I’m spending some time getting back up to speed on the major players in the games sector as part of my increased involvement in Hiro Capital, and this chart in the Activision Blizzard annual report leaped out at me:
Microsoft was less than 10% of Activision Blizzard’s revenue. Sony was more, and the two main mobile platforms were about 1/3 of the total.
(As an aside, and looking at 2020, we see that the 4 main platforms of Apple, Google, Sony and Microsoft represent 57% of Activision’s revenue. That leaves 43% from… elsewhere. That would include Nintendo, advertising, Steam, platforms in other large territories such as China and direct-to-consumer offerings such as Blizzard’s World of Warcraft, Hearthstone and Overwatch. We know that Nintendo is less than 10% otherwise Activision Blizzard would have to declare it, so consoles (not including PC) are around 1/3 of the company’s revenue. How the world has changed.)
I’m trying to decide what this means strategically in the light of Microsoft’s acquisition plans. I guess the goal would be to get Xbox revenues up to the same level as PlayStation. The ongoing FTC anti-trust review seems likely to lead to the protection of the Sony revenue: under Lina Khan, the FTC is looking at a much wider definition of anti-trust harm than “does it lead to higher prices for consumers”, a stance that I am very much in agreement with.
Overall, I was surprised to learn how small a proportion of Activision Blizzard’s revenues come from consoles, and also that Microsoft revenues don’t even make up 10% of the company’s revenue. Sometimes, the platforms that we think are big… are not as big as we think.