Activision Blizzard Inc. (NASDAQ:ATVI) beat analysts' expectations Thursday with revenue of $1.46 billion, the company revealed in its earnings report for the first three months of 2016. Analysts had forecast around $1.3 billion. The beginning of the year is notoriously sleepy for video games due to the lack of major releases, but the completed acquisition of King in February added intrigue as investors saw the first returns in the $5.9 billion investment in the developer of "Candy Crush."
Activision Blizzard's adjusted revenue of $908 million was up 29 percent year-over-year. The company reported King had 463 monthly active users with a net revenue of $207 million, accounting for 23 percent of Activision Blizzard's total sales. King's income was $67 million. Activision Blizzard, across all properties, has 544 million monthly active users. In-game revenue, players purchasing add-ons or other content, was up 80 percent when factoring in King.
Net income was down year over year, however, from $394 million for the first three months in 2015 to $336 million for the first three months of 2016. Increases to product costs, sales and marketing, general and administrative — along with intellectual property licenses — were responsible for the decrease in income. GAAP earnings per share were 45 cents, non-GAAP 23 cents.
Activision Blizzard's 2016 will be one to watch as it continues to expand across industries. There will be major releases, such as Blizzard's "Overwatch" in May and "Call of Duty: Infinite Warfare" in November, along with sales from "Candy Crush, Saga" "World of Warcraft," "Hearthstone," "Destiny" and "Heroes of the Storm." Blizzard is poised to have a big 2016 with the introduction of the multiplayer first person shooter "Overwatch," which could have millions of fans playing the game for years to come if past successes of the "Starcraft" and "Warcraft" franchises are any indication. First released in 2004, "World of Warcraft" is getting a massive expansion, "Legion," on Aug. 30. "Hearthstone," its competitive collectible card game, has hit 50 million registered users.
Activision Blizzard is also expanding into movies and television. "Warcraft," in partnership with Legendary Pictures, will be released June 10. Activision's studio division is currently working on a "Call of Duty" franchise and a "Skylanders" animated series. Activision also wants to create an eSports television channel, which opens up new sources of revenue from advertisers.
Due to the strong first quarter, Activision Blizzard increased its outlook for the next three months and for the year. Activision Blizzard forecasts $6.1 billion in net revenue for 2016 with $1.4 billion in sales for the second quarter.