Call of Duty slumps ahead of potential Activision-Microsoft deal

Millions of people stopped playing Call of Duty in the first quarter of 2022, as one of gaming's top franchises continued to cool off, according to Activision Blizzard's latest financial results.

Why it matters: Call of Duty is the biggest annual franchise in gaming, so any struggles can have knock-on effects for the rest of the industry.

The details: Activision Blizzard said its Activision-branded games — which nearly entirely consist of Call of Duty — had 100 million monthly active users in the first three months of 2022.

• That's down from 107 million in the quarter before.
• And it's down from 150 million in the first three months of 2021.
• The drop comes as Microsoft presses forward on a bid to buy Activision Blizzard for $69 billion.

What they're saying: In a press release, the company blamed the decline on "lower premium sales" for November's Call of Duty: Vanguard compared to November 2020's Call of Duty: Black Ops Cold War.

• It also cited "lower engagement" for free-to-play Call of Duty: Warzone and flat performance for its Call of Duty: Mobile title.
• Activision has been signaling for months that Vanguard has underperformed.

Between the lines: The decline is relative. Vanguard is the best-selling PC/console game of the past 12 months in the U.S., according to the NPD group's latest numbers, released today.

• But Bloomberg has reported that Vanguard's struggles prompted Activision to consider the once-unthinkable: skipping an annual CoD release in 2023. That skip could have a big impact on foot traffic to retail, and reverberate across the industry, analysts say.
• With or without a skip year, Activision is pressing ahead with the franchise, saying today it "continued to rapidly expand" development resources on its CoD games.

The big picture: Microsoft's $69 billion bid for Activision assumes Call of Duty will be a lucrative and valuable franchise for years to come.

• But the bid also hinges on the potential resurgence of Blizzard and the continued success of Candy Crush maker King, which remained steady at some 250 million monthly users for the first three months of 2022.

What's next: For later this year, Activision is promising a sequel to its hit Call of Duty: Modern Warfare.

• It also announced today a June 2 launch for the PC and mobile Blizzard game Diablo Immortal.
• More immediately, Activision shareholders vote this Thursday about whether to approve the company's acquisition by Microsoft. Even with approval, the deal would have to clear regulatory hurdles.

Go deeper: Microsoft's Phil Spencer: Activision deal "well beyond anything I’ve ever done"

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