.