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Finance

Activision Blizzard closes 2012 with record $4.86 billion

Activision Blizzard closes 2012 with record $4.86 billion

Fri 08 Feb 2013 3:00am GMT / 10:00pm EST / 7:00pm PST
FinanceFinancial

Skylanders and Call of Duty lead the publisher forward

Activision Blizzard

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

activisionblizzard.c...

Activision Publishing

Activision, Inc. is a leading international publisher of interactive entertainment software products....

activision.com

Activision Blizzard has announced its financial earnings report for the fourth quarter and full year of 2012, ended on December 31, 2012. For calendar year 2012, the publisher pulled in record revenues of $4.86 billion, up from $4.76 billion in 2011. Digital revenue accounted for 32 percent of the company's revenue, totaling $1.54 billion.

For the fourth quarter, Activision Blizzard delivered a record net revenue of $1.77 billion, up from $1.41 billion in Q4 2011. The recorded revenue was ahead of the publisher's prior estimates of $1.49 billion.

"We are very pleased to report that Activision Blizzard delivered the best performance in its history. With better-than-expected net revenues, record operating margins and record earnings, and over $1.3 billion in operating cash flow, we continue to set the industry success bar. I would like to thank our incredibly talented employees around the world for their passion, drive and creativity, which continues to fuel our success," said Activision Blizzard chief executive officer Bobby Kotick.

Titles in the Call of Duty and Skylanders franchises led the company forward for the full year. Across all platforms in the United States and Europe, Black Ops II, Skylanders Spyro's Adventure, Skylanders Giants, and Modern Warfare 3 were the number one, number four, number five, and number nine titles in dollars, respectively. As of December 31, 2012, the Skylanders franchise has drawn in more than $1 billion in worldwide sales, with more than 100 million figures sold through January 2013.

Blizzard Entertainment also had two top ten PC titles in the US and Europe: Diablo III and World of Warcraft: Mists of Pandaria. Diablo III sold 12 million units through the end of December and was the number one best-selling PC game, while Mists of Pandaria was the number three best-selling PC game.

"As we look to 2013, we will continue to invest in our established franchises, as well as several new properties. We expect these investments to drive our growth over the long term and to enable us to deliver superior returns to our shareholders in the years to come. In the short-term, we expect to continue delivering strong profitability, but below our record setting 2012 performance, due to a challenged global economy, the ongoing console transition and a difficult year-over-year comparison because of Blizzard's record-shattering Diablo III success in 2012," said Kotick.

Heading into the next year, Activision is expanding Call of Duty: Black Ops II with the Revolution downloadable content and Starcraft II with the Heart of the Swarm expansion. First quarter revenue is estimated at $1.16 billion, with calendar year 2013 coming in at $4.09 billion.

Activision shares rose to $12.69 in after hours trading on the earnings news.

[Image via Telegraph]

16 Comments

Bruce Everiss
Marketing Consultant

1,716 598 0.3
Mr Kotick is by far the best businessman that the video game industry has ever seen.
Some people don't like that.
But we would all be a lot better off with more like him running the major publishers.

Edited 1 times. Last edit by Bruce Everiss on 11th February 2013 9:10am

Posted:A year ago

#1

Peter Dwyer
Games Designer/Developer

458 254 0.6
@Bruce

Seriously! If this guy is your hero, then you really need to take a step back or have you conveniently forgotten all the closed studios that ultimately boosted the bottom line for Activision. This is a short term boost as you can never make the same cost saving twice.

So yep the share holders will be pleased and Evil K. can afford yet another house/farrari/yatch but at what ultimate cost to our industry!

Posted:A year ago

#2

Andreas Gschwari
Senior Games Designer

542 528 1.0
I don't necessarily agree Peter. Yes there have been closures, but Activision is by far not the only one and, unlike many competitors, Activision is massively successfull and continues to employ thousands of people.

They have some massive pillar franchises and, with WoW, a continuing steady stream of revenue. My hope is that some of that money will find it's way to more new and fresh IPs. I would not put Kotick as a personal hero, but he is certainly a shrewd business man and at the end of the day a successful business is one that continues - unlike say THQ. Or more closer to home Codemasters with a new round of redundancies.

Posted:A year ago

#3

Bruce Everiss
Marketing Consultant

1,716 598 0.3
Closing under performing studios is good.
If our industry did more of it then we would be a lot more vibrant and healthy.
Kotick is not sentimental. He puts resources where they will do the most good in an entirely pragmatic manner.

Posted:A year ago

#4

Alex O'Dwyer
Animator

162 155 1.0
Closing under performing studios is good.
I am honestly lost for words.

Edited 1 times. Last edit by Alex O'Dwyer on 8th February 2013 9:37am

Posted:A year ago

#5

Tom Pickard
Lead Environment Artist - Campaign Map

308 382 1.2
Ahh... It's scary I kind of agree with Bruce, maybe not so bluntly... But reorganising and closing of studios, whilst bad for the individuals at said studio, Is potentially beneficial in the long term for the Industry.. Often If a Studio Is constantly churning out average games Just to keep going year by year, It takes either a hit game or a s**t game to make the decsion for them on the future of the studio...

Sentiment Is one thing but a competetive market where Investment goes to people making good products and those not need to adapt or fail. With people like Kotick being almost sociopathically absolved from actual day to day running of a studio and working with devs he can make decsions on a more viable "the strong survive" mentality.. It's not nice, and It's not great every time. But things that do happen when studios close Is the best people move on to form start ups and Join other teams, and the rest filter out of the Industry keeping the standards higher..

Like Down In Brighton after Blackrock was closed by Disney, CA hired several people, And out of nothing popped a few really talented start ups with more freedom and flexibility, It's a new lease of life for the Brighton games community that probably wouldn't have happened without that major descion by Disney.

Posted:A year ago

#6

Michal Korec
Editor/Analyst

9 1 0.1
If we have only managers like Bobby Kotick, we end up with 20 repeating foreseeable titles each and every year and variety of console games would die quickly. New IP would grow up once in a few years and need to be premium-priced like Skylanders because Bobby didn't bring anything new to market at all. Compared to EA (which is slumbering through its own muddy waters), not many IPs brought to the market, sorry.

Nevertheless, market wouldn't allow to have more than 2 or 3 managers on-board because they would compete to the bone and nothing will remain.

Honestly, Bobby Kotick became CEO in summer 2008, when Call of Duty was already multi-billion franchise and WoW was going to third published release (Wrath of the Lich King). Exclude Skylander and there is nothing new he brough to the market. There is a clear difference of inventing and leading the venture or maintaining it.

But hey, let's see how he manages WoW slump and transition to the new generation and then we'll discuss his achievements. Or we'll see how he manages to perform in 2015 when WoW gets to 5-6 million customer, CoD would be tired franchise and Destiny will have... well, we don't know its destiny.

Posted:A year ago

#7

Bruce Everiss
Marketing Consultant

1,716 598 0.3
@Michael Korec

How does The Blast Furnace fit in with your view?

If all the industry managers were like Kotick then all developers would be happy because they would be working on successful projects that customers wanted.

Kotick became CEO of Activision in February 1991. Fact.
2008 was just the date of the Blizzard merger.

Posted:A year ago

#8

Max Kaftanati
President

10 4 0.4
Recycled products (and graphics engine) every year. Good thing there is just one Kotick. I remember buying MW3 for PC and never looked at BO2 ever since. Textures looked worse than COD4, maybe 1 good map, $59.99 purchase. No idea why it still gets played according to steam stats. I guess life is good at Activision

Posted:A year ago

#9

Andreia Quinta
Creative & People Photographer

193 424 2.2
we would all be a lot better off with more like him running the major publishers.
Kotick is a financial genius and businessman, and while the games industry might have been better off and financially healthier with Koticks, creativity and 'vibrance' - as Bruce put it - would have reached stagnation apart from indie developers since all the major publishers would stick to financially secure IP's to appeal it's shareholders.
Holding creativity in this industry would never be a good idea, but apparently making games isn't meant to be fun anyway, fun being one of the main propellers of creativity and innovation.

I can respect his business drive, but he doesn't care about his consumers, something like this would never be done by someone that does.

Posted:A year ago

#10

Cameron Lourenco
Studying Business Managemant

22 16 0.7
With more Bobby Koticks you'll get absolutely no risk taking, milking franchises for all they are worth, putting out as many as possible until market saturation with little innovation until everyone gets sick of it and the franchise dies (see - Guitar Hero).

Closing smaller studios which may not have made as big a profit is what Kotick does. Those studios may have been creating something ingenious that may not have sold like Call of Duty, but if you're not a homogenized game that appeals to the mass market, you have no place at Activision. This is a business strategy that does nothing for the industry in terms of moving forward creatively and expanding what is possible. This is what David Cage was talking about - an industry that can't move anywhere because its stuck marketing to teenagers, and people with teenage mentalities, where the vast majority of what is sold is just another version of you getting to stab and/or shoot things. If you're a shareholder, on the other hand, it's great, and that's who Bobby Kotick is running Activision for - the shareholders. He doesn't give two pisses if you think the games his company puts out are derivative and don't push the industry forward. That's what smaller companies are for who aren't looking to maximize profits as their first and only goal.

Posted:A year ago

#11

Andreas Gschwari
Senior Games Designer

542 528 1.0
It is interesting to see so many people jump on the "Kotick is bad" bandwaggon. Have any of you bothered to look at the list of games Activision actually has published? (http://en.wikipedia.org/wiki/List_of_Activision_games)

It's not just Call of Duty you know.

There is no doubt in my mind that Activision is driving the industry forward, partly because of their pillar franchises - same as EA is with FIFA and Battlefield. Would people buy a console for an indie game? a few perhaps, but not in the numbers those big franchises manage.

Look back to the days of Tomb Raider 1 and 2. Those games shifted massive amounts of consoles for Sony. Call of Duty and the likes do the same for Xbox and PS3. Those franchises ensure an installed user base which is happy to try out new games and venture into the indie side of things.

Additionally, how many small and independant studios have we seen formed by people who came from large studios and publishers? With the know-how, the background, the name to get funding and produce excellent new IP?

Regardless of what we, the people who work in the industry, might think of some of these massive core franchises, the industry would not exist without giants like Activision, EA, Ubisoft, Take Two and others. How many of these industry giants have helped fun kickstarter projects as well?

If people don't like Activision, don't work for them. If they don't like their pillar franchises, don't buy them. Nobody stops anyone working in the industry to go indie and work on franchises that are creatively amazing and (hopefully) sell enough to break even. Working in Sweden i know a few people who work independantly and i know their struggle to break even - and that's with amazingly creative and fun games.

As for Kotick not caring about consumers, i would question that statement. I think Kotick very much cares about consumers. Because consumers are the ones spending money on Activision products - and i'd say almost 5 billion USD shows that consumers like what they get. Looking at new ways of creating revenue is not a unique thing to Kotick or Activision - every company should do this - what it shows is that Kotick is aware that the consumer base and the consumer needs are changing. Some ideas might well be crazy and not work, others will.

Posted:A year ago

#12

Randy Marr
Customer Service Representative

12 37 3.1
Financially, you're apparently not wrong, and the dollar signs prove that. Creatively, you couldn't be further from the truth. People like him, who have gone on record saying that he wishes to take the fun out of video game making, are going to be what wreck this industry and turn it into a worst-than-Hollywood slog-fest.

Posted:A year ago

#13

Paul Gheran
Scrum Master

129 27 0.2
But work isn't supposed to be fun, or we wouldn't have invented another word to describe how it feels. Fun is for hobbyists, which we are not supposed to be.

Call me Bobby. Lets do lunch.

Posted:A year ago

#14

Paul Jace
Merchandiser

765 997 1.3
Activision shares rose to $12.69 in after hours trading on the earnings news
For a company as successful as Activision Blizzard and one that has been as successful as long as they have I've always wondered why their share price seems so low. I don't expect them to pull in Apple numbers but I can't remember the last time they have had a negative year or even quarter and their major franchises continue to break records year after year. Shouldn't their stock price be somewhere between $25-$55 a share?

Posted:A year ago

#15

Gareth Eckley
Commercial Analyst

96 69 0.7
@Bruce's remark

Do you honestly think that people who work in the industry STOP working in it when a studio closes?

No, the ones who've spent the longest in the industry are pretty much guaranteed new jobs, regardless of talent. So pretty much the only people who get screwed are new talent at the bottom end, who don't have any say in the overall production of the game anyway.

But don't let reality get in the way of things.

Edited 1 times. Last edit by Gareth Eckley on 24th March 2013 10:50am

Posted:A year ago

#16

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