Guitar Hero tops $2 billion, Activision Blizzard earns $981 million in Q1

Rhythm franchise only third series to top lifetime-sales milestone; COD4 sales hit 13 million; World Tour, Lich King top multiplatform, PC charts for quarter; MMORPG revenues more than $100 million per month.

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Whereas rivals THQ and Electronic Arts reported red ink this week, Activision Blizzard released earnings solidly in the black today. For the January-March quarter, the first of its fiscal year, the company exceeded its $860 million earnings target, as it predicted it would three weeks ago.

It's good to be the King.

The Santa Monica, California-based operation reported a whopping $981 million in net revenues for the quarter--nearly as much money as competitor THQ's entire annual income and archrival Electronic Arts' annual losses.

Year-on-year figures are not available, given that Activision Blizzard did not officially come into being until last July, but the company submitted now-defunct Vivendi Games' $325 million Q1 2008 for comparison's sake. Profit-wise, the company racked up $189 million in net income, more than quadruple the $43 million that Vivendi made in the same quarter the year prior.

Unsurprisingly, the Call of Duty, Guitar Hero, and World of Warcraft series were singled out as the quarters' big earners. Citing numbers from the NPD Group, Activision declared "Guitar Hero World Tour was the #1 best-selling third-party title in the U.S. across all platforms in dollars." (Emphasis added.) Sales of the rhythm franchise were also up 84 percent for the quarter in Europe, according to figures from UK-based research firm Charttrack and Germany-headquarted Gfk.

Unsurprisingly, World of Warcraft: Wrath of the Lich King was the number-one game for the quarter on the PC charts, according to NPD. A closer look at earnings numbers showed the impact of the World of Warcraft franchise on the company's bottom line. Massively multiplayer online role-playing game income for the quarter was $314 million, or more than $100 million per month.

After the earnings report, Activision executives held a conference call with analysts to talk more about its finances and game lineup. Highlights from the call are below:

--The company has $3.1 billion in cash on hand as of the end of the quarter, and is continuing to buy back stock.

--CFO and chief corporate officer Thomas Tippl said that reduced Guitar Hero hardware manufacturing costs will increase profit margins.

--Blizzard Entertainment will be ramping up its development costs during the rest of the year; MMORPG revenue will be an estimated 35 percent of earnings in the April-June quarter.

--The company will have 11 major releases in the back half of the year, as compared to eight last year.

--Activision president Mike Griffith said that the installed base of current-generation hardware in the US and Europe, including handhelds, to be 170 million units.

--Guitar Hero now commands 55 percent of the music-based game market in North America and Europe. "We took share from Rock Band in North America and Europe," claimed Griffith. Guitar Hero outsold Rock Band 10 to 1 in Europe, and "should improve" when GH: Metallica launches there next month.

--On rhythm games: "This is a genre retailers continue to disproportionately support."

--DJ Hero can be supplemented with a guitar. "It is an all-new interactive music experience that allows gamers to rule the party, delivering unique remixes and mash-ups created by professional DJs exclusively for the game."

--50 percent of likely buyers for DJ Hero are consumers who are not Guitar Hero owners.

--All Guitar Hero instruments will work with Band Hero, but the DJ Hero turntable will not.

--More than 35 million Guitar Hero games sold, and more than 40 million "professional songs" have been downloaded.

--Bizarre Creations' new racing game, Blur, is officially confirmed and will be on hand at E3.

--Griffith: "From a business perspective, we are targeting Blur to do for racing what Call of Duty did for shooters, and that was the goal when we acquired Bizarre Creations [in 2007] to make this game. "

-Call of Duty 4: Modern Warfare life-to-date sales now top 13 million, nearly as many as Grand Theft Auto IV.

--In the back half of the year, Activision is also "planning to release our reinvention of Tony Hawk with a very innovative and interactive game that lets consumers skateboard. Our goal was to reinvent this franchise where we engage a broad mass-market consumer, and we feel good about what this game can do."

--President and cofounder of Blizzard Entertainment, Mike Morhaime: "This summer we will beta-testing, this phase will signal the final stretch of development. During the Starcraft II beta test, we'll begin external testing of our new Battle.net, including some features that are designed to connect all future Blizzard games. This includes new tools that will make it easier for players to communicate with each other between games. We are also introducing a centralized system that would let players manage of all their Blizzard entertainment games and future games in one place without having to remember multiple sets of login information."

--This quarter, the Guitar Hero franchise surpassed the $2 billion mark in terms of sales, and "is only the third franchise in the history of gaming besides Super Mario and Madden to achieve that milestone," according to Griffith.

Discussion

104 comments
RitterXplode
RitterXplode

They make a huge amount of money out of WoW. I bet it's the game that give it's company the biggest monthly profit by... A LOT.

GamerEternal
GamerEternal

One thing though, I did enjoy the hell outta that Wolverine game.

GamerEternal
GamerEternal

I don't care about sales figures, I care about game quality and I support Activision because they make great games. Well GH is a great series but I don't understand how in the **** people would buy it over RB, which is way more fun. Although, as a natural lyricist, I look forward to the day when I can use my XBOX720 or 3602 or whatever, make some beats, burn a CD and sell it. Spiderman is a great series and TH's ok. I've never been one for COD and I think WoW is a waste of time, considering I don't want to play a game endlessly that causes me to miss out on all the other great games because I'm playing one-game. To be honest, I think Activision is a company that is very over-rated and I prefer Capcom anyday of the week. As for the issue, of making more money, it's great that they made another billion dollars, let's all celebrate with a big middle finger to Activision because they are the exact reason companies I grew up with like WD are out of business. Maybe, between them and Nintendo, they can bring about another video game crash. Makes me wonder, what game companies will go next......

GamerEternal
GamerEternal

[This message was deleted at the request of the original poster]

JTR_IceBerg
JTR_IceBerg

haha, nice man... find NyGin07 post and read for lols

shadowkiller11
shadowkiller11

thats great considering other companies have been losing money.

Phaselinear
Phaselinear

It's amazing how they can haul in billion(s), yet they fall short of expectations. That's what happens when you overpay your help, and spend way over your budget for promotion. If they thought more about their game(s) [like Halo, Mass Effect...etc.] you might get a movie out of it too!

NyGin07
NyGin07

Merl57, yeah that guy rocks doesnt he

frogiggy323
frogiggy323

40 million professional song downloads? Is that supposed to mean paid downloads?

necronaux
necronaux

Activision fell short of a billion? Phttt, wusses.

Tyraan
Tyraan

@uberjannie: I've never put much faith in any numbers a company might release for their costs. Could be under or over estimating them to make themselves look better...never know. Interesting thing about the article is that it doesn't say if that's an annual, monthly or all time cost. I highly doubt it's for all time nor could I see it being annual as that would make Blizzard a very rich company. I would tend to agree though that if that 200mil number is accurate that it's just upkeep. Hardware, and the kind of hardware they need to run is extremely pricey. A good designer can make 6 figures a year and even CSRs are pretty high up on the yearly salary. I imagine that if you guestimated the salaries of all the design, tech, monitoring, CSR, GMs etc etc for one year that it would make that 200mil number seem like pocket change. Considering Blizzard isn't just WoW you also have to figure in the various departments for their three top games (WoW, Diablo and SC) that all have their own staff for every aspect involved. These numbers here aren't just for WoW and the article you linked was about WoW only. Who knows though. We can only guess but my guess is that they do make a ton of cash but are forking it over big time as well.

Mr_Versipellis
Mr_Versipellis

2 Billion from GH? That's a third of what the Wii's made...

nappan
nappan

@uberjannie: Hmmm now that is interesting. If those numbers cover their total overhead (R&D, electricity, etc) that's amazing, and yeah, wow they're raking it in. Between you and Tyraan, this is getting interesting! :)

uberjannie
uberjannie

@Tyraan : I remember reading somwhere before the burning crusade that the total cost of WoW (including salery of staff and servers) went to a total of 200 000 000 USD. That was right before WotLK. Thus, the expenses arent as bad as you say they are. Remember, thats since 2004 , you can imagine the pile of money Vivendi has earned from this. http://kotaku.com/5050300/how-much-has-wow-cost-blizzard-since-2004

uberjannie
uberjannie

Vivendi makes a lot of money on World of Warcraft.

tajirinere
tajirinere

the only games to actually come out of activision are COD series and WOW but GH hype i dont get and dont really want 2 becuase it just feels like a cash leech

twodollarcuts
twodollarcuts

Is the Guitar Hero $ amounts including bundles or do they count the difference (as in the actual price of the game, not the whole bundle)? If they are then that's not very accurate. I had to buy a bundle for the PS2 when 1 came out, then another bundle for 3 when that came out for 360. That's about $160 for two games. Seeing as how GHWT was $90-100 for all platforms in bundles (Band kit not included) that gives it a $30-40 advantage over all other third party games.

smfes
smfes

This games business is one hell of a big one, look at these numbers !

grillepain_man
grillepain_man

Waow! 981 millions! in ***** Q1! You may not like wow fans or what so ever, but they sure know how to make money!

cockneyscouse
cockneyscouse

At the start of this generation I was naive enough to believe that Nintendo's and companies like Activsions dominance of the industry, could be a good thing. OK it's all totally aimed at the casual market, but money made from that market could be plowed into development of new techs and deeper new franchises. Todays announcements from Activision and Ninty confirm that the casual marker is paying huge dividends. But it leaves me cold that they sem to have abandoned gamers. Activision have even stated that fact and Nints silence and lack of real games speaks volumes. My olny hope is that a good size percentage of the newer casual market will get a taste for 'real' gaming and these giant companies gat back to what they are good and capable at.The casual gamers are getting bored (check out the Japanese games charts, compared to 2 yrs ago)

Mr_Fujiv1
Mr_Fujiv1

how much do they spend on making these games?? not alot i guess but the money they are making is unbelievable its a joke that it beat COD sales but there are more people that wanna sing in a band than blow someones head off haha

Tyraan
Tyraan

@nappan: Thanks. I would think though that most people can relate to labor costs in this economy. IE a $20 car part costing $300 to put in because of extremely high and inflated labor costs. The same applies to a software company like Blizzard. A simple 3 min game video like the one for Lich King has hours upon hours of labor involved with little to no actual materiel required for it's creation. The big bucks they earn go towards paying for those peoples education, skills, talents, time etc. The better you are at what you do, the more money you can "charge" for your services. I imagine GS puts out this kind of information (as they often do) to try to show how well or poor a company is doing. I suppose since every article is written in the same context that we at least get some kind of comparison for comparisons sake.

nappan
nappan

@Tyraan: You do realize that you just explained something complex, in a clear concise manner right? You also know, that 90% of the people here won't understand, or read it, and then flame you. For the record, good show on your post... I don't know why GS is doing that kind of explanation and analysis. What's the point in shoving raw sales figures down our throats without context?!

Tyraan
Tyraan

@ MushroomRevenge: Nobody but Blizzard really knows the costs involved in maintaining the number of servers they have. But I can tell you that they aren't a super rich company swimming in pools full of $1,000 bills. In terms of just WoW they aren't making a new game every other month to have that $60+ income to rely on like other game companies. They have one time sales that eventually drop to to the $20 mark like the first two expansions. After that they wouldn't have much of an income. New subscribers buying the game would not bring in enough profit for them to pay all their bills. Programmers, designers, graphics artists etc are some of the highest paying jobs and for good reason. Dozens of company owned/maintained servers running 24/7 with 24/7 human monitoring is a costly thing in itself. I'm sure they have plenty of money but I'm also sure that they have plenty of expenses.

NavIGOtoR25
NavIGOtoR25

I suppose that they use so much money to make good games.

omgimba
omgimba

Hum.. I wonder if its really true that there are only 2 more series that sold for $2 billion. After all pokemon sold a total of some 170 million games, a 12$ average would top 2 billion. And Im pretty sure most pokemon games where sold for much more then that for most of the time.

Squeets
Squeets

P0T... More like $165,000,000+ each month... 11,000,000 people paying $15 a month... Plus there is Guitar Hero... which is making them boatloads and costing them nothing... Every few months they just add a few new songs, slap the name of a band on the box and sell the same game again for the same price... so all the idiots of the world pay $60 over and over for the same game... plus another $100 or whatever for the Guitar that cost Activision $8.30 to make...

SephireX
SephireX

WoW is a game that deserves to take in that revenue. Though what is their sales contribution from this revenue? That is the main figure to look at. Guitar Hero is not a game which deserves to take in that revenue. The real Guitar Hero is Rock Band anyway since Harmonix created Guitar Hero and are the true innovative developers. Guitar Hero 5 or Rock Band 3? Make your choice! I don't care either way.

P0T
P0T

wow, so pretty much they are making a 100 million every month from WoW

wayanbros
wayanbros

there is a financial crisis. Just that some companies do better than the most, M$ is surviving because...it has a monopoly on computer operating systems. Actiblizzvision is surviving becuase it has a monopoly on good games...

Merl57
Merl57

@ NyGin07 hahahha wow that was fantastic good job :)

nanikore
nanikore

What about Activision Hero? Tap the colored buttons to crap out random Guitar Hero games!

Pete5506
Pete5506

Guitar hero is good but I do like rock band better

Kenji_Masamune
Kenji_Masamune

yeah, check the stock price when SC2 ships. The koreans still play SC like religious fanatics. With wow constantly printing money for blizzard, they'll recieve 2 more HUGE influxes of cash that will be SC2 and Diablo 3... damn I wish I worked for blizzard.

insanitycheck3
insanitycheck3

[This message was deleted at the request of the original poster]

nickythenewt21
nickythenewt21

Ugh, only one of the franchises that have passed the $2 billion mark is deserving of that amount of money, and that's Super Mario Bros. Mario has done more for gaming than either Guitar Hero or Madden will ever do.

55592
55592

@ Paul_GameFury The entertainment industry is often slow to get hit by economic strain, particularly video games. The reason being that people in financial crisis want more than ever to find moments of escape from reality.

FallenOneX
FallenOneX

Unsurprisingly, the moral of the story for EA is: buying up or paying to disrupt the competition is not a smart business move. Madden better make 20 quadrillion dollars by the time that contract with the NFL runs out.

Desperados11
Desperados11

goes to show that if ur a good developer u can expect great revenue even in the midst of an economic crysis. as for the guitar hero milking, it's only gonna get worse. They should just stop releasing new games and offer cheaper addon packs since the new games are almost nothing more than new songs and a few new gimmicks that dont change much anyway

grafkhun
grafkhun

The amount of profit is disgustingly obscene, that's almost 1 billion dollars in just Q1... I really do not want to see Act Blizz's annual numbers.

SmashingX
SmashingX

eh i buy the call of duties but when i get my fill of the single player i sell em'. the online really feels like, waste, to me.

NyGin07
NyGin07

breaking news: activision announces whistle hero lead devolpers had to say this about the situtaion: "its really awesome man. we really wanted to recreate the feeling of being on stage or at a county fair playing a whistle. were gonna have all the greatest whistle songs and only a few covers. the plastic whistle will be perfectly modeled after a plastic whistle and will cost 99 dollars." other instruments include a pair of limited edition plastic index and middle fingers which will cost 250 dollars. whistle hero is set for a dec. 09 release and bagpipe hero and whistle hero 2 will be released shortly after.

nappan
nappan

"Paul_GameFury Posted May 7, 2009 8:44 pm ET I've put hundreds of hours into WoW and pay $15 a month." Um... I'd say the problem there would be playing WoW for HUNDREDS of HOURs... not the fee. Remember, for 60 bucks, you get a totally new game that doesn't become a repetative drama factory. Oh, and before you tell me how exciting the raids are, etc... when you're doing that... look down at your keybaord. Realize that you're just tapping the same two or three buttons OVER and OVER, producing the same effect... for virtual loot. True, every game is like that to some degree, but MMOs sort of make it an art... a daaaarrrrkk aaaarrrtttt. ;)

nappan
nappan

P.T. Barnum was right.

silent_snip3r
silent_snip3r

Talk about milking the Guitar Hero franchise!