Starcraft II sells 3M, Activision Blizzard reports $51M profit

Megapublisher beats expectations, reports $745 million for July-September quarter; full-year earnings projection revised up to $4.28 billion.


Accountants and gamers alike are eagerly awaiting next week's release of Call of Duty: Black Ops, the latest installment in Activision Blizzard's highly successful first-person shooter franchise. However, the publisher showed today that the modern-military series wasn't the only way it was able to turn a dime, announcing better-than-expected financial results for the quarter ended September 30.

3 million units? Awww, yeah.
3 million units? Awww, yeah.

During the three-month period, Activision Blizzard achieved sales of $745 million, well above estimates of $600 million for the quarter. The publisher also made massive gains in net income compared to last year, growing profit from $15 million during the third quarter in 2009 to $51 million in 2010. The company's profit resulted in $0.04 earnings per diluted share, compared to projections of a break-even result.

"For the third quarter, we exceeded our net revenues and earnings per share outlook and delivered strong year-over-year growth," said Activision Blizzard CEO Bobby Kotick in a statement. "Our better-than-expected results are due to our leadership in online entertainment, including strong performance from Activision Publishing's Call of Duty franchise, and Blizzard Entertainment's World of Warcraft and Starcraft II: Wings of Liberty."

Kotick went on to note that nearly half of the company's revenue during the quarter--$348 million, to be exact--came from subscriptions and online revenues. In October, Blizzard Entertainment touted a new milestone for its monumentally successful massively multiplayer online role-playing game World of Warcraft, saying the global subscriber base has reached 12 million players.

Activision also saw production out of another of Blizzard's franchise's, Starcraft II. As of September 1, the highly regarded sci-fi real-time strategy title sold more than 3 million units worldwide, having gone on sale in July. The game sold more than 1.5 million units within 48 hours of release.

Activision Blizzard also raised its full-year earnings outlook. The company now expects full-year 2010 revenues to come in at $4.28 billion, EPS of $0.51. Those figures are up from previous projections of $4.18 billion in sales and $0.49 EPS for the fiscal and calendar year.

The publisher attributed the upward revision to its better-than-expected third quarter performance, as well as its fourth-quarter hits-in-waiting, the aforementioned Black Ops and World of Warcraft's third expansion, Cataclysm. Of the former, Activision said that it expects the game to be "one of the top entertainment properties of the holiday season," with preorders projected to set an industry record.

In a post-earnings conference call, new Activision Publishing CEO Eric Hirshberg confirmed that a new Call of Duty will arrive during the latter half of 2011. "We will launch a new first-person action title during the back half of 2011," he said. Activision later clarified this statement to say that the game would fall within the first-person shooter genre.

Hirshberg did not indicate which Activision-owned studio would be handling the game. However, Sledgehammer Games and Infinity Ward are known to be working on new installments in the franchise.

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