Analysis of Reportable Segments
Activision Blizzard Inc. operates in 3 segments: Activision Publishing, Inc. (Activision); Blizzard Entertainment, Inc. (Blizzard); and King Digital Entertainment (King).
Segment Profit Margin
Activision Blizzard Inc., profit margin by reportable segment
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Activision Publishing, Inc. (Activision) | 40.21% | 47.93% | 47.39% | 38.31% | 41.13% |
| Blizzard Entertainment, Inc. (Blizzard) | 31.06% | 38.20% | 36.38% | 26.99% | 29.90% |
| King Digital Entertainment (King) | 40.25% | 44.19% | 39.60% | 36.44% | 35.95% |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Activision Publishing, Inc. (Activision) Profit Margin Trend
- The profit margin for the segment initially declined from 41.13% in 2018 to 38.31% in 2019. Subsequently, it exhibited a significant improvement, reaching a peak of 47.93% in 2021, before declining again to 40.21% in 2022. Overall, the trend shows fluctuations with a notable peak in 2021 followed by a significant decrease in the final year.
- Blizzard Entertainment, Inc. (Blizzard) Profit Margin Trend
- The profit margin trend for this segment shows a consistent decline from 29.90% in 2018 to 26.99% in 2019. This was followed by a recovery and increase to 38.20% in 2021, marking the highest value in the observed period. However, in 2022 the margin decreased again to 31.06%. The pattern reflects volatility, with a recovery phase that peaks in 2021 before retreating.
- King Digital Entertainment (King) Profit Margin Trend
- The profit margin for the King segment demonstrates a generally upward trajectory from 35.95% in 2018 to 44.19% in 2021. Despite a slight decline in 2022 to 40.25%, the overall trend across the period is positive, indicating progressive improvement with less pronounced fluctuation compared to the other segments.
- Comparative Analysis Across Segments
- Among the three segments, Activision shows the highest volatility with a marked peak and decline within the period. Blizzard presents a more volatile trend with an initial decline, recovery, and subsequent drop, while King shows a steadier increasing trend with moderate decline in the last year. The profit margins across all segments reflect market or operational factors influencing profitability, with 2021 being a peak year before declines in 2022 became evident.
Segment Profit Margin: Activision Publishing, Inc. (Activision)
Activision Blizzard Inc.; Activision Publishing, Inc. (Activision); segment profit margin calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment operating income | 1,317) | 1,667) | 1,868) | 850) | 1,011) |
| Segment net revenues | 3,275) | 3,478) | 3,942) | 2,219) | 2,458) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 40.21% | 47.93% | 47.39% | 38.31% | 41.13% |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Segment profit margin = 100 × Segment operating income ÷ Segment net revenues
= 100 × 1,317 ÷ 3,275 = 40.21%
- Segment Operating Income
- The segment operating income exhibited a fluctuating trend over the analyzed period. Beginning at 1,011 million USD in 2018, it experienced a decline to 850 million USD in 2019. Subsequently, there was a significant increase in 2020, reaching 1,868 million USD. However, this was followed by a decrease in 2021 to 1,667 million USD and a further decline in 2022 to 1,317 million USD. Overall, the segment operating income showed volatility with a peak in 2020 and a downward trend thereafter.
- Segment Net Revenues
- Segment net revenues mirrored a similar pattern, initially declining from 2,458 million USD in 2018 to 2,219 million USD in 2019. A substantial increase was observed in 2020, with revenues rising sharply to 3,942 million USD. This was followed by a decline in 2021 to 3,478 million USD and a further decrease in 2022 to 3,275 million USD. Despite the decreases after 2020, revenues remained significantly higher than the levels observed in 2018 and 2019.
- Segment Profit Margin
- The segment profit margin presented variability over the years. It started at 41.13% in 2018, slightly decreasing to 38.31% in 2019. In 2020, there was a notable increase in margin to 47.39%, which was maintained in 2021 at 47.93%. However, by 2022, the profit margin decreased to 40.21%. This indicates that while profitability peaked around 2020 and 2021, it experienced a decline in the most recent year, aligning with reductions in both operating income and net revenues.
Segment Profit Margin: Blizzard Entertainment, Inc. (Blizzard)
Activision Blizzard Inc.; Blizzard Entertainment, Inc. (Blizzard); segment profit margin calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment operating income | 625) | 698) | 693) | 464) | 685) |
| Segment net revenues | 2,012) | 1,827) | 1,905) | 1,719) | 2,291) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 31.06% | 38.20% | 36.38% | 26.99% | 29.90% |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Segment profit margin = 100 × Segment operating income ÷ Segment net revenues
= 100 × 625 ÷ 2,012 = 31.06%
- Segment net revenues
- Segment net revenues exhibit a fluctuating trend over the five-year period. Revenues decreased significantly from $2,291 million in 2018 to $1,719 million in 2019, representing a notable decline. After this drop, revenues partially recovered, increasing to $1,905 million in 2020, followed by a dip to $1,827 million in 2021. In 2022, revenues increased again to $2,012 million, indicating some recovery but remaining below the initial 2018 level.
- Segment operating income
- Segment operating income also shows volatility, beginning at $685 million in 2018 and dropping substantially to $464 million in 2019. Subsequently, operating income improved to $693 million in 2020 and remained relatively stable at $698 million in 2021. In 2022, there was a decline to $625 million. Despite fluctuations, operating income in the latter years stayed above or near the 2018 baseline, with the peak in 2021.
- Segment profit margin
- The segment profit margin demonstrates considerable variability throughout the period. It declined from 29.9% in 2018 to 26.99% in 2019, reaching its lowest point. Following this, there was a strong upward trend, with margins rising markedly to 36.38% in 2020 and further to 38.2% in 2021, indicating improved profitability. In 2022, the margin decreased to 31.06%, reflecting a reduction in profitability compared to the previous two years, though it remained higher than in 2018 and 2019.
- Overall analysis
- Over the observed timeframe, the segment experienced initial downturns in revenue and operating income in 2019, likely impacting profit margins. Recovery phases occurred in 2020 and 2021, characterized by increased operating income and significant improvement in profit margins, suggesting better cost management or favorable business conditions. However, 2022 saw declines in operating income and profit margin, despite a modest rebound in revenues, implying potential pressures on costs or pricing power. The segment's financial performance indicates cyclical behavior with opportunities for growth tempered by periodic challenges.
Segment Profit Margin: King Digital Entertainment (King)
Activision Blizzard Inc.; King Digital Entertainment (King); segment profit margin calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment operating income | 1,121) | 1,140) | 857) | 740) | 750) |
| Segment net revenues | 2,785) | 2,580) | 2,164) | 2,031) | 2,086) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 40.25% | 44.19% | 39.60% | 36.44% | 35.95% |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Segment profit margin = 100 × Segment operating income ÷ Segment net revenues
= 100 × 1,121 ÷ 2,785 = 40.25%
The segment data for King Digital Entertainment over the five-year period presents several notable trends in financial performance and profitability.
- Segment Net Revenues
- Segment net revenues exhibited a fluctuating but generally upward trend from 2018 through 2022. Starting at $2,086 million in 2018, revenues slightly decreased to $2,031 million in 2019. However, the segment recovered and experienced consistent growth thereafter, increasing to $2,164 million in 2020, $2,580 million in 2021, and reaching $2,785 million in 2022. This indicates an overall positive trajectory in revenue generation, with a notable acceleration in the later years.
- Segment Operating Income
- Operating income showed a somewhat mixed pattern initially but overall improved substantially over the period. After a modest decline from $750 million in 2018 to $740 million in 2019, operating income rebounded to $857 million in 2020. The segment then demonstrated strong growth with operating income climbing to $1,140 million in 2021 before slightly declining to $1,121 million in 2022. Despite the minor decrease in 2022, operating income in the final year remained significantly higher than in the initial years, reflecting improved operational efficiency and profitability.
- Segment Profit Margin
- The profit margin percentage consistently improved from 2018 to 2021, increasing from 35.95% to a peak of 44.19%. This continuous uptrend illustrates enhanced profitability relative to revenue during this period. In 2022, the profit margin decreased to 40.25%, which, while lower than the previous year’s peak, still represents a strong margin above earlier years. This decline may suggest increased costs or a shift in revenue composition but overall indicates sustainable profitability at a high level.
In summary, the segment experienced steady revenue growth with some variability in operating income in the earlier years, followed by notable improvements in both income and profit margin, highlighting increased operational efficiency and robust profitability. The slight decline in profit margin in 2022 warrants monitoring to understand underlying causes but does not detract from the overall positive financial trends observed across the analyzed period.
Segment net revenues
Activision Blizzard Inc., segment net revenues by reportable segment
US$ in millions
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Activision Publishing, Inc. (Activision) | 3,275) | 3,478) | 3,942) | 2,219) | 2,458) |
| Blizzard Entertainment, Inc. (Blizzard) | 2,012) | 1,827) | 1,905) | 1,719) | 2,291) |
| King Digital Entertainment (King) | 2,785) | 2,580) | 2,164) | 2,031) | 2,086) |
| Total | 8,072) | 7,885) | 8,011) | 5,969) | 6,835) |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Activision Publishing, Inc. (Activision)
- The net revenues for this segment showed a fluctuating trend over the five-year period. Starting at 2458 million US dollars in 2018, revenues declined to 2219 million in 2019. However, a significant increase occurred in 2020, reaching 3942 million. This was followed by a decrease in 2021 to 3478 million and a further decline in 2022 to 3275 million, indicating some volatility after the 2020 peak.
- Blizzard Entertainment, Inc. (Blizzard)
- The Blizzard segment experienced a general downward trend from 2018 to 2021. Revenues decreased from 2291 million in 2018 to 1719 million in 2019. A modest recovery took place in 2020 to 1905 million, but the revenues slightly decreased again in 2021 to 1827 million. In 2022, revenues rose to 2012 million, marking a positive movement after the previous declines but still below the 2018 level.
- King Digital Entertainment (King)
- King demonstrated consistent growth throughout the period. Revenues increased from 2086 million in 2018 to 2031 million in 2019, showing a slight dip but overall stability. From 2019 onwards, there was a continuous upward trend, with revenues rising to 2164 million in 2020, followed by more notable increases to 2580 million in 2021 and 2785 million in 2022. This segment showed the strongest and most steady growth among the three.
- Total Net Revenues
- The combined net revenues of the segments showed fluctuations but an overall growth trend across the five years. Starting at 6835 million in 2018, revenues decreased to 5969 million in 2019, mainly influenced by the decline in Activision and Blizzard segments. A sharp rise occurred in 2020 to 8011 million, coinciding with growth in Activision and King. The total slightly declined to 7885 million in 2021 but rebounded to 8072 million in 2022. The figures suggest recovery and growth driven primarily by King and partially by Blizzard's rebound, despite some decline in Activision revenues.
Segment operating income
Activision Blizzard Inc., segment operating income by reportable segment
US$ in millions
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Activision Publishing, Inc. (Activision) | 1,317) | 1,667) | 1,868) | 850) | 1,011) |
| Blizzard Entertainment, Inc. (Blizzard) | 625) | 698) | 693) | 464) | 685) |
| King Digital Entertainment (King) | 1,121) | 1,140) | 857) | 740) | 750) |
| Total | 3,063) | 3,505) | 3,418) | 2,054) | 2,446) |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Operating Income Trends for Activision Publishing, Inc. (Activision)
- The segment operating income experienced a notable fluctuation over the observed five-year period. Starting at $1,011 million in 2018, it decreased to $850 million in 2019, indicating a decline. This was followed by a significant increase in 2020 to $1,868 million, representing the highest level in the period. However, the subsequent years showed a downward trend, with operating income reducing to $1,667 million in 2021 and further declining to $1,317 million in 2022. Overall, while there was growth after the 2019 low, the segment did not sustain the peak levels achieved in 2020.
- Operating Income Trends for Blizzard Entertainment, Inc. (Blizzard)
- The operating income for Blizzard demonstrated relative stability with minor fluctuations. Beginning at $685 million in 2018, the figure dropped to $464 million in 2019, marking the lowest point within the timeframe. It then recovered modestly to $693 million in 2020 and remained almost unchanged at $698 million in 2021. In 2022, there was a slight downturn to $625 million. The data indicate a partial recovery after the decline in 2019, but without significant growth beyond the initial 2018 levels.
- Operating Income Trends for King Digital Entertainment (King)
- The King segment showed consistent growth throughout the period. Starting at $750 million in 2018, the operating income remained relatively stable in 2019 at $740 million. From 2019 onwards, there was a steady upward trajectory, increasing to $857 million in 2020, then more sharply to $1,140 million in 2021. In 2022, the operating income slightly decreased to $1,121 million but maintained a strong position well above the initial years. This suggests robust performance and sustained profitability growth over time.
- Total Operating Income
- Total operating income, aggregating all segments, followed overall growth despite some fluctuations. Beginning with $2,446 million in 2018, the total declined to $2,054 million in 2019, reflecting the overall segment downturns particularly in Activision and Blizzard. Thereafter, it increased markedly to $3,418 million in 2020, reaching a peak of $3,505 million in 2021. The total saw a reduction to $3,063 million in 2022, driven by declines in Activision and Blizzard despite strong performance from King. The total figures suggest that while the company experienced volatility, its operating income generally expanded over the five years, with a peak in 2021 before a partial retreat in the final year.
- Summary of Insights
- The operating income data reveal varied segment performances contributing to total results. Activision exhibited the most volatility with a sharp rebound in 2020 but subsequent declines. Blizzard showed a recovery from a low point in 2019 but did not demonstrate significant growth beyond initial levels. King was the most consistently growing segment, contributing positively to the overall income and partially offsetting declines in other areas. Total operating income trends underline the impact of segment fluctuations, with a peak in 2021 followed by a moderation in 2022, suggesting a possible market or operational challenge faced during the last year.