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Finance

Activision-Blizzard doubles annual profits to $1.1 billion

Thu 09 Feb 2012 11:12pm GMT / 6:12pm EST / 3:12pm PST
FinancePublishing

34 per cent of record $4.76 billion annual revenue from digital sales

Activision Blizzard

Headquartered in Santa Monica, California, Activision Blizzard, Inc. is a worldwide pure-play online...

activisionblizzard.c...

Activision-Blizzard more than doubled its annual net profit to $1.1 billion in another record year for the company.

For calendar year 2011, the company posted revenues of $4.76 billion, up from $4.45 billion the previous year, and almost $800 million higher than its outlook. Net profit rose from $418 million in 2010 to just over $1.08 billion.

The company's digital business was also at an all-time high of $1.6 billion, or around 34 per cent of total sales.

The company plans to buy back a further $1 billion worth of shares from its parent company, Vivendi, in 2012.

Key to that success, in both physical and digital retail, was the Call of Duty franchise, which enjoyed its eighth consecutive year of revenue growth.

That Modern Warfare 3 was the best selling game (in dollars) of 2011 is by now widely known, but its predecessors also sold strongly. Black Ops was the fifth best-selling game, and CEO Eric Hirschberg claimed that Modern Warfare 2 and World at War had combined sales "in the millions."

Modern Warfare 3, Black Ops and Modern Warfare 2 occupied the top three slots in the most played games on Xbox Live

The franchise also saw record engagement, with Modern Warfare 3, Black Ops and Modern Warfare 2 occupying the top three slots in the most played games on Xbox Live. Across the entire franchise, Call of Duty now has 40 million MAUs.

As of January 31 this year, Call of Duty Elite had 7 million subscribers, with 1.5 million people signing up for a premium annual membership - priced at $49.99 a year. Activision-Blizzard claims that Elite is now the third biggest game subscription service behind Xbox Live and World of Warcraft.

The company's major new IP launch of the year, Skylanders, also performed beyond expectations. It was the number one "kids game" of the calendar year, and sold 20 million toys and accessories.

Skylanders and Call of Duty Elite were repeatedly cited as two of the company's main "vectors for growth" in 2012. However, that could change drastically depending the number of products Blizzard chooses to release.

World of Warcraft finished the year with 10.2 million subscribers, with Mike Morhaime noting that there was a minimal difference over the prior quarter. In addition, the WoW Annual Pass announced at Blizzcon 2011 gathered more than 1 million registrations.

However, Bobby Kotick confirmed that, including Diablo III, Blizzard would release "at least two" products in 2012. Blizzard DoTA is likely to fill the other slot, but its still unannounced MMO featured heavily in the investor presentation's slides.

Another key area for growth in 2012 is the free-to-play, micro-transaction funded version of Call of Duty being developed for the Chinese market, which CEO Eric Hirschberg expects to "over-deliver" on gamer expectations in the region

Activision-Blizzard's full year results and its tentative 2012 release schedule will go some way toward addressing those who doubted the company's strategy of concentrating on an ever decreasing stable of IP.

Despite the company's financial success, its IP portfolio has slimmed considerably since it announced last year's results.

Activision closed racing specialist Bizarre Creations In January 2011, before choosing to shelve the Guitar Hero franchise and axe United Front's True Crime: Hong Kong shortly after its Q4 results the following month

By that point, the firm's other major IP, Tony Hawk's Skateboarding, had already stalled, with its last iteration, Shred, selling just 3000 copies in its first week on-sale in the US.

Activision-Blizzard also posted its fourth-quarter results. For the three month period ending December 31, the company generated net profits of $99 million on revenues of $1.41 billion, versus a loss of $233 million on revenues of $1.43 billion in Q4 2010.

6 Comments

Matthew Handrahan Staff Writer, GamesIndustry.biz

125 121 1.0
Noted and changed.

Posted:2 years ago

#1

Bruce Everiss Marketing Consultant

1,692 594 0.4
Kotick is the most successful businessman that the video games industry has produced.

Compare and contrast with Electronic Arts.

Posted:2 years ago

#2

Dirk van Wijk Student - Computer Science (Master)

29 13 0.4
But he's also one of the biggest asses out there :D

Posted:2 years ago

#3

Terence Gage Freelance writer

1,288 120 0.1
@ Bruce

While you're probably right, I would be interested to see a breakdown of how much of that profit is coming from WoW - which, as you know, has had nothing to do with Kotick overall.

But, they've done an incredible job with the COD series, and despite many vocal internet folk expecting the series to begin a decline at some point (I myself thought MW2 would be the series' peak in terms of sales and revenue), Activision somehow keep pulling it out the bag, so bravo to them. Whether the audience will soon begin to tire of the whole 'modern military shooter' sub-genre remains to be seen, but I still think it's a little narrow-minded of Activision to kill off almost all internal projects and not look at the wider picture of having a catalogue of relatively successful games spearheaded by the multi-million selling likes of COD, Spyro and anything Blizzard release.

I mean, say what you like about EA - and their short-term business model obviously hasn't been as successful or profitable as Activision's in the last few years - but at least they still invest in and publish new games and projects which are slightly off-the-wall, like Shadows of the Damned, Kingdoms of Amalur and Alice: Madness Returns. As a consumer, I really respect that, and it makes EA as a publisher much more appealing to me.

Edited 1 times. Last edit by Terence Gage on 10th February 2012 11:20am

Posted:2 years ago

#4

Jeff Wilson

46 0 0.0
We have Infinity Ward to thank for this success story. Let us hope the staff are now getting the profits they deserve and prevent another mass walk out. Having said that, EA's Battlefield 3 is probably the best multiplayer FPS on the market today so Activision can't assume they will remain top dog indefinitely and continue to overcharge for their games. This is aside from their other IP's like WOW naturally.

Posted:2 years ago

#5

Private VIdeo Games

103 14 0.1
CoD will be top dog for some years to come, he's done well Kotick.

Posted:2 years ago

#6

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