"Game On" is The Fly's weekly recap of the stories powering up or beating down video game stocks.
ACTIVISION BLIZZARD: Following numerous reports of toxic workplace conditions and even a lawsuit in the state of California, Activision Blizzard (ATVI) president and COO Daniel Alegre sent a letter to all Blizzard Entertainment employees announcing that president J. Allen Brack is leaving the company to "pursue new opportunities." "I am pleased to announce that, effective immediately, Jen Oneal and Mike Ybarra have been appointed co-leaders of Blizzard," Alegre said. "Jen and Mike will share responsibility for development and operational accountability for the company. Both are leaders of great character and integrity and are deeply committed to ensuring our workplace is the most inspired, welcoming environment for creative excellence and to upholding our highest game development standards." Brack himself also released a brief statement, saying, "I am confident that Jen Oneal and Mike Ybarra will provide the leadership Blizzard needs to realize its full potential and will accelerate the pace of change. I anticipate they will do so with passion and enthusiasm and that they can be trusted to lead with the highest levels of integrity and commitment to the components of our culture that make Blizzard so special."
The news comes after a barrage of reports of sexual harassment, racial discrimination, and other toxic labor accusations levied at the game giant. The letter from Daniel Alegre, notably, is the first major corporate statement since Activision Blizzard CEO Bobby Kotick sent a letter to staff last Wednesday, admitting that the company initial response to the accusations was "tone deaf" and that it is "imperative" that the publisher acknowledges "all perspectives and experiences and respect the feelings of those who have been mistreated in any way." In the statement, Kotick pleged to continue investigating each and every claim and "will not hesitate to take decisive action."
TAKE-TWO RESULTS: After Monday's market close, Take-Two (TTWO) reported upbeat results for the first quarter, with GAAP earnings and net bookings for the quarter coming in above consensus estimates. In addition, the company provided conservative guidance for the second quarter and reiterated earnings and net bookings guidance for fiscal 2022. Of note, the game maker said that recurrent consumer spending, which is generated from ongoing consumer engagement and includes virtual currency, add-on content and in-game purchases, increased 15% and accounted for 70% of total GAAP net revenue in Q1. The largest contributors to GAAP digitally-delivered net revenue were "NBA 2K21" and "NBA 2K20"; "Grand Theft Auto Online" and "Grand Theft Auto V"; "Red Dead Redemption 2" and "Red Dead Online;" "Borderlands 3"; the "WWE" series; "Dragon City"; "Two Dots"; "Sid Meier’s Civilization VI"; and "Monster Legends." The Fly notes that "Grand Theft Auto V," consistently one of Take-Two's biggest revenue generators, originally came out in late 2013.
TENCENT: Tencent (TCEHY) joined rivals from NetEase (NTES) and Nexon (NEXOF) in a gaming selloff after an outlet run by Xinhua News Agency published a critique of the gaming industry, calling for stricter controls over time spent in-game for minors, Zheping Huang of Bloomberg reported earlier. Tencent responded by pledging to limit play for minors to an hour during weekdays and two hours on vacations and holidays, while potentially banning the game altogether for children under 12 years old. This has stoked fears Beijing will soon focus its regulatory efforts on the gaming industry, Bloomberg noted.
OTHER STORIES TO WATCH:
On the company's quarterly earnings call last week, Microsoft (MSFT) CEO Satya Nadella said that the Xbox Series X and Series S are the company's fastest-selling consoles ever, with more units sold life-to-date than in any prior generation.
Meanwhile, Sony (SONY) announced last week that it has already sold over 10M PlayStation 5 consoles globally.
Sony has also postponed the release of upcoming PS5 and PS4 game "Horizon Forbidden West," a sequel to 2017's "Horizon Zero Dawn," to the first quarter of 2022, Bloomberg's Jason Schreier reported.
Nintendo (NTDOY) will end service for its mobile game "Dr. Mario World" on November 1, 2021.
GameStop (GME) intends to rebrand EB Games in Canada.
Keywords: video games, game on, take-two, activision, blizzard, tencent, china