Activision Blizzard, the biggest US video game publisher, on Monday reported revenue that beat analysts’ estimates, but adjusted sales still declined 15% from a year ago due to a soft Call of Duty launch last autumn and a slow year for the gaming industry overall.

Activision, which is in the process of being acquired by Microsoft for $69bn, brought in adjusted revenue in the second quarter of $1.64bn, compared with the average analyst projection for $1.6bn. Adjusted earnings per share were 47c, almost 50% lower than a year earlier and slightly below analysts’ estimates.  

Last autumn’s Call of Duty Vanguard, which Activision said hasn’t performed as well as anticipated, has had a ripple effect on the company’s fiscal year. The game received negative reviews and faced stiff competition from new entries in the popular Halo and Battlefield series.

During the second quarter, Activision’s Blizzard division released Diablo Immortal, a new mobile entry in the action series. Activision’s Chinese partner NetEase delayed Diablo Immortal’s launch in the world’s biggest mobile app market by about a month, saying it needed additional time. It was finally released on July 25. Activision didn’t give revenue figures for the new Diablo game on Monday.

The video game industry has faced a sluggish year as it deals with hardware supply chain issues affecting consoles, inflation and a lack of big hits. Interest in gaming has also cooled off as pandemic stay-at-home orders lifted and people resumed outside interests and activities. Spending in the video game industry is expected to drop 8.7% in 2022, according to a report from the analytics firm NPD Group.

Activision said it expects revenue and earnings per share to “remain lower year on year in the second half”. The shares were little changed in extended trading at $80.30.

Call of Duty Modern Warfare II, a new entry in the series, will be released this autumn. But the series will then skip 2023, Bloomberg has reported. Activision will instead release add-ons for Modern Warfare and other Call of Duty related content. The next mainline game in the series, from the Treyarch studio, is planned for 2024. Call of Duty is Activision’s biggest video game series and the titles regularly top yearly sales charts. They have sold more than 400-million units since the series began in 2003.

Microsoft announced its purchase of Activision in January. The Xbox maker swooped in while Activision’s shares had suffered amid an ongoing sexual misconduct scandal in 2021. Activision’s stock has gained about 20% since the January announcement, although it is still trading well below the offer price of $95 a share, suggesting market uncertainty that the deal will go through.

Lina Khan, the newly appointed head of the US Federal Trade Commission, has indicated that she plans to take a tough stance against technology mergers. Activision has said it expects the transaction to close in Microsoft’s fiscal year ending June 2023.

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