Take-Two pops on blowout earnings report

Yahoo Finance’s Daniel Howley joins Kristin Myers to break down Take-Two's stellar earnings report, and what investors should be expecting in Activision Blizzard’s upcoming quarterly results.

Video Transcript

KRISTIN MYERS: But I also want to give a call out right now to Take-Two-- Take-Two Software. They're a video game maker. They are up over 4 and 1/2%. That's, of course, on the news that they had blowout earnings this quarter.

So for more on this, we are joined now by Yahoo Finance expert Dan Howley. Hey, Dan.

DAN HOWLEY: Hey, what's happening? Yes, Take-Two--

KRISTIN MYERS: So talk to me about Take-Two. I don't play enough video games, so--

DAN HOWLEY: I, unfortunately, am a giant gamer. Fortunately, unfortunately-- I don't know if you can tell that I'm a gamer right here. But yeah, Take-Two had an incredible quarter. Some of the numbers-- they saw a 54% increase in revenue for their fiscal Q1. That's up to a record $831 million for the quarter.

They're seeing a lot of growth, as are all video companies-- and that includes the giants like Microsoft, Sony, and Nintendo-- because of the COVID-19 lockdowns. That has sent people either streaming on Netflix. And once you're done watching "The Office" or whatever 10,000 times in a row, you look for something else. And since a lot of people may not be able to see family and friends yet, what they're doing is they're turning to video games to A, occupy their time, and B, give them the chance to communicate and socialize with people. And that's exactly what's happening here.

For Take-Two, a massive quarter, obviously. We're expecting Activision Blizzard after the bell as well. They're expected to have a bang quarter. Expectations are for $1.69 billion in revenue. That's based on Bloomberg compilations.

But what they're really looking at is their mobile side and the "Call of Duty" franchise that they have. That, they have a title called "Warzone." It's free to play. And so that allows players to jump in and then spend money on in-game purchases.

And that's where you're seeing a lot of these companies make up extra revenue. Through those in-game purchases, people can buy add-ons for things like extra ornamentals in the game, clothing, things along those lines. And they end up spending a good deal on it. So I think Activision Blizzard, they're looking good. Sony is obviously looking good.

Now we have down the line these big companies launching their next generation consoles. And they might not have as big of an impact revenue-wise for the game publishers, like Activision or Take-Two. But down the road, they will. Out of the gate, they'll probably help Sony and Microsoft. But it will eventually filter down to the publishers as they get more titles out for those next gen consoles.