Activision Blizzard beats Q3 outlook

[UPDATE] Publisher posts better-than-expected sales of $711 million, merger costs weigh down total losses to $108 million.

by

Last week, publishing heavyweight Electronic Arts reported strong revenues that were deflated due to a greater-than-expected $310 million loss. For EA rival Activision Blizzard the outcome was much the same, with the publisher seeing substantial revenue gains during the July-September period, but also mounting losses.

For its first quarter as a joined entity, Activision Blizzard reported net revenues of $711 million. The publisher did not reveal an apples-on-apples matchup of the gamemaker's previous year's performance, saying only that controlling-partner Vivendi Games posted $326 million for the same period a year ago. Add in Activision's July-September 2007 tally of $317 million, and the combined effort would have amounted to approximately $644 million a year ago.

Whereas EA saw a massive splash of red in its profit/loss column, Activision Blizzard's losses skewed toward magenta. For the quarter, Activision Blizzard reported a loss of $108 million, a sharp contrast from the $48 million and $700,000 profits posted for the same period last year by Vivendi Games and Activision, respectively. However, the publisher noted that much of its losses were due to restructuring costs associated with the merger. For the recently completed quarter, Activision Blizzard saw operating losses also take a dive to $194 million.

Putting a positive spin on the quarterly results, Activision Blizzard CEO Bobby Kotick noted that the company's sales beat its quarterly guidance of $620 million. "Our performance was driven by continued strong worldwide sales of Call of Duty 4: Modern Warfare, Guitar Hero: Aerosmith and Guitar Hero: On Tour, Blizzard Entertainment's World of Warcraft, and the international release of LucasArts' Star Wars: The Force Unleashed," said the exec in a statement.

Of note, in breaking out its quarterly revenues by segments, Activision Blizzard revealed that its massively multiplayer online gaming business--that is, World of Warcraft--generated $271 million for the three-month period. That tally amounts to just $1 million less than Activision Blizzard's total console business, with both segments contributing an equal 38 percent to the publisher's bottom line. Last week, Blizzard revealed that WOW's global subscriber count had surpassed 11 million.

In light of today's earnings announcement, Activision Blizzard reaffirmed its fiscal-year guidance, projecting $4.9 billion in sales and $1.2 billion in operating income for the full 12-month period. The publisher also announced a plan to buy back $1 billion of its shares, though no other details on this venture were provided.

[UPDATE] Activision Blizzard provided no shocking revelations in its post-earnings conference call. However, the publisher did shed some light on the performance of a few of its flagship franchises.

Regarding Guitar Hero World Tour, CEO Bobby Kotick noted that more than 25,000 user-generated songs had been uploaded to Guitar Hero World Tour by way of the game's Studio Mode. The publisher was evasive in saying just how many units of the title had sold through in its first 10 days at retail, but did note that launch quantities were "virtually sold out" in all regions.

The publisher also provided a brief update on the Treyarch-developed Call of Duty: World at War. With the franchise set to return to World War II next week, Activision Blizzard said that preorders were outpacing those of last year's award-winning modern-combat shooter Call of Duty 4.

Lastly, Blizzard Entertainment boss Mike Morhaime briefly addressed World of Warcraft's performance in light of the launches of Funcom's Age of Conan and EA Mythic's Warhammer Online. "Even though the quarter was bookended by competitors in the MMO space, the World of Warcraft subscriber base continued to grow," he said. "To date, 68 percent of the players who listed Age of Conan as a reason for cancellation, and 46 percent of the players who listed Warhammer as the reason for cancellation, have reactivated subscriptions to World of Warcraft."

Discussion

42 comments
ctg867
ctg867

I can't stand the new company. They lessened competition, so naturally quality and innovation are going to have a decrease overall in the industry. Then they laid off people, and people loosing jobs in a time when the economy sucks definitely isn't a good thing. And then they they dropped a bunch of seemingly quality titles like World in Conflict, Riddick, Ghostbusters, and more. So with all honesty, I hope the company takes a hit from this and learns a thing or two about damaging the industry for personal gain. I know you're a company, but there is such a thing as morality and good will, regardless of who you are or what organization you are.

Vote_For_McCain
Vote_For_McCain

@ Azati S When a company buys back its stock it is a good indication that they believe in the near future the value of their stock will go up. I would also like to point out that this is a historically true fact...that indeed when a company buys back it's own stock it does indeed go up in the near future. Think of it this way: You are the CEO of your company. You know you have a product(s) in the pipeline that are going to make a killing in sales in the future but you have not announced them yet. In Activision Blizzard's case in the last 4 months their stock has gone down from $17.99 to at the moment $12.28. This is about a 32% decline in the value of their company. Stocks are largely based on sales. You know you have just put out some games that will sell a lot (COD5 GH:WT) and more in the future that are to be announced. So when your sales numbers start to come in and you report huge profits from your newly released games investors like that and the value of your company goes up. I could go much more in depth but this is just a games website so I will stop there. Hope that helps. I am also lol'ng at the person who called me a retard earlier.

AzatiS
AzatiS

""In light of today's earnings announcement, Activision Blizzard reaffirmed its fiscal-year guidance, projecting $4.9 billion in sales and $1.2 billion in operating income for the full 12-month period. The publisher also announced a plan to buy back $1 billion of its shares, though no other details on this venture were provided."" What does that mean , anyone? Buy back 1$billion of its share to? what/whom? Didnt get that. Anyone?

tudyniuz
tudyniuz

that's a lot of money...

kitty
kitty moderator

It's not surprising to see this happening, activison blizzard is a great company

MonkeyWrench127
MonkeyWrench127

I would care if it wasn't for the fact that Activison Blizzard have just done what everyone feared, begun milking there games to the point of dispair...

VanStrummer99
VanStrummer99

Vote_For_McCain - I would agree too that while most people may not have known the differences in developers from COD2 to COD3, they took notice in the differences in Big Red One vs COD4. Treyarch is not exactly synonymous with quality, but Infinity Ward is. Consumers are getting smarter, and think of the studios that now have publisher like billing. DICE, Epic Games, etc. I think Publishers will have to wake up and realize that the end consumer starts to do their due dilligence before buying. Another big example was NHL 08. Talk about grabbing hold of the reigns and a return to glory.

GrgSpunk
GrgSpunk

If that's the case, then can we please get the console versions of World in Conlfict released?

shadowblade99
shadowblade99

They should make a 3rd party publisher cross over fighting game like EA versus Activision, or Guitar Hero vs. Rock Band. Let the battle for top music guru be decided here. Round 1...FIGHT!!!

swamptick
swamptick

Vote_For_McCain knows what he is talking about. I am in the game industry and the man knows what he is talking about.

Vote_For_McCain
Vote_For_McCain

Ignition93 Posted Nov 7, 2008 12:01 am GMT -12 "Vote_For_McCain is a retard Just because one game from a studio is terrible doesn't make every game they make instant crap. Especially games that are still being worked on." - - Read much? Maybe you should re-read what I said instead of skimming over my post. If you did not skim over my post and actualy read all of it I don't see how you could call me a retard If you want to see a retard just look in the mirror. The following is what I posted: Gamespot said: "The publisher also provided a brief update on the Treyarch-developed Call of Duty: World at War. With the franchise set to return to World War II next week, Activision Blizzard said that preorders were outpacing those of last year's award-winning modern-combat shooter Call of Duty 4." No crap sherlock. Who would have ever thought COD4 would have been such a good game after the crap that COD3 was? You could say that they are made by different studios but most people don't know that. I will not be buying COD 5 after playing the beta. Treyarch is a failure. COD3,5, and 007 Quantom of Solace are all letdowns. I can honestly say this because I have played all three of them. I can wait another year for COD 6 and just play Gears 2, Resistance 2, and Killzone 2 in the mean time.

cooldude03
cooldude03

the reason sales are up is people are exspecting a game as good as last years COD, but with Treyarch's history on this title it will probably disappoint just like COD3. I hope I'm wrong. Long live Infinity Ward the real COD developers.

lp2nat
lp2nat

if they would put out a Freestyle Street basketball Style game they would soar..

Netherscourge
Netherscourge

WoW is the greatest MMORPG of all time. I tried AoC and WAR, but I went right back to WoW after a couple weeks because those games are simply inferior. They have some cool ideas, but they are not good enough to make WoW obsolete. Blizzard has better artists, better designers and better customer service.

CamiKitten
CamiKitten

Yadda yadda, they make the cheese. Sigh big deal.

df-1
df-1

@ nintendo-nerd Blizzard said how they count people as subscribers are people paying them this month. pre paying them for next month, and on the 30 day free when they buy WoW. that means only the people who are currently playing WoW, which is 11million people. Read up on the page where gamespot said they had 11million it says it there :)

Ignition93
Ignition93

Vote_For_McCain is a retard Just because one game from a studio is terrible doesn't make every game they make instant crap. Especially games that are still being worked on.

Nintendo-Nerd
Nintendo-Nerd

at silverman2000 11 million people do not play world of warcraft. there has been 11 million suscriptions made in the last 4 years. there are a lot of people who have either quit, or have moved on. Also there are a number of people who have 2 or more accounts. I was one of those people, I had 3. But I quit.

Vote_For_McCain
Vote_For_McCain

"The publisher also provided a brief update on the Treyarch-developed Call of Duty: World at War. With the franchise set to return to World War II next week, Activision Blizzard said that preorders were outpacing those of last year's award-winning modern-combat shooter Call of Duty 4." No crap sherlock. Who would have ever thought COD4 would have been such a good game after the crap that COD3 was? You could say that they are made by different studios but most people don't know that. I will not be buying COD 5 after playing the beta. Treyarch is a failure. COD3,5, and 007 Quantom of Solace are all letdowns. I can honestly say this because I have played all three of them. I can wait another year and just play Gears 2, Resistance 2, and Killzone 2 while I wait for COD 6 made by Infinity Ward.

yunarce19
yunarce19

wonder what could be the next MMO that blizzard is developing right now... hmmmm... they are a pioneer at making MMO..

silverman2000
silverman2000

Blizzard is making the most money,look how many ppl play World of Worcraft 11 million this is insane!!

Toro_Nev
Toro_Nev

Wow!!!! They are making tons of $$$$$$$$

VenomRitual
VenomRitual

why is COD 4 still 50$ when COD "5" is about to come out?

sieg6529
sieg6529

So why did I lose money on my ERTS stocks today?

mattdv
mattdv

@gnbfd: Activision has traditionally published LucasArts' games outside the U.S. (or at least in some places; I don't know which countries exactly).

ccgod
ccgod

with that amount of $$ they could hire enough people to put out games every 6months lol diablo 4 lol

Faeton
Faeton

Geez, how could they actually loose money? They have that big money-printing machine, WoW. $1 billion a year is a lot of profit on something that doesn't have high dev costs anymore...

cid_007
cid_007

I own ATVI stock and it hope it does well for me over the next few years, especially capitalizing on EA's "resting on their laurels."

Blazius2
Blazius2

I love the part about people who quitted wow for other mmos reactivated their subscriptions.

ivan50265
ivan50265

Buy Activision stock friends there doing well.

vunacar
vunacar

EA has elevated my opinion of them with recent game releases. If they only dumped/overhauled EA Sports and NFS franchise they would have beed perfect.

gnbfd
gnbfd

Dang. With GH, CoD and WoW, AB is a super publisher But WTF @ Force Unleashed? What does that have to do with AB?

zeckle_1
zeckle_1

I love these two company's

FoxExecutive
FoxExecutive

This is to be expected really. And it definitely makes sense that AB is buying back some of its shares. With Wrath of the Lich King coming out and other titles Activision releasing, the future looks promising for the company. They could turn this $1 billion dollar investment into a profit.

Beanoooo
Beanoooo

[This message was deleted at the request of a moderator or administrator]