Activision reports record sales

[UPDATE] Revenue jumps $52.6 million during the publisher's first fiscal quarter thanks to strong sales of Shrek 2 and Spider-Man 2.

Activision announced its financial results today for the first quarter of its 2005 fiscal year, which ended June 30. Revenue for the Santa Monica, California-based company topped $211.3 million, compared to $158.7 million during the same period last year. Net income was $12 million, which represents an increase of $7.8 million. It was, according to Robert A. Kotick, chairman and CEO of Activision, the highest Q1 revenues in the company’s history.

Most of the publisher's success is attributed to Shrek 2 and Spider-Man 2. The two multiplatform titles have shipped more than 5 million units combined and were the best-selling titles of May and June, respectively. Activision also indicated that the release of the PC version of True Crime: Streets of LA also boosted sales. Ironically, Activision only picked up the Shrek license last December, following the purchase of former rights-holder TDK Mediactive by Take-Two Interactive.

Activision stated recently that 2 million units of Spider-Man 2 have been shipped into the retail channel. Today, Activision Publishing CEO Ron Doornink said sell-through, or actual units sold, probably numbered 1 million to date.

The numbers in today's revenue statement come from before the July 14 announcement that Doom 3 had gone gold. The long-awaited PC title is expected to drive the company's revenue through the second quarter, with some reports saying it is already Activision's best-selling PC title ever. Informed sources tell GameSpot that preorders for the upcoming shooter are running more than double any previous Doom title.

As for the Xbox version of Doom 3, Activision executives told analysts in a post-announcement conference call today that they are listing the game as a December 2004 release "for modeling purposes only." They said ultimately, though, the decision to release the Xbox Doom 3 will fall to id Software, which will supervise Vicarious Visions' development of the console version of the game.

Activision expects revenue for its second 2005 fiscal quarter (calendar Q3 2004) to be $254 million, an amount that should increase even further to $515 million during its third fiscal quarter (calendar Q4 2004), which includes the holiday season. Besides Doom 3, the company hopes that its forthcoming games Rome: Total War, Call of Duty: United Offensive, X-Men Legends, and the movie tie-in Shark Tale will be the big moneymakers over the next two quarters. For the holidays, Activision maintains high hopes for continued strength for both Shrek 2 and Spider-Man 2 based on the December releases of both movies on DVD.

For the full fiscal year 2005, Activision is intent on “breaking through the billion dollar barrier,” according to Doornink.

Other topics touched on by the two executives today included the company’s cautious entry into the mobile sector. Doornink called it “an emerging market” and not yet worthy of major resources. Kotick said Activision was waiting for handsets that offered faster data transport and better game control.

On the hardware front, the executives outlined how they think the back half of 2004 will pan out for each major console maker. Doornink sees Sony selling an additional 3.8 million PS2 units, Microsoft will move an additional 1.8 million Xboxes, and Nintendo will sell 1.4 million GameCubes and 3 million Game Boy Advances. Neither executive sees any price cuts for current-generation systems within the next six months.

One additional revenue-generating resource that Kotick predicts will increase in usage by Activision is the employment of in-game advertising and sponsorship deals, like those arranged for True Crime: Streets of LA. “We’re excited about integrating messages of advertisers and sponsors into the game,” Kotick said during today’s call.

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