Activision Blizzard's billion-dollar quarter beats expectations

$1.038 billion in revs yield $195 million in profit for Call of Duty, World of Warcraft publisher; Starcraft II delayed to "first half of 2010"; Modern Warfare 2 most preordered game to date; COD4 sells 14 million; new James Bond, Spider-Man, post-Ride Tony Hawk next year.

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Yesterday, Electronic Arts announced a loss of $234 million loss, despite an increase in sales, thanks to deferred revenue costs and the ongoing recession. Today, its archrival Activision Blizzard turned in its quarterly earnings report, which revealed $195 million in profits for the April-June quarter. Overall, the company's $1.038 billion in quarterly revenues were slightly better than the $1 billion it had forecast earlier in the year.

Modern Warfare 2 boasts the most preorders in Activision's history.

Year-on-year comparisons were impossible because Activision Blizzard didn't come into existence until the July 2008 union of Activision, Inc. and Vivendi Universal Games. (The latter's parent, French media conglomerate Vivendi, holds a controlling stake in the year-old company.) However, the publisher's outspoken CEO Robert Kotick took the opportunity to boast that the megapublisher has beat expectations every single quarter since its formation.

"Since our merger one year ago, we have delivered better-than-expected financial performance for four consecutive quarters," said the executive. "Our second quarter overperformance was driven by Activision Publishing's Prototype, Transformers: Revenge of the Fallen, X-Men Origins: Wolverine, and the Guitar Hero and Call of Duty franchises, as well as Blizzard Entertainment's World of Warcraft. During a challenging economic climate, Activision Blizzard grew its quarterly North American and European market share 2.8 points across all platforms to 12.7 percent from 9.9 percent for the previous year and was the number one North American third-party console and handheld publisher for the quarter and first six months of the calendar year, according to the NPD Group, Charttrack and Gfk."

"No Starcraft II for you! You come back--one year!"

While today's report might be music to Activision Blizzard shareholders' ears, it contained some devastating news for gamers. As rumored, Blizzard Entertainment's Starcraft II: Wings of Liberty won't launch until the first half of 2010. "Over the past couple of weeks, it has become clear that it will take longer than expected to prepare the new Battle.net for the launch of the game," the Irvine, CA-based developer said in a statement. "The upgraded Battle.net is an integral part of the StarCraft II experience and will be an essential part of all of our games moving forward. This extra development time will be critical to help us realize our vision for the service."

Starcraft II's delay and the previously announced postponement of the new sci-fi shooter Singularity have forced Activision Blizzard to lower its full-year guidance from $4.3 billion to $4.05 billion.

In a call with analysts following the announcement, Kotick, Activision Publishing CEO Mike Griffiths, Blizzard CEO Mike Morhaime, and other executives revealed the following details:

--World of Warcraft is still down in China, but is "ready to relaunch pending receipt of the necessary approval from the Chinese government."

DJ Hero's songs will be heavily localized, with the European versions favoring "dance music."

--Activision Blizzard is predicting that, since their respective launches, some 33 million Xbox 360s, 20 million PlayStation 3s, and 50 million Wiis will have been sold in the combined North American and Europe market by year's end.

--Since retailers are being increasingly selective due to the recession, Activision expects overall game sales to be flat or down for the year. However, Kotick said that stores are "still showing strong commitment to our holiday launches" and giving them prime "shelf space allocation."

--One of those holiday titles, November 10's Call of Duty: Modern Warfare 2, is already the most preordered game in Activision's history. Call of Duty 4: Modern Warfare has now sold nearly 14 million copies, a number that will increase when its Wii port ships out November 10.

--The music genre is down significantly, and executives conceded that Guitar Hero "is performing in line with overall market." Guitar Hero World Tour band kit has already been lowered to $99 at certain retailers to further promote the franchise.

--Singularity is now being groomed as a full-fledged "first-person action franchise." (Emphasis added.)

Tony Hawk Ride will only launch in the UK, Germany, and North America in 2009 to ensure steady supplies.

--Tony Hawk Ride will only be released in North America, the UK, and Germany this year to ensure its skateboard peripheral is in ample supply. The game will be released in "all other territories" in "early 2010."

--To accommodate the popularity of dance music in Europe and hip-hop in the US, DJ Hero will have the most localized content of any Activision game to date.

--New James Bond, Spider-Man, and Tony Hawk games are planned for 2010. The year will also see a game based on the animated films Shrek 4 and How to Train Your Dragon.

--Blizzard sold 20,000 tickets for this month's BlizzCon in only eight minutes.

--The delay of Starcraft II: Wings of Liberty to 2010 doesn't affect the release schedule of any other Blizzard games, said Morhaime. He said once it launches, work will immediately begin on the second installment in the three-part game, Heart of the Swarm.

--Morhaime repeatedly deflected questions about launch plans for Diablo III. "We have not announced release dates for any other games," went the refrain.

--Kotick compared the upcoming revamp of Battle.net to Xbox Live in terms of its scope and feature set.

--Guitar Hero: Van Halen was not mentioned anywhere in Activision's report or the subsequent conference call. However, Activision reps confirmed to GameSpot the game is still coming this year, and it is slated to ship on December 22.

Discussion

136 comments
linahater
linahater

Sabotuer, oh wow I never thought I'd see a Playstation 2 game on a next gen console...

Clive-Owen
Clive-Owen

thrasher510, you can go for mw2, or for both mw2 and Saboteur, but skipping mw2 is the dorkiest thing ive heard,

thrasher510
thrasher510

i might skip mw2 and go for the saboteur...

NoLifeGamin
NoLifeGamin

well i guess "If it aint broke don't fix it" and thats what Activision is doing....milking the **** out of a game thats been selling like diarhhea from a fat guy that just ate a s***load of burritos filled with laxidants from a homeless guy's barf bag.....i mean they even dont have to make games and can just sit back and relax while WoW brings in the cash and seriously without Blizzard to support them, they would be deads**t a long A** time ago(which, unfortunately is not likely to happen)

georgeorjose
georgeorjose

i like milk, especially if its ice cream or chocalate

Balaji1212
Balaji1212

Though i Hate Activision,atleast they market the games well and support all systems and have good ports most of the time(eg: Prototype for the PC),thus in some ways they deserve the profits.Though they are even more evil than EA ever was.

Godak
Godak

It seems like this merger has created a disgustingly evil entity worse than EA...and that is something I thought I would never say! I think Blizzard has seriously gone down hill after WoW. MMOs cater to the lowest denominator for profit: addicts and chat room gamers. Yeah, they're fun as all hell, but just look at all the idiots running around...it's disturbing.

WillyChong
WillyChong

I don't care other games, DJ Hero can go to hell. Transformer is nothing but trash. The only games I can't wait is Call for Duty: Modern Warfare 2 and Starcraft 2, if it got LAN.......

Coolyfett
Coolyfett

This is the same company that said they would drop support for PS3 & PSP if the PS3 did not drop in price? Sounds to me like they have plenty of money and the Sony reps that responded to the threat were correct. I have never played a Call of Duty game. It does not seem like they will be bringing a new one out for the PSP. They made a billion bux and they want Sony to drop prices to sell more product? What is that?

endocrine
endocrine

@Scooter540 Whether you want to believe it or not, coming out with a new CoD game with the exact same gameplay mechanics every year is milking the franchise. I have yet to play WoW because I am still burnt out from playing the series since day one.

Xx_Hopless_xX
Xx_Hopless_xX

@Barryjones Actually the COD series are highly acclaimed by both Gamers and Reviewers, while the don't revolutionize the genre they have amazing graphics as well as good stories. I'm also going to disagree with your statement about the online, i have the 360 version and I'm very pleased that they have added maps and you don't really see much lag. MW2 will hopefully uphold the standards of the whole COD series, continuing with great graphics, nice visuals and fun gameplay. Killzone 2 in my opinion didn't really do much that revolutionizes the genre and it seems as if Resistance was a knock off of Gears of War. I'm not a fanboy, nor am i trying to start a system war, just stating my opinion on things...

barryjones009
barryjones009

You can never have enough good superhero games, but someone else than activision and treyach should buy the rights.We deserve a great spidey game. COD4 is a poor online game.Has not improved or refined the FPS market at all.MW2 won't be revolutionary in any way and i think Resistance2, Killzone2 and even Bond wipe the floor with this crap.To buy an overpriced FPS (MW2)you either have too much money to waste or are just plain dumb.Even second hand, the shops will rob you blind.

Scooter540
Scooter540

@endocrine Milking the CoD franchise?Dude it's one of the highest selling franchises in gaming history!I mean yes games like GH are being milked to s*** but CoD's doing just fine.

Glade_Gnarr
Glade_Gnarr

Good thing people stopped buying Guitar Hero.

endocrine
endocrine

@timboutillier Lets see here: CoD, GH, Tony Hawk all things X-Men and Spiderman, Cabela's, etc. They are as bad as EA in milking their franchises to death.

scarface_dm
scarface_dm

I dont see myself buying an activision game(not even MW2) anytime soon Maybe the marvel game will persuade me, but maybe not

timboutillier
timboutillier

Enough is enough! Put together a GOOD Spiderman game! @endocrine What are they milking? The guitar hero franchise? Not milking if it's new music everytime.

endocrine
endocrine

When you milk sequals, I am not suprised by sales.

ClawedMonkey
ClawedMonkey

Its disappointing that SC 2 was delayed, but honestly, we all knew it was going to happen. No news on Diablo 3 was also disappointing, but its almost certainly going to release a good while after SC 2. They don't want two of their own huge titles competing for your $s. Blizzard Entertainment always delays its games, but if that's what they need to deliver another game of epic quality and replay value, I can be patient. Activision's games... not so interested. Modern Warfare 2 is going to be good, but other than that, they aren't really delivering nearly as well as their partner.

The_Gobfather
The_Gobfather

"Call of Duty is the only good thing coming out from Activision these days...!" tornado_volcano, i absolutely disagree. i loved prototype.

ace-of-spades93
ace-of-spades93

wow 1 billion dollars :-/ and yet it's still necessery for british versions of games like guitar hero and MW2 to have significantly higher prices than the american counterparts.

Tornado_Volcano
Tornado_Volcano

If it wasn't for Blizzard's WoW, Activision would present a ridiculous/extreme loss in their profits. I mean, Activision's originality is dead, pronto. They only make games with pheriferals, Call of Duty and movie-based games nowadays. Guitar Hero is getting ridiculously repetitive, movie-based games are only "easy money" and Call of Duty is the only good thing coming out from Activision these days...!

guitarist1980
guitarist1980

actaully lets do the math If WoW has 11,000,000 current subscribers thats about 165,000,000 millions dollars a month multiply that by 12 which comes out to over a billion dollars a year??? wait holy is that right? They only made 195,000,000 million in profits?? they probably lost money on most there games but wow just puts them over no matter what.

guitarist1980
guitarist1980

GRRR that pisses me off that the ceo brushed off the diablo 3 questions... oh wait oops I forgot Blizzcon is in 2 weeks, 20,000 people attending most are waiting for the next bombshells they are going to drop about diablo 3.. I mean we know SC2 isnt out til June of 2010, They just released wotlk in november soooo Helllooo diablo 3!!!!!! Capitilize off your friggen Blizzcon!! Just give us what we want. And that is of course Diablo 3

mightycloud
mightycloud

I can't be the only one who's sick of seeing World of Warcraft everywhere can I? They must get so much money from the comics, board games, TCG's etc etc, and yet Activision/Blizzard are still going to charge £55 for MW2! How can they charge so much for something they know is going to sell well? Surely you'd charge less so that people wouldn't want to go searching for a 2nd hand copy and thus increase your revenue (if the money was that important). I've said it before, and will for quite some time it would seem, that it feels strange not hating EA for a change after so many years. But when they're booasting about profits like this, you can't help but hate Activision, even just a bit for the hardcore fanboys.

Gen007
Gen007

oh man i cant believe im saying this but i want DJ hero dam music runs my life.

MarcoAM98
MarcoAM98

im tired of the call of duty and all call of duty s are the same

SDMF_TrueBlue
SDMF_TrueBlue

Over $1B in profits, but they raise the price on PC and UK copies of MW2? Fail.

DaSlyOne
DaSlyOne

12 years to get to Starcraft 2. Is it going to be 12 years to get to Diablo III? I'm willing to bet that another WOW expansion comes out before Diablo III does.

fredwv
fredwv

Activision is thanking its lucky stars that it merged with Blizzard.

drangel_jam
drangel_jam

good for them, now, if they only would invest in more quality titles overall.

Fyre8892
Fyre8892

I have a feeling that they're becoming the new EA and not in a good way either. As long as they keep letting Infinity Ward do their thing, it's no biggy for me, but this just looks like bad mojo. A-B already had enough of an ego to leave E3 and make their own event, and this isn't going to help that situation.

rann89
rann89

Wow, I thought the new Starcraft overall was delayed. They haven't even started the other games and they're still being delayed? There's something else going on, they don't just "need more time".

0Aragorn0
0Aragorn0

This is just more proof that the lawsuit filed by Activision against the Brutal Legends game is unfounded and pretty much "Bullying"...Hopefully with this report they'll drop the lawsuit...it's not like they'll be out anything...but knowing Activi$ion they probably won't drop it.

Ovirew
Ovirew

It's good that they are doing well, but with all of this money they could lower the cost of WOW (possibly even make it free to play with micro-transfers), make a Warcraft 4 and improve some of their current IPs.

BenBenBen93
BenBenBen93

far to powerful. you need to give back the love to the independent developers not distroy them in to pile of dust

xialon
xialon

Activision is a beast. :o

James00715
James00715

The new Battle.net is going to be as good as Xbox Live and FREE! I buy sequels because I know what kind of gameplay it offers and gameplay will be at least as good as the last game. Paying $60 for an original game is too risky in this economy. I graduated for 6 months now and am still in a dead end job because no company hires graduates now. They have an abundance of layed-off, highly-experienced options to choose from over me.

CoreoVII
CoreoVII

Why does none of this interest me in the least? Just release D3.

ASG_
ASG_

Or shall I say, with added emphasis, BLIZZARD'S billion-dollar quarter?

alkaline_DnB
alkaline_DnB

looks like their merge was a complete success. good for them.

2bitSmOkEy
2bitSmOkEy

Looking up Activion's history on this website shows they have a total of 3067 games that Gamespot has followed. probably 99% of those games are quick movie tie in games, or guitar hero, or.....fill in the blank with terrible/quick/cash-in games. Its funny I used to rip on EA for spamming the same games every year and getting rich off it. Now EA looks like the greatest gaming company ever compared to Activision. This company is simply that, a company. Its not gamers making games for gamers, its purely a money making business. These people aren't in the industry to make great games that they would want to play themselves, its all for the green paper. They are the perfect equivalent to what Hollywood became over the years, and is right now.

Anonymoe
Anonymoe

This news dissapoints me, but doesn't surprise me one bit. After all, Activision has some of the biggest franchises in the industry. Honestly, however, I only see one game by Activision coming out that really interests me (I'm not a RTS fan, although I'll admit Starcraft II looks good) which is Modern Warfare 2 (and more for IW than anything else). And there are only 2 games listed here that aren't sequels or movie tie-ins, which I'm getting a little tired of. Sure these games make money, but now that Activision is making money, would it kill them to try a few more risky and unique games? That's really the main beef I have with Activision (aside from trying to block Brutal Legend's release). They have the cash to try something cool and unique, but they play it safe (read: boring). It's why other companies, even EA (who made Dead Space and now publish Brutal Legend) are getting more of my money in the end.