Q3 2020 Activision Blizzard Inc Earnings Call
Good day and welcome to the Activision Blizzard third quarter 2000, <unk> earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero after.
After todays presentation, there will be an opportunity to ask questions. Please note. This event is being recorded I would now like to turn the conference over to Christopher Hickey Senior Vice President of Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us today for Activision Blizzard third quarter Twentytwenty culture in school, but that's all Bobby Kotick CEO, Daniel will likely president and COO, Dennis Durkin CFO.
Q and I walked caustic persistence about commission Jay Alan Black persistence of Britain's Entertainment and lumps like me has done just King will also join us.
I'd like to remind everyone that during this call we will be making statements that are not historical facts.
Its wards can statements in this presentation are based on information available to the company I think that takes this presentation and while we believe to be true. They ultimately may prove to be incorrect a number of factors could cause the company's actual future results and other future circumstances to extend maturities from those expressed in any forward looking statements. These include the impact of the cope ignite team.
The risk factors discussed in our since he filings cruising I was once the 19th annual reports on form 10-K, I first quarter and second quarter, Twentytwenty 10-Q, and those on the site, but the show.
The company undertakes no obligations reach publicly any revisions to any forward looking statements to reflect events or circumstances. After the date October 29, 20 to 20.
We will present, both GAAP and non-GAAP financial measures. During this call, it's like non-GAAP financial measures, which exclude the impact of expenses related stock based compensation amortization of intangible assets and expenses related to acquisitions, including legal fees costs expenses and accruals expenses related to debt financings and refinancings restructuring.
He charges associated tax benefits would be great.
Significant discrete tax related items, including amounts related to changes in tax laws amounts related to the potential final resolution of tax positions and other unusual or unique tax related items activities. These non-GAAP measures are not intended to be considered in isolation from as a substitute for or superior to I've got crews that's been cogent.
Best is to consider all measures before making an investment decision piece, which were top earnings release, which is posted on www Activision Blizzard dot com for a full GAAP to non-GAAP reconciliation and further explanation with respect to our non-GAAP measures.
Also an earnings presentation, which you can access with the webcast, which will be posted to the website following the call.
Now I'd like to introduce our CEO Bobby Kotick.
Thank you, Chris and thank you all for joining us today.
I hope all of you and your families are safe and healthy.
In the midst of the ongoing pandemic. This week a few hundreds of our employees were evacuated from their homes in Orange County because of fires.
The resilience our employees around the world continue to show under very difficult circumstances is incredibly inspiring.
Our extraordinarily talented teams have been able to connect and entertain hundreds of millions of people around the world at a time when connection enjoy is more important than ever.
This led to better than expected third quarter results and we're again raising our outlook for the full year.
We now expect net bookings in 2020 to grow over 25% year over year with earnings per share growing even faster.
Since refocusing our teams on our greatest opportunities we've started to return to the execution excellence, we've always been known for.
We have significantly grown the number of creative and commercial employees working on our key franchises. We have a clear strategy to continue expanding reach engagement and player investment across all of our biggest franchises and we continue to increase investment to grow the communities anchored in our franchise.
We have a deep company wide commitment to continue to deliver the highest quality content and live operations to our network of almost 400 million players.
And we've transitioned the business to a digital first model, enabling our players to consume our content in the most convenient value focused manner.
Our continued strong results reflect our focus on execution.
Today, we're in a position to deliver sustained and significant long term expansion across our portfolio of fully owned franchises as.
As we execute against our content pipeline extend our key franchises to mobile introduced new free to play experiences and continue to optimize in game operations. We are positioned to continue converting our growing engagement into consistent and long term revenue and earnings growth.
Call of duty is the first community benefit from our pursuit of this franchise based strategy.
With over 100 million monthly players the call of duty community is larger than ever before and with expansion across all platforms. The franchise has transformed into a truly social experience that engages in connects her players in truly epic ways.
Through modern warfare, and our free to play game War zone.
Over two thirds of the players playing groups of friends, demonstrating the rich social connections enabled by our games.
On mobile call of duty has been downloaded over 300 million times worldwide and has become the highest grossing new game in the U.S. App stores since its launch last October.
By expanding to mobile we brought in tens of millions of new players in countries far beyond our traditional audiences.
With the game now in final large scale testing in China and over 50 million players already pre registered we see a clear path to continue growing qualities reach engagement and player investments on mobile in the largest mobile gaming market in the world.
[laughter] deep engagement in premium call of duty content as well as the addition of free to play experiences across mobile console and PC [laughter] drove the number of monthly players in the community to over three times a year ago level in this third quarter.
And hours played were seven times higher than a year ago.
As a community engages they consume more content more players are purchasing premium content than ever before and these growth rates highlight the tremendous power of the combination of our premium and free to play business model.
We expect to continue the call of duty momentum when we deliver black ops Cold war in two weeks.
And our marketing has changed to reflect the scale and size of our own proprietary network.
In August millions of players gained access to the black ops Cold war reveal trailer by playing interactive content within wars on.
Generating a true virtual water cooler moment and driving substantial interest in the new release.
Going direct to our network of players in this way represents more effective marketing than any paid media network.
We intend to achieve with all our franchises as well as the potential new franchises. We are actively creating many of the successes we have had with call of duty.
The World of Warcraft for example, we've seen unprecedented engagement trends since the subscriber base doubled following the launch of classic last year.
Presales of the upcoming Shadowlands expansion are the highest we've seen at this stage ahead of any release.
Blizzard has the largest team ever working on ensuring shadowlands meets all of our players highest expectations.
And to deliver more frequent major content launches across both the modern game and classic in the years ahead.
Blizzard is also dedicated creative talent focused on delivering multiple mobile experience in the coming years.
Our franchises are well suited for global mobile console and PC gaming audiences and we're determined to deliver compelling mobile experiences for both existing fans of our franchises and the hundreds of millions of players around the world who haven't yet played our games.
We also see continued growth opportunities for candy crush even as the franchise continues its leadership is the number one franchise in the U.S. app stores with both in App purchases in advertising driving growth for the third quarter will continue to introduce competitive and collaborative social features to further broaden reach and.
Deepen engagement in the coming quarters.
There are few entertainment franchises to generate over $1 billion in annual net bookings and today, we operate three of them call of duty world of Warcraft, and Candy crush and each has clear opportunity for sustained growth.
With our teams hard at work on multiple products in the Diablo franchise and major innovations for the Overwatch franchise as well as a number of new potential franchises at Blizzard and King the pipeline across our portfolio and the potential for revenue and earnings expansion has never been stronger.
I am so proud of our employees amid what continues to be the most challenging environment I've ever experienced in my three decades of leading the company. Our teams continued to perform with extraordinary commitment to our audiences around the world.
Of course, ensuring that our employees and their families are safe and healthy remains my number one priority.
The majority of our teams continue to work successfully from home and they continue to show ingenuity and fortitude as they overcome challenges in health care family care and work.
For the balance of this year, we're raising our outlook and we believe we will continue connecting engaging more players than ever before in 2021.
Thank you for your continued support Daniel will now review the highlights of our operations for the past quarter with you.
Thank you Bobby.
Even through the challenges of operating during the pandemic Activision Blizzard significantly exceeded its third quarter outlook with strong execution across our three strategic growth drivers expanding audience reach deepening engagement and increasing player investment.
Our player base grew 23% year over year and total time spent in our games increased even more.
We grew net bookings, 46% year over year, driven by strong in game performance with substantial operating margin expansion and earnings per share more than doubling year over year.
We achieved these results through a laser focus on execution, both in major content launches and live operations across PC console and mobile.
And in our new approaches to engagement and business models, particularly the introduction of call of duty free to play experiences.
Our continued investments and successful initiatives for our largest franchises position the business for ongoing strong results and we expect reach engagement and player investment to remain structurally higher going forward.
We're seeing a clear return on our increased investment in creative and commercial talent and we intend to continue scaling our capabilities across our six key franchises call of duty Candy crush world of Warcraft, Hearthstone Diablo and Overwatch.
We're still early in unlocking the full potential of these wholly owned franchises and IP.
Now turning to our franchise and operational highlights across our business units.
Starting with Activision monthly active users tripled year over year to 111 million.
The call of duty ecosystem had another fantastic quarter again, delivering substantial year over year growth across reach engagement and player investment.
The combination of premium modern warfare content and the free to play wars on experience on PC and console continues to expand the community and drive deep engagement.
Modern warfare and war zone saw more than three times as many monthly players as the prior title in the year ago quarter with strong growth, both inside and outside our traditional regions.
Console player numbers grew strongly and monthly players grew over 10 fold year over year on PC.
Across platforms hours played in the modern worker universe, where approximately seven times higher year over year versus the prior title.
We again saw substantial year over year growth in premium game sales as wars on players chose to upgrade to the full call of duty experience water.
Modern warfare. Its first year sales are the highest in call of duty its history with two thirds of lifetime units sold digitally.
And we are seeing sustained strength in the franchises revamped endgame system with console and PC endgame net bookings four times a year ago level.
On November 13, we will watch black ops called war, the latest installment for call of duty.
Anticipation for the release is high with far more players engaged in the games public testing then for the year ago title.
Supporting cross platform play across PC current generation and next generation consoles. The Premier release includes three compelling modes, an immersive single player campaign set in the volatile geopolitical battle. The 19 eighties, the deep end engaging multiplayer game play that black ops fans expect any.
Terrific zombies mode.
And there's so much more to come.
We are releasing the title into the largest and most engaged community at the time of launch in franchise history, and we are leveraging our direct digital relationships with our players to build awareness through entirely new in game initiatives.
Black ops Cold wars in game content will be centered around the same endgame system that resonated so well the players in modern warfare.
And starting with the first season of in game content in December Lockups Cold War will be integrated into war zone.
We'll bring black ops cold wars characters and weaponry into the free to play experience along with substantial new content, ensuring that war zone remains both a terrific experience and a powerful onramps. So the franchises premium content.
We are confident that call of duty will once again be the number one console franchise globally for upfront sales. This year and we expect a continued shift to full game downloads given the convenience for players and endgame marketing initiatives enabled by war zone.
On mobile call of duty mobile sustained the impressive levels of reach and engagement seen in the second quarter.
As the game passes its first anniversary the team continues to refine and optimize gameplay seasonal content and the endgame economy, leveraging over 15 years of proven content and learnings in the franchise.
October saw the biggest update yet with the addition of the Alcatraz map for Black ops for and further social features driving continued growth in engagement and player investment versus Q3's season.
And with further innovations ahead the game now in final large scale testing in China. The title is well positioned for further growth.
That enters its second year.
Also in Q3, the inaugural season of the call of duty lead concluded with the Champs weekend breaking records for the highest viewership of any call of duty esports at that.
Overall, the call of duty franchise and ecosystem are in great shape, and we can't wait to build on this with a premium release in a couple of weeks.
Also in the third quarter Ive Division continued to Reimagine, the lumbered IP with the successful launch of Tony Hawkes Pro skater, one and two.
The game received fantastic reviews, and became the fastest title in the series to reach 1 million units sold highlighting the opportunity for our rich library of classic franchises.
And in October we launched crash bandicoot for its about time, the first all new crashed title in over a decade again to a great critical reception.
Now turning to Blizzard.
And then you were 30 million in Q3.
Well the Warcraft may use were stable year over year, having structurally increased last Q3 following the launch of classic.
Anticipation continues to build for the shallow and expansion ahead of its November 23rd watch.
Franchise engagement is at its highest level for this stage ahead of an expansion in a decade with pre sales well ahead of any prior expansion.
The team is determined to build on this momentum incorporating the communities feedback from testing to ensure that the expansion delights and engages players over sustained period.
The response has been extremely positive so far, particularly around the new character customization options and the new player experience, which not only streamline how players enter the game, but allows current players to seamlessly level of new characters in previous expansion.
And Blizzard will follow shadowlands with more content for the franchise than ever before into the next year and beyond.
Hours played and Hearthstone grew year over year in the third quarter with the battlegrounds modes seeing sustained strong engagement since its release last November.
Battlegrounds engagement illustrates the significant potential for new modes within the franchise and the team continues to execute against innovative pipeline with regard to this opportunity.
November we'll see the broader release of duals, a new player versus player mode, which is already seeing strong interest in early access since it's revealed last week alongside a new endgame progression system and the latest expansion madness at the dark mint fare all aimed at providing a rich and rewarding experience that drives.
Growth.
Across existing lapsed and new players.
Overwatch continues to have a large and dedicated community with an average 10 million monthly players in the quarter more than four years since launch millions more have engaged with the 2020 season of the Overwatch League with the Grand finals being the most watched event in the leagues history.
And finally amongst multiple blizzard mobile titles under development Diablo model side hugely enthusiastic response in internal testing in the third quarter and will soon enter external regional testing.
Now turning to King.
Overall, King network and May use were stable year over year at 249 million, while kings. Most important franchise candy crush again grew may use solidly year over year.
Endgame net bookings grew year over year.
Things initiative to attract both lapsed and new Payors have meaningfully improved the trajectory for a number of payers over the last year.
And we are now starting to see the benefits of these actions in net bookings with a healthier payer base that is responding positively to compelling new features and live operations.
As a result candy crush was once again the top grossing franchise in the U.S. App stores.
We also saw strength in two of Kings other franchises farm heroes and bubble Witch, which both grew net bookings year over year as the team delivered a higher frequency of in game content.
Along with higher performance for in App purchases, King again delivered robust double digit growth in advertising with strength across both direct brand advertisers and partner networks.
The teams investments in its direct sales channel Tech infrastructure and product innovation continues to pay off.
The advertising business is on track to grow net bookings around 40% this fiscal year and similar to kings in that business is set to enter next year with a strong trajectory.
And as we announced this week kings newest title crashed bandicoot on the run will launch in spring.
The title has already been met with incredible fan reception with pre registrations off to a very strong start around 10 million people have already registered their interest in the game.
In summary execution against our franchise strategy has driven another quarter of strong year over year growth across the business and we have momentum heading into Q4 and next year.
Dennis will now share the detailed results of our third quarter and specifics of our raised outlook.
Thanks Daniel.
I will review, our Q3 2020 results as well as our outlook for the fourth quarter.
Bookings in the third quarter grew 46% year over year to $1.77 billion with digital net bookings grew 65% year over year and representing over 90% of the total.
Let's start by looking at our segment results.
Activation revenue was $773 million growing 270% year over year.
Growth was again driven by modern warfare and war zone in game revenues strong sales of premium modern warfare. The addition of call of duty mobile and the successful Tony Hawk launch.
Operating income was $345 million with an operating margin of 45%.
Third quarter Records.
Blizzard revenue was $411 million growing 4% year over year, driven by another strong quarter of growth for world of Warcraft operator.
Operating income was $133 million, increasing 80% year over year with an operating margin of 32% 14 points higher year over year.
King revenue of $536 million was 7% higher year over year with both in App revenue and advertising revenue growing.
Operating income was 248 million the highest since acquisition with an operating margin of 46% eight points higher sequentially boosted by lower sales and marketing versus Q2.
In total across our segments endgame that bookings were $1.2 billion growing 69% year over year with each of Activision Blizzard and king contributing to the strong performance total.
Total segment operating profit of $726 million grew 147% year over year. This.
This was despite an approximately 50 million dollar headwind as we adjusted E Sports franchise terms and made investments to support our team owners and ecosystems amid a challenging environment for live events. During the pandemic. This was primarily and Blizzard segment results.
Now, let's turn to our consolidated results.
Please refer to our earnings release for a full GAAP to non-GAAP reconciliations.
Quarter, we generated Q3, GAAP revenues of $1.95 billion $154 million above our August outlook I.
This includes the net recognition of deferrals of $187 million net.
Net bookings of $1.77 billion or $117 million above our August outlook.
And we generated Q3, GAAP EPS of 78 cents and Q3, non-GAAP EPS of 88 cents, which was 14 cents and 13 cents above guidance respectively. These.
These figures include the net recognition of deferrals of 17 cents.
Turning to cash flow and the balance sheet Q3, operating cash flow was $196 million, reflecting higher cash taxes paid and changes in working capital.
Year to date operating cash flow of $1.11 billion grew 22% year over year.
Our cash and investments at the end of September were approximately $7.6 billion and we ended the quarter with a net cash position of approximately $4 billion.
During the quarter, we issued $2 billion of unsecured 10, and 30 year notes.
We redeemed all of our outstanding $1.05 billion of notes due in 21 and 22.
With the remaining $950 million further strengthening our balance sheet as we took advantage of historically low interest rates.
Now, let's turn to our outlook for the fourth quarter and the full year.
In the fourth quarter. In addition to ongoing live operations and in game content across the portfolio Activision launched crashed bandicoot for its about time on P. S. Four and Xbox one in early October and of course on November 13th we will release call of duty Black Ops Cold War on current and next Gen, Playstation and Xbox and PC.
Blizzard will release Hearthstone Manocept, the dark mint fare expansion and the world of Warcraft Shadowlands expansion.
King is planning numerous features an innovative live ops and candy crush.
Before I discuss the specifics of our outlook I'll provide some context.
We are entering the holiday season with strong momentum across all duty world of Warcraft and Candy crush our three largest franchises, which bodes well for the future. We are launching major new content for call of duty and world of Warcraft into highly engaged communities, but at the same time in the short term, we wish to remain prudent in our assumptions regarding the consumer spending environment the console transition and the pace.
The player migration from deeply engaging existing content.
I'd also note that while color BT mobile has entered final large scale testing in China. We do not include material revenue from the region, our Q4 outlook and anticipate monetization will become more meaningful next year.
For Q4 on a GAAP basis, we expect revenues of $2.0 billion, including net deferrals of $731 million, we expect net bookings of $2.7 billion.
We now expect to GAAP only restructuring charge of approximately 50 million and a GAAP operating margin of 24%.
We expect GAAP and non-GAAP share count of 782 million and EPS of 44 cents.
For Q4 on a non-GAAP basis, we expect an operating margin of 33% and non-GAAP EPS of 63 cents, including net deferrals of 46 cents.
On a GAAP basis for 2020, we now expect revenues of $7.7 billion, including net deferrals of $425 million.
We now expect net bookings of $8.1 billion $475 million above August outlook.
We expect a GAAP only restructuring charge of approximately 90 million and a GAAP operating margin of 34%.
We expect GAAP and non-GAAP share count of 779 million GAAP EPS of $2.61.
For 2020 on a non-GAAP basis we.
We expect an operating margin of 39% and non-GAAP EPS of $3, Nate, including net deferrals of 27 cents.
Now I'd also like to briefly touch on 2021.
I'd note that it is still early we remain cognizant of macro risks and we will take our normal prudent approach to forecasting results but.
Strong business momentum works in our favor and we see numerous opportunities to expand the scale of our franchises successful execution against our plans would position our segments to build on the aggregate performance reflected in our revised 2020 outlook.
So in closing our business it seemed that structural change this year and we continue to experience strong momentum heading into the holiday season of next year we.
We see substantial opportunity ahead for our franchises across geographies platforms and business models.
And we'll continue to focus on business improvements in operating efficiencies and the service of investing more in development to further expand our communities and franchises.
We remain confident that executing against our plan will position us to deliver strong results and shareholder value over the long term.
Now I welcome our business leaders, Jay who mom and Rob as they join us for the Q and a portion of the call off.
Operator.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble roster.
Our first question comes from Ryan <unk> from Barclays. Please go ahead.
Hey, guys just Brian Thanks for taking the question on call of duty what should the player community expect a sea change.
Following the launch of Cold War next week.
Equally curious how the team plans to tie that progression between Cold Wars, a multiplayer mode and then the free to play mode and War zone and what they would say is the value prop for those wars on players to upgrade the Cold War.
And as a follow up is there anything you guys can say about the timing of content upbeat.
For both Cold War and war zone, and how those two may overlap. Thanks.
Hey, Ryan its Rob Thanks for the question.
Let me first start by saying that obviously, we're thrilled with how the community has embraced war zone.
Obviously, we're very thankful for their support we're also really proud of the work in our development teams have done on the game and continue to do so.
What we've done is really become an incredible addition to the franchise, it's a central place, where we can connect and engage the entire call. The community and I also think maintaining that tight connection that premium games has been really important, especially for players who want to check out everything the quality has to offer and we saw that with modern warfare plan.
Can you that in the future. So the player community should expect to see war zone evolve and innovate a lot of fun ways.
And alongside our premium games importantly.
Now, let me clarify a bit on your question on how Cold War and war zone are going to work together and I'll do this at a high level and please also note that we can be sharing a lot of details with the community coming up fairly soon but first core.
Core blackouts Cold war progression will build upon the success and we'll work similarly to how it did modern warfare. So for example, all the awesome, new Black ops weapons and operator, you on lock in your level, one to 55 progression will be usable and black ops and in war zone.
Just like that work in modern worker Black ops Battle pass content store content will also work across black ops in war zone.
Now players of course continue to use a modern worker at content was down once black ops launches and as a result, one cool feature that players will see is that they will be able to choose either their black offload out.
For their modern warfare load outs in war zone for their gameplay and this is just one example on how war zones going to expand and evolve over time.
Now players can also expected ton to three post launch content.
From the blackouts Cold war premium experience across multiplayer and zombies I think we did a great job on this for the community for everyone modern warfare and we'll do the same with black box.
In November 13th really is just the beginning for this game and I think it's a great game and just like modern warfare. This game is going to get bigger and better and much more fun as the year goes on.
So if you turn in terms of overall progression unlocks and content, we really don't upon what has worked really well for the community with modern warfare, and we think people and players will be really excited checkout everything black ops Cold war has to offer as well.
Now in terms of timing of the next season Daniel mentioned this we expect season, one for Black Ops Cold War and work down to launch this December and that's when you're going be able to start to see the impact of black ops in mortgage I'm really starting to work together and cool.
Cool and fun way again, a lot more detail here, which we're going to be reveal revealing in the next week or two.
And I guess the file thing I would say and Gail I think mentioned that well what's exciting for US we are launching black ops cold war into the largest and most engaged community oncology history and now we're really excited to see what the company does and how they play together across its ecosystem is now really expanding even further and we're excited about where it's going.
Thanks for the question.
Thanks Ryan.
The next question please.
Next question from Matthew Thornton from Truest Securities. Please go ahead.
Hey, good afternoon, everybody. Thanks for taking the question.
You know, there's a lot going on right now in terms of platforms. So not only next gen consoles launching but new entrants in the streaming space in particular, just wondering if you can update us on your latest views on some more if he does supporting more platforms over time and also your strategy with respect to subscription so color there would be it would be helpful. Thanks.
Okay.
Thanks, Matt This is Daniel I'll take that question look we love to see the platform innovation be it in next gen consoles or streaming or the increased power of mobile devices, which really enables new and unique ways for us to deliver experiences and content to our communities.
With more well capitalized companies coming into the space and really investing to extend the reach of gaming. If anything. This is just going to accelerate the growth in the in already growing industry. So its actually great for everybody.
These platforms really need great content to thrive and for us as a leading content owner that fully olds, our franchises and our key we're really well positioned to take advantage of this expansion platforms and also the associated economics.
We're also excited just for the next generation of costs is that a potential they offer to really bring even more compelling experiences to our players and you're already seeing that supporting the new hardware with the launch of Black Ops Cold War on day, one as Rob was mentioning.
Ultimately for US our priority is to build the best player experiences where players want to be and really where they can connect with other members of the community. It's just so powerful.
That said, though our development resources just are finite so we really have to focus on where the biggest opportunities are for example, we need to make sure that we're enabling our franchises on the billions of mobile devices that are available right now.
That's by far our biggest opportunity and we're investing meaningfully to capitalize on this and to take all our franchises to mobile overtime, that's really really important for US now regarding your question on subscriptions were also very fortunate in that we have exposure to every gaming business model at scale.
The original if you had to Warcraft.
We made the delay earlier to shadowlands to make sure that the quality of the games really going to match, our expectations and that the game was gonna break.
And the community feedback that we received on that decision was overwhelmingly positive.
So we're keeping the quality of the game as a top concern. It's helped drive I think a lot of excitement for awhile.
And the form really strong player engagement and as well as expansion pre sales.
So players are already been doing the content that are released with the shadowlands pre patch, but I want to talk about a feature that I'm personally really passionate about which is the new player experience with.
So the Goldford. This system was to really streamline learning how to play Warcraft for newcomers and also give people who have multiple characters away to level up in previous expansion.
So today the way we look at the Wow ecosystem is that we operate two distinct game modes.
With with very engaged player basis, and that gives us the opportunity to deliver a lot of content into the lab community really more than ever before all under a single unified subscription.
We've talked before about our plans to expand besides the development teams.
And we intend to install the Orange, it's shadowlands were even more content across both the modern dance and and classic.
But if we step back we think of Warcraft as a huge franchise and Wow is only a part of it.
We're always exploring how to express war craft with new experiences and you see a lot of opportunity for growth ear in 2021 and beyond thanks for the question.
Thanks, Mike offer it to the next question please.
The next question comes from Mike Ink from Goldman Sachs. Please go ahead.
Good afternoon, and thanks for the question I just have to first could you talk about the future of called D. D on mobile, including giving a more detailed update on.
Card mobile in China.
Is there anything more you can share about timing or the market opportunity and then second are there any opportunities to make more zone truly cross platform by making it available on mobile Ah any thoughts there would be great. Thank you.
Yeah.
Hey, Mike It's Rob I'll take this one you know I think just starting at a high level again I called the mobile we're really happy and proud of the success. We've seen here with you over 300 million downloads around the world. We did maintain a lot of good momentum in the third quarter, driven really by the frequency of updates in the quality of those updates.
Most importantly, and it's resonating really well with the community and the good time for US is that momentum is continued now already into the fourth quarter and October we had a big one year anniversary of that and I guess, one metric I can give you would suggest we're off to a very strong start the first week of that event has been the strongest first week.
We've seen in terms of gross bookings and so that's really nice positive and continue momentum that we're seeing now in terms of future growth, we do still see strong potential for calling to the mobile China. Obviously, we believe can become a significant contributor to our overall franchise revenues.
And we talked about how the title has been approved and now it's in final testing. So you know again, we expect to see it soon and hope to see it soon but we think and have a great impact in the region and it's really not just China for example, Mexico, and Brazil or top five markets for us in terms of both installed in revenue and so we see a big opportunity to further <unk>.
Spanned geographically in other markets through mobile to increase marketing and accessibility initiatives over the coming quarters.
Now we also see a big opportunity to further connect the mobile experience to what's happening on console M. P. C and to your point that includes war zone. As you know wears on for US is a very important strategic initiative I just don't have any announcements that we're gonna share today on it but certainly.
Arizona is important piece for us across a franchise.
Overall, we're really happy with our progress on mobile for call of duty and we're going to continue to invest in talent and capability bring the best possible call beauty experiences to the modem platform.
And you know with these opportunities on mobile that we're talking about right now and I think with the momentum are seeing on the franchise across console M. P. C across everything we have going on and we do believe called idiots really well positioned for growth next year and well into the future.
<unk>.
Thanks, Mike.
The next question comes from Alex Ciano from Jeffries. Please go ahead.
Thanks for the question just within the King segment, hoping you can just provide some additional color around how you're thinking about I D. S. A and the potential impact of both the advertising business as well as user acquisition and then maybe just from a high level you can talk through any incremental content or initiatives that can drive further girl.
With within that segment. Thank you.
Hey, Alex Thanks for the question. This is my mom let.
Let me take your second question first I'll provide context on how we're thinking about the business overall, and then kind of the idea so changes in context of that.
So as you can see from two three results, we have some great momentum and making business across both an app purchases and also advertising.
So looking add we expect that momentum to deliver gross baths next year and have you noticed some earlier, we also will add to that new launch with crash bandicoot on demand.
So, but let me start with the enough business in the dynamics there.
You know our initiatives brought in the third base delivering near me some really good results for us in our name Great Foundation for clothes for the future.
And can do particular, we see quite a few opportunities ahead of us, including we did a lot of innovation around competitors and collaborators social features they're driving franchise school with an engagement you know to give you. Just one example in the United Kingdom recently with Iran can be all stars and that.
Kansas first ever competitive tournament, which was limited in the United Kingdom, and we saw some really terrific results across screech engagement and clear investment and so the team is really thinking about exploring even more initiatives to build on the success.
So when you think about idea, saying that contacts and our ability on his or acquisition bring him in your prayers.
Point out that at the scale of the King network.
And can be strong brand recognition, we drive a significant majority of items calls organically uhm.
Uhm. So many of our competitors are typically how much more reliant on aggressive pages or acquisition and we are so while we will see how this plays out we think that we ultimate you'll see less and bathroom and ideas for a change here on the acquisition piece of of the King segment.
Now on the advertising side, that's also been performing quite well driven by really strong execution and we've we've been exam July thing or brown safe platform.
And we've introduced as you've heard in previous calls a number of really great product innovations, there like sponsorships, which we'd have been delivering for us.
So when I do say it comes into that context, alright, there may be some short term volatility and advertising just soon as a whole, but we really believe that the investments in our own direct sales and our own tech have really positioned us for future uncles can articles next year as part of that.
So it was that you know I add on as well as your next year is a year of a lunch for us around crash bandicoot on the run.
And we'll too long and lunch in the spring and we would expect that contribute to king's top and bottom line again going with an iconic franchise from the who can keep catalog of IP Activision Blizzard.
Enables us to benefits from brand recognition.
So not wait a good momentum right now and I feel really really good about our growth prospects for the business in each one of these areas and how they carry forward into into next year and kind of the context of the kind of IBSA changes as far as that.
Thank you.
Okay. Thanks, Alex operated we'd have time for one last question. Please.
The next question is from Marianne Lou from Barclays. Please go ahead.
They they started taking the questions I have two one that's no longer term and 192021 so.
So you made a number of significant changes as an organization in the past couple of years with the company itself and changes and improvements in late 2018 to doubling down on franchises like call of duty by standing at your new platforms and introducing new features like cross platform play.
But the new Gen castles coming out in a couple of weeks, how do you envision the business of all day in the next five to 10 years and how Activision as a company benefit from those trends and then just real quickly Dennis you mentioned that the successful execution in 2021 will allow you to build on your needed Twenty-twenty outlook.
Wanted to clarify does that mean.
Potentially on your growth in terms of either the top or bottom line next year or am I, just reading too much into it. Thanks.
And Mario is Bobby.
Jake.
Larger.
Outlook so.
I think when you look at this here and particularly the multiple touch place of opportunity that we're realizing on franchises like call of duty.
Those same opportunities exist for us on all of our franchises as well as the new potential franchises that we have in development.
And as my now 31st year of doing this I don't recall, a time, where I've seen more opportunity for growth and margin expansion.
All the time that I've been doing this the challenge for US is gonna be one prioritizing opportunity and then to making sure that we have the right talent the lines of those opportunities, but when I look at the success that we're experiencing now and then I think about the opportunities we have over the next few years, including next year.
More momentum going into the next few years that I can remember in a long time and a lot of the changes that we've made over the last few years.
Really starting to pay dividends. So from long term perspective, I think more platforms more opportunities to deliver interactive entertainment experiences increasing engagement that we're seeing from our gains becoming increasingly social the shift to more frequent delivery of.
Content the flexibility that we have in player investment models.
I haven't seen as much opportunity ever and so the child for us is going to be made sure. We prioritized them effectively and have the right people in place to take advantage of them, but.
What about long term outlook I I don't think it's ever been better.
And then just turning to the second part of your question I think what you heard sprinkled through you know J, Rob her mom and each of the major franchises, there's a lot of opportunity for growth building up Bobby's comment both.
Both in the near term and in the long term and I think you heard that right in terms of the specific comment in my section regarding our segment operating results in being able to go off of that base that guidance space, which we've given.
For 2021, so we feel like we have a real opportunity to do that with great execution. So we've got great momentum and our biggest franchises and we think that'll bode well as we head into 2021 and beyond so well.
Well, we know everyone had a lot of other companies reporting Tonight. So we appreciate you spending time with US. This afternoon, and we'll look forward to talking to many of you over the coming weeks, but thanks for your time and attention to that would really appreciate it.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
[music].