Activision Blizzard's billion-dollar quarter beats expectations

By Tor Thorsen, GameSpotPosted Aug 5, 2009 3:10 pm PT

$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.

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.

136 Comments

  • linahater

    Posted Nov 4, 2009 12:14 pm PT

    Sabotuer, oh wow

    I never thought I'd see a Playstation 2 game on a next gen console...

  • Clive-Owen

    Posted Aug 22, 2009 3:31 am PT

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

  • thrasher510

    Posted Aug 20, 2009 6:33 pm PT

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

  • NoLifeGamin

    Posted Aug 12, 2009 3:46 pm PT

    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

    Posted Aug 11, 2009 2:33 pm PT

    i like milk, especially if its ice cream or chocalate

  • Balaji1212

    Posted Aug 10, 2009 1:37 am PT

    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

    Posted Aug 8, 2009 5:35 pm PT

    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

    Posted Aug 8, 2009 6:57 am PT

    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.......

  • RavenXavier

    Posted Aug 8, 2009 2:34 am PT

    New Spidey in 2010....Awesome!!!

  • Coolyfett

    Posted Aug 7, 2009 1:57 pm PT

    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

    Posted Aug 7, 2009 11:30 am PT

    @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

    Posted Aug 7, 2009 11:16 am PT

    @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 posted Aug 7, 2009 8:20 am PT (does not meet display criteria. sign in to show)

    barryjones009

    Posted Aug 7, 2009 8:20 am PT (hide)

    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

    Posted Aug 7, 2009 7:28 am PT

    @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

    Posted Aug 6, 2009 9:45 pm PT

    Good thing people stopped buying Guitar Hero.

  • endocrine

    Posted Aug 6, 2009 9:17 pm PT

    @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

    Posted Aug 6, 2009 8:23 pm PT

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

  • timboutillier

    Posted Aug 6, 2009 6:11 pm PT

    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

    Posted Aug 6, 2009 4:48 pm PT

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

  • ClawedMonkey

    Posted Aug 6, 2009 4:25 pm PT

    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.

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