Shareholders of Activision Blizzard (ATVI) are in for another banner fiscal year. The video game developer recently lifted its 2021 outlook after players stayed engaged in franchises like Call of Duty in the early summer. The worries of a sharp slowdown were overblown.

While the company's short-term outlook is brighter than that of peers like Take-Two Interactive, Activision is still facing some unusual workplace challenges that could hurt investor returns. CEO Bobby Kotick and his team discussed those hits and misses in a conference call with Wall Street analysts, and below are a few highlights from that presentation.

Two people playing a video game.

Image source: Getty Images.

1. It's a Call of Duty world

Activision enjoyed strong gamer engagement across the portfolio, but the standout franchise was Call of Duty. The audience size declined compared to a year ago, when social distancing was at its peak. But people are spending much more time and money in the ecosystem than they did in 2019.

And the free-to-play mobile and battle royale offerings are funneling demand toward premium titles like Black Ops: Cold War and Modern Warfare. In-game spending was over four times the level from the second quarter in 2019. The audience size was three times higher, executives said. "We continue to see robust engagement even as regions continue to reopen," Kotick said.

2. The pipeline is stacked

Unlike Take-Two Interactive, which disappointed investors by delaying a few of its core releases, Activision Blizzard is flooding the market with new content. There's a new premium Call of Duty game set to hit around November and lots of content updates attached to the World of Warcraft (WoW), Candy Crush, and Diablo franchises.

Executives are especially excited about Diablo's push into the mobile platform. That's part of their wider strategy of applying the successful Call of Duty approach to other franchises.

In a nutshell, that involves building a bigger audience through free-to-play options, which end up driving demand for more premium titles. "Our current plans contemplate compelling new experiences across Call of Duty, WoW, and Candy [Crush]," COO Daniel Alegre said, "alongside several major new titles across PC, console, and mobile."

3. Looking ahead

It's too early to know whether the regulatory challenge involving Activision's workplace safety and diversity will cost the company much in terms of penalties or further management changes. But the current outlook is bright for both sales and earnings.

Activision is expecting a strong second half of 2021, including more year-over-year growth, even compared to last year's surge. Investors will know much more by the third quarter earnings report in three months, which occurs right around the official launch of the annual Call of Duty installment.

But right now, Activision has a clear path toward another record fiscal year. "Our expanded teams are focused on delivering epic in-game and upcoming content," CFO Armin Zerza said. The reception of those releases will determine whether the growth stock improves just modestly on 2020's results or turns in another market-thumping performance this year.