Activision Blizzard Inc (NASDAQ:ATVI) continues to rake in healthy profits from the use of controversial microtransactions, as evidenced by the US video gaming giant’s latest quarterly report released today.
Written in an “in-game net bookings”, Activision Blizzard, which owns popular gaming franchises Call of Duty, Warcraft, Overwatch, Diablo and Candy Crush, netted US$1.8bn from microtransactions and downloadable content in the fourth quarter, a 46% year-on-year increase.
In-game net bookings for the entire financial year were US$5.4bn, compared to US$5.1bn in 2021.
Microtransactions refer to the business practice of charging players to use in-game features of supposedly free-to-play titles. They also go by the pejorative ‘pay-to-win’ term.
Activision Blizzard copped negative press on the release of its anticipated dungeon crawler Diablo Immortal.
Gaming news site Kotaku called it a “greedy, money-sucking” game that could cost upwards of half a million dollars to access the full gamut of the game’s features.
“It’s always worth pointing out that you aren’t obligated to partake in stupid in-game microtransactions like these,” wrote Kotaku, adding: “You could have an awesome time with Diablo Immortal without spending a single dollar, though it does become troublesome if you want to participate in some of the game’s player-versus-player (modes).”
Microtransactions have been the target of protests among gamers. Diablo Immortal, despite garnering praise for its gameplay, has the lowest user score of any game in history on Metacritic following a mass review-bombing campaign.
Electronic Arts (NASDAQ:EA), another major games developer, was forced into removing microtransactions from its 2017 title Star Wars: Battlefront II after outraged fans baulked at the game’s pay-to-win model.
Developer Monolith Productions backtracked on microtransactions following similar outrage to its 2017 Lord of the Rings title Middle-earth: Shadow of War.
But it seems that Activision Blizzard didn’t get the memo, and for their part, the strategy paid off, if not critically but financially.
Diablo Immortal brought in around US$100mln in the first two months of its release, according to data provided by analytics company Sensor Tower.
Microsoft merger still on the cards
Activision shares surged over 5% following today’s earnings report, which underscored net revenues of US$7.5bn with an operating margin of 22% and cashflows of US$2.2bn.
While these numbers represented a year-on-year decline, investors remain bullish on the company in anticipation of its high-stakes merger with Microsoft Corporation (NASDAQ:NASDAQ:MSFT).
Activision Blizzard and Microsoft remain committed to their US$69bn merger despite pushback from US and UK regulators due to anti-competition concerns.
Equities analysts at Wedbush reckon the group’s current share price “presents a compelling entry point”.
According to Wedbuch, if the Microsoft deal closes in the next two months, it will bring over 30% returns to investors, but If the deal fails, there will be a quick rebound in the share price due to the return of conventional investors.