Activison Blizzard recently revealed in their posting of their first quarter 2012 fiscal results that they performed better than expected in sales and profits, although the company’s net revenues saw a decrease from $1.45 billion for the first quarter of 2011 to $1.17 billion this time around. Earnings per share also saw a drop to 33¢, down from 42¢ at this time last year.
Due to the better than expected quarter, projections by the company have been raised for the rest of the year, with Activision expecting $4.2 billion in revenues, which is up from $4.15 billion and earnings per share of 65¢, up from 63¢.
Activison also reports that digital sales accounted for 27% of total revenues. Chief Executive Officer Bobby Kotick went on to say:
“Our better-than-expected first-quarter performance was driven by global consumer demand for Activision Publishing’s Call of Duty: Modern Warfare 3, and Skylanders Spyro’s Adventures, as well as Blizzard Entertainment’s World of Warcraft which remains the #1 subscription-based MMORPG in the world. Through March 31, players have logged more than 1.6 billion hours of online gameplay of Activision Publishing’s Call of Duty: Modern Warfare 3, and for the quarter in North America and Europe, including the accessory packs and figures, Skylanders Spyro’s Adventures was the #3 best-selling game overall in dollars across all platforms. Based on our internal estimates, we believe that Skylander’s toys sales in the first quarter exceeded those of Star Wars, the #1 action figure line.”
Over 30 million Skylanders toys have been sold through March 31 and have played a big role in the better than expected Q1 fiscal report. Looking forward, Diablo III is set for release on May 15 with reports indicating “pre-orders for the game worldwide have set a new record for Blizzard.” The expansions World of Warcraft: Mists of Pandaria and StarCraft II: Heart of the Swarm also contributed, as well as the company publishing the upcoming Skylanders title and Call of Duty: Black Ops 2, which reportedly boasts three times the first day preorders on day one than that of the first Black Ops. As for the online services the company offers, specifically Battle.net and Call of Duty Elite, Kotick stated:
“We also continue to expand our service platforms, Blizzard Entertainment’s Battle.net and Activision Publishing’s Call of Duty Elite, grow our global footprint into new markets and strengthen our development resources for the future. Our high-quality brands, industry leading operational capabilities and solid balance sheet should enable us to continue to take full advantage of the opportunities afforded by the expanding interactive entertainment market and deliver continued superior returns to our shareholders.”
Analysis: Activision really hit the jackpot with the Skylanders franchise and it’s a deserving title. It’s something that the market hasn’t really seen before and has a gimmick that kids will just adore while also being a nice, clean title. It’s hard to be certain if even Activision could’ve seen all this success because, to begin with, I sure didn’t.
As for their expectations for the end of the year, it would be surprising if the company didn’t reach their new expectations, especially with a strong lineup for the rest of the year. Diablo III has been long awaited for, and millions are eager to get their hands on the title. I’m not sure how Torchlight II, which is expected to release in June, is going to fare against the juggernaut that is Diablo III. This is before we even mention the upcoming Black Ops II, set to actually bring something new to the table with a new time setting and a storyline that’s begging to be explored and could be highly relevant within the next ten years. I’ve never been a massive Call of Duty fan, but even my interest has been piqued by where Treyarch is taking the title.
In the MMO department, whatever dent made by newer releases like Star Wars: The Old Republic could potentially be completely undone if the Mists of Pandaria expansion really takes off, which will add a slew of new content for new and old users alike and bring back gamers who may have moved on to new titles. It’ll be interesting to see how the rest of the market reacts and where players end up going to for their MMO fix when the expansion reaches the hands of the customers.
The digital market is only going to grow in the coming years. While I can’t personally vouch for the usefulness of Battle.net or the Call of Duty Elite service, they both offer incentives to those willing to shell out the extra money and have seen a great amount of success each. Activision has performed well this quarter, but at this point, I didn’t really expect anything different.