The third quarter of the fiscal year has not left good results for Activision Blizzard and its recent financial report confirmed a drop in the finances of the companies that make up the company, that is, Activision, Blizzard and King. Also, some announcements made in the framework of the presentation have had an impact on the stock market, causing the fall of its shares.
A Wccftech report revealed that following the financial results published by Activision Blizzard and an important announcement related to its important title for this season, Call of Duty Modern Warfare, the company’s shares fell 3.28% yesterday, leaving the share price at $59.81, an amount that was below the forecasts.
According to the information, many of these projections took into account the launch of the Battle Pass for Call of Duty Modern Warfare, which as you know will be the means of access for additional content during the new delivery cycle.
However, Activision announced that, although the Battle Pass debut was scheduled for this month, it will be until December when it reaches Call of Duty Modern Warfare, a fact that negatively impacted the company’s actions on the Stock Exchange.
In other news, for many years, the video game industry went under the radar of the authorities in certain areas and it was a matter of time for financial success and business models to attract the attention. Recently, the scandal approached Activision Blizzard as a report from Think Tank Tax Watch UK points to the company for tax evasion.
The British Think Tank Tax Watch UK, which exposed the fiscal situation of Rockstar in the United Kingdom, presented its report entitled World of Taxcraft, which indicates the controversial financial and fiscal operations of Activision Blizzard from 2013 to 2017, where it is estimated that they sent millions to tax havens in Bermuda and Barbados.
Likewise, the information, based on documents obtained by Tax Watch UK, indicates that the corporate structure of Activision Blizzard operates through subsidiaries located on the 2 islands named above, as well as in Malta and the Netherlands.
The Think Tank investigation began after analyzing the disputes that Activision Blizzard has had with the tax authorities of the United Kingdom, Sweden and France, who have detected irregularities in the operations and movements of the company and have initiated processes that could result in tax credits, including fines and updates.
According to the report, Activision Blizzard operates through the sale of intellectual property rights in the United States to a subsidiary originally from the Netherlands but based in Bermuda, ATVI CV, and another subsidiary in the same situation that is located in Barbados, ATVI International SRL.
Both subsidiaries agree to sub-license intellectual property with Activision Blizzard International BV, a subsidiary located in the Netherlands. Already with the control of the IP, Activision Blizzard International BV is responsible for exploiting them outside the United States with operations that rarely leave profits.
As for the European market, Tax Watch UK notes that Blizzard UK is being targeted by authorities for irregularities detected in its operations and for the relationship it has with Blizzard International, which is registered as an entity that operates at risk, a situation that allows, under British law, that they can delegate its financial operations to said subsidiary of the Netherlands.
On the other hand, the report also presented information about King, a company that belongs to Activision Blizzard and specializes in the mobile sector, where it has obtained very good profits thanks to Candy Crush.
In this regard, the information on King shows a similar corporate structure, which delegates financial and fiscal responsibilities outside Sweden and the United Kingdom, where the company has a legal presence, which allows it to pay less taxes through an operation that takes place with a subsidiary located in Malta.
Finally, the report indicates that, although Activision Blizzard has told its investors that it will “defend itself vigorously” in the face of fiscal problems that it presents in various countries, the result may not be as expected by those who have put their money in the North American company.
In that sense, Tax Watch UK warns that the amounts that have moved to tax havens are very large and these operations were obviously not tracked to generate taxes, a delicate situation that could compromise the company before the tax authorities where it is subject to investigation.