Activision Blizzard beats on gaming surge

Yahoo Finance’s Brian Sozzi, Alexis Christoforous, and Dan Howley break down Activision Blizzard’s latest earnings report.

Video Transcript

BRIAN SOZZI: Welcome back to "Yahoo Finance Live." Let's take a look at one of the trending tickers on yahoofinance.com. Activision Blizzard is in the spotlight after the company posted first-quarter earnings that crushed expectations.

Yahoo Finance Tech Editor Dan Howley is here to break it all down. Dan, some pretty big numbers out of our ATVI. Walk us through it.

DAN HOWLEY: Yeah, they absolutely demolished any expectations that were set by analysts. Basically coming out of the gate, they had a new game roll out, "Call of Duty-- War Zone." It's an add-on, a free-to-play add-on to their other game, "Call of Duty-- Modern Warfare." That did absolutely well, and then you have this "War Zone" add-on.

60 million people signed up for it since March 10 when it launched. That's just going to continue to be a moneymaker for some time going forward. Think of it as on the level of "Fortnight" style game, and that kind of in-game transaction will continue going forward.

And then outside of just that, we also have games from the Blizzard side that did very well, games like "Overwatch" which has its ongoing e-sports league which they can continue to do digitally as well as the old standby "World of Warcraft." That's been doing well, getting new gamers as well as old gamers returning. That's a game that requires a lot of time. Obviously people have a lot of time on their hands now, so they're jumping back into there.

And then King, the digital side-- the mobile side did incredibly well. And, you know, when I was speaking to CEO Bobby Kotick, it was basically, you know, this quarter did well. They do, obviously, care more about the safety of their workers, and they had mentioned that, you know, because they have digital assets that they work on, they're able to keep up with the flow of the kind of schedule that they have laid out already. So they don't expect any delays, according to this release, but they are obviously taking the health and safety of their employees very seriously as well.

ALEXIS CHRISTOFOROUS: Hey, Dan, did Activision Blizzard look ahead at all to the future and the holiday season and what that might look like for them?

DAN HOWLEY: Yeah, they didn't really offer anything as far as that goes. But, you know, there's going to be two new consoles this holiday season, one from Sony. It's going to be a PlayStation 5. One from Microsoft. It's called the Xbox Series X. We don't know pricing for those yet, but it's looking like the PlayStation might be more expensive.

But regardless, once you get new consoles out there, game sales soar. So you can expect a lot of publishers to be pushing their games, even older ones, to their console, and I imagine they're going to do that with those "Call of Duty" games.

HEIDI CHUNG: Hey, Dan, it's Heidi. A question because EA also reported yesterday, but when it comes to these two companies, was there any management commentary that had to do with, OK, this was because our games were really good. We saw this huge uptick in users, or is it just because people are working from home and spending more time in front of our TVs?

DAN HOWLEY: I think it's a little bit of column A, little bit of column B. It's, you know, they have these great games out now. And a lot of times, you know, part of the issue with not being able to game is, you know, you might want to watch TV or, you know-- their competition is Netflix and music on Spotify and, you know, I guess books, whatever those are. But so now that's so many people have so much free time, they're able to go and look at these games that everybody talks about and then dive in.

And that's-- you know, looking forward, you know, the long-tail view, that could be a positive for them because you get into these types of games. You get to socialize with-- I mean, look, I talk to my best friends every day, every other day just playing this "War Zone" game. So I think people will start to do this, and they'll end up sticking around for the long term-- maybe not as far as the huge groups that we see now, but it will continue going forward.