Activision Blizzard Shrugs off Hong Kong Uproar, Beats Q3 Earnings Expectations

Activision Blizzard
Courtesy of Activision Blizzard

Controversy? What controversy? As Activision Blizzard reported its fiscal Q3 earnings Thursday afternoon, there was no mention at all of a recent backlash over the company’s controversial suspension of one of its players. Instead, executives celebrated better-than-expected results, and promised to more aggressively embrace mobile gaming.

The gaming company generated $1.28 billion in sales in the quarter ending September 30, compared to $1.5 billion during the same quarter a year ago. Net income for the quarter was $204 million, which translates to non-adjusted earnings per share of $0.38. In Q3 of 2018, non-adjusted earnings per share were $0.42.

Analysts had expected non-adjusted earnings per share of $0.23. However, investors were apparently turned off by the fact that Activision’s business still hasn’t fully recovered from  the company’s split with “Destiny” developer Bungie, which was announced earlier this year. Activision Blizzard’s share price fell close to 3% in after-hours trading.

One of the subjects analysts were probing on the company’s earnings call Thursday afternoon was its mobile strategy; some of Activision’s biggest titles are still PC- and console-only, leaving an opening for companies like Epic to dominate mobile gaming.

Activision did release “Call of Duty Mobile” in October, and president and chief operating officer Coddy Johnson suggested Wednesday that the company would follow up with other titles in the near future. “A third of our business is on mobile already,” he said. “It is a massive opportunity, and we think not just for ‘Call of Duty’.”

“There are more to come,” he added. “We are anxious to move.”

But while analysts had some pointed questions about Activision Blizzard’s business strategy on the company’s earnings call, they didn’t once mention the threat of boycotts announced against the company in conjunction with its handling of a recent protest.

“Hearthstone” gamer Ng Wai Chung, better known under his gamer handle Blitzchung, used a live stream following the Asia-Pacific Grandmasters tournament to call for the liberation of Hong Kong last month. Blizzard initially responded by taking away Chung’s prize money, and banning him from all professional competitions for one year.

The company justified this step by pointing to tournament rules that don’t allow players to offend parts of their audience, or otherwise tarnish the company’s image. However, the move caused outrage among fans of “Hearthstone” and other Activision Blizzard titles, with some prominent players even threatening to boycott the company.

Blizzard ultimately relented, if only a bit, and reinstated Chung’s prize money, while also reducing his ban to 6 months. However, executives continued to insist that Chung had to be punished for his political statements, with company president J. Allen Brack declaring in a statement: “There is a consequence for taking the conversation away from the purpose of the event and disrupting or derailing the broadcast.”

Critics have argued that Blizzard’s crack-down on political speech was motivated by its financial ties to China. Chinese gaming giant Tencent holds a 5% stake in the company, and China has been a major market for Activision Blizzard.

Brack rejected those claims last month, saying: “The specific views expressed by Blitzchung were not a factor in the decision we made. I want to be clear: Our relationships in China had no influence on our decision.”

Those statements were somewhat undercut by messages put out on Activision Blizzard’s social media accounts in China, including one that declared that the company would “resolutely safeguard [China’s] national dignity.”