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).
Between 2018 and 2022, all three reportable segments exhibited a synchronized pattern of margin expansion peaking in 2021, followed by a contraction in 2022. A notable period of margin growth occurred between 2019 and 2021, suggesting systemic operational improvements or favorable external market conditions during those fiscal years.
- Activision Publishing, Inc. (Activision)
- This segment displayed significant volatility. After an initial decrease from 41.13% in 2018 to 38.31% in 2019, margins expanded sharply to a peak of 47.93% in 2021. By the end of 2022, the margin contracted to 40.21%, effectively returning to 2018 levels.
- Blizzard Entertainment, Inc. (Blizzard)
- Blizzard consistently maintained the lowest profit margins across the analyzed period. The segment followed a trend similar to Activision, with a dip to 26.99% in 2019 followed by a significant increase to a peak of 38.20% in 2021. The margin subsequently declined to 31.06% in 2022.
- King Digital Entertainment (King)
- King demonstrated the most stable and consistent growth trajectory. Margins increased steadily from 35.95% in 2018 to a peak of 44.19% in 2021. While a decline occurred in 2022, the margin remained relatively resilient at 40.25%, concluding the period with a net increase compared to the 2018 baseline.
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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%
The financial performance of the Activision segment from 2018 to 2022 is characterized by a significant peak in both revenue and profitability during the 2020-2021 period, followed by a subsequent contraction. While the segment experienced a temporary dip in 2019, the subsequent growth spike suggests a period of high operational leverage or increased market demand, which normalized toward the end of the analyzed period.
- Net Revenue Trajectory
- Segment net revenues exhibited considerable volatility, declining from US$ 2,458 million in 2018 to US$ 2,219 million in 2019. A substantial increase occurred in 2020, with revenues peaking at US$ 3,942 million. This peak was followed by a steady two-year decline, ending at US$ 3,275 million in 2022.
- Operating Income Fluctuations
- Segment operating income mirrored the revenue trend, dropping to US$ 850 million in 2019 before surging to a five-year high of US$ 1,868 million in 2020. From 2021 onward, operating income trended downward, reaching US$ 1,317 million by December 31, 2022.
- Profit Margin Analysis
- The segment profit margin demonstrated a notable expansion phase between 2019 and 2021. After hitting a low of 38.31% in 2019, the margin expanded significantly to reach 47.39% in 2020 and a peak of 47.93% in 2021. However, this efficiency gain was not sustained, as the margin contracted to 40.21% in 2022, returning to a level nearly identical to the 41.13% recorded in 2018.
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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%
The financial performance of the Blizzard segment between 2018 and 2022 is characterized by significant volatility in both top-line revenue and operational efficiency. While the segment experienced a notable contraction in 2019, it achieved a period of peak profitability during 2020 and 2021 before returning to margins more aligned with 2018 levels by the end of 2022.
- Revenue Trajectory
- Segment net revenues experienced a sharp decline from 2,291 million US$ in 2018 to 1,719 million US$ in 2019. This was followed by a gradual recovery phase, with revenues rising to 1,905 million US$ in 2020 and reaching 2,012 million US$ by 2022. Despite the recovery, revenues remained below the 2018 peak throughout the analyzed period.
- Operating Income and Margin Expansion
- Operating income mirrored the revenue dip in 2019, falling to 464 million US$, which resulted in the period's lowest profit margin of 26.99%. However, a substantial recovery occurred in 2020 and 2021, with operating income peaking at 698 million US$ in 2021. This period marked the highest operational efficiency for the segment, with profit margins expanding significantly to 36.38% in 2020 and 38.20% in 2021.
- Recent Performance Trends
- In 2022, a divergence is observed between revenue growth and profitability. Although net revenues increased to 2,012 million US$, segment operating income decreased to 625 million US$. This led to a contraction in the profit margin to 31.06%, indicating an increase in operating expenses relative to revenue growth during the final year of the sequence.
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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 financial performance of the King segment between 2018 and 2022 is characterized by overall revenue growth and a significant expansion of operating efficiency that peaked in 2021, followed by a moderate contraction in 2022.
- Revenue Trajectory
- Net revenues exhibited a general upward trend, increasing from US$ 2,086 million in 2018 to US$ 2,785 million by 2022. Aside from a slight dip in 2019, the segment experienced consistent year-over-year growth, with the most significant acceleration occurring between 2020 and 2021.
- Operating Income Trends
- Segment operating income rose from US$ 750 million in 2018 to a peak of US$ 1,140 million in 2021. A slight decrease was observed in 2022, where operating income fell to US$ 1,121 million. This divergence in 2022 is notable as it occurred despite the continued increase in net revenues.
- Profit Margin Analysis
- The segment profit margin expanded steadily from 35.95% in 2018 to a maximum of 44.19% in 2021, indicating a period of increased operational efficiency and improved cost management. However, the margin declined to 40.25% in 2022, reflecting an increase in the cost of operations relative to revenue growth during that fiscal year.
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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).
Total net revenues exhibit a volatile trajectory between 2018 and 2022, characterized by a notable contraction in 2019 followed by a substantial surge in 2020. While consolidated revenues reached their highest point of 8,072 million USD in 2022, the contribution from individual segments shifted significantly over the five-year period.
- Activision Publishing, Inc. Trend Analysis
- This segment demonstrated the highest level of volatility. Following a decline in 2019, revenues spiked to a period peak of 3,942 million USD in 2020. Since that peak, a steady downward trend has been observed, with revenues receding to 3,275 million USD by the end of 2022.
- Blizzard Entertainment, Inc. Trend Analysis
- Blizzard experienced a significant revenue drop in 2019, falling to 1,719 million USD. The subsequent recovery was gradual, with revenues slowly increasing to 2,012 million USD in 2022. This indicates a return to near-2018 levels after a prolonged period of stagnation relative to other segments.
- King Digital Entertainment Trend Analysis
- King exhibited the most consistent and sustainable growth pattern. After a marginal decrease in 2019, the segment maintained an uninterrupted upward trajectory, rising from 2,031 million USD in 2019 to 2,785 million USD in 2022. By 2022, King emerged as a primary driver of stability for the consolidated total.
- Consolidated Revenue Composition
- The aggregate revenue shifted from a diversified contribution in 2018 to a structure increasingly reliant on the King segment. The overall revenue growth observed since 2019 is largely attributable to the expansion of King's operations, which served to offset the revenue erosion seen in the Activision segment after 2020.
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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).
Consolidated operating income exhibited significant volatility between 2018 and 2022, characterized by a contraction in 2019 followed by a sharp expansion during the 2020-2021 period. Total operating income reached a peak of US$ 3,505 million in 2021 before moderating to US$ 3,063 million by the end of 2022.
- Activision Publishing, Inc. Analysis
- This segment demonstrated the highest level of volatility among the three reportable segments. After a decline from US$ 1,011 million in 2018 to US$ 850 million in 2019, operating income surged to a period peak of US$ 1,868 million in 2020. A subsequent downward trend is observed through 2021 and 2022, with income ending at US$ 1,317 million.
- Blizzard Entertainment, Inc. Analysis
- Operating income for Blizzard remained relatively stable compared to the other segments, despite a notable dip to US$ 464 million in 2019. The segment recovered to US$ 693 million in 2020 and remained steady at US$ 698 million in 2021, before experiencing a slight decrease to US$ 625 million in 2022.
- King Digital Entertainment Analysis
- A consistent growth trajectory is observed for King, which maintained the most resilient performance profile. Operating income grew from US$ 750 million in 2018 to US$ 1,140 million in 2021. Unlike other segments, King showed minimal volatility, ending 2022 with US$ 1,121 million, which represents a significant increase over its 2018 baseline.
- Comparative Contribution Trends
- The distribution of operating income across segments shifted over the analyzed period. While Activision provided the most significant contribution to the total income spike in 2020, King evolved into a more stable and proportionally larger driver of total operating income by 2022, mitigating the impact of declines seen in the Activision and Blizzard segments.
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