The beginning of 2019 has been marked by a number of changes at Activision Blizzard, with the company’s CFO, Spencer Neumann, leaving to join Netflix and Blizzard CFO Amrita Ahuja taking a new position at Square Inc. Today saw yet another shakeup when it was announced that the company is relinquishing the publishing rights to Bungie’s Destiny, and this has seemingly led to a significant drop in the value of Activision Blizzard’s stock.
Specifically, the company’s stock fell more than 6.5% following the announcement that Activision Blizzard would be separating itself from Destiny 2. This drop occurred in after hours trading, following a day that put the stock up 1% to $51.35, as the announcement was made after the market had already closed.
Indeed investors appear to be concerned about the implications of losing Destiny as a revenue stream, and Stifel analysts suggest that the sci-fi shooter’s absence will “create a void across Activision Publishing’s content pipeline.” That said, analysts further indicate that the overall financial ramifications will likely be limited, and Activision Blizzard seems to share this sentiment, stating in a securities filing that it does not expect an “operating loss” to occur.
When Activision Blizzard began publishing Destiny, following a partnership with Bungie that started in 2010, the company’s stock was on the rise. In 2015, it hit an all-time high before encountering some notable dips, which culminated last year with the company closing 2018 down 26% on the market.
Some analysts have cited concerns about the company’s 2019 release schedule as a culprit for these losses, pointing to a controversial showing at last year’s BlizzCon in particular. While Activision Blizzard indicates that the loss of Destiny will have no impact on its bottom line, the absence of the title from the company’s portfolio is certainly not improving the year’s offerings.
Last November, Activision Blizzard indicated that Destiny‘s financial performance had fallen below expectations, leading to Destiny 2‘s game director, Luke Smith, taking to social media in defense of the title. Clearly, the two companies have not been seeing eye-to-eye on the franchise, and time will tell just how much impact the split has on the company’s finances.
Destiny 2 is available now on PC, PS4, and Xbox One.
Source: The Wall Street Journal