73% of Sales Come from Digital

With “Call of Duty: Advanced Warfare,” “Skylanders Trap Team” and “Destiny” launching this fall, Activision Blizzard raised its sales outlook for the rest of the year, expecting to generate $4.7 billion.

That’s up slightly from earlier estimates of nearly $4.68 billion, when taking into account non-GAAP earnings, but as digital continues to grow into a larger source of revenue for the company, new game launches, sequels to its top franchises, as well as downloadable expansions to “World of Warcraft” are expected to prop up results.

Even without launching a major game so far this year, Activision reported better-than-expected second quarter results, generating $658 million in sales (up from $608 million) and $45 million in net profit, the company announced Tuesday.

Digital sales from subscriptions, downloads and other transactions, in particular, increased during the three-month period, that ended June 30, generating $383 million, up from $323 million, and accounting for a massive 73% of the company’s sales during the quarter, a record.

That was primarily driven by strong digital sales of “Call of Duty: Ghost,” Blizzard Entertainment’s “World of Warcraft,” “Diablo III: Reaper of Souls” and its newest franchise, “Hearthstone: Heroes of Warcraft,” which recently launched on the iPad.

“Today, we have more opportunities to create great content using new platforms and business models while also expanding into new geographies, and are embracing all of these growth opportunities with the same commitment to excellence that we have demonstrated over the past 23 years,” said Bobby Kotick, CEO of Activision Blizzard.

“Over the next few months we expect to release some of the very best games in our company’s history,” he added.

In fact, Activision has high hopes of turning Bungie’s “Destiny” into its next billion-dollar franchise when the game launches Sept. 9.

The company expects to spend $500 million to make and market the game, from the creators of Microsoft’s “Halo” franchise.

“We belive (‘Destiny’) will be the largest new intellectual property launch in videogame history,” the company said.

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Blizzard also plans to launch “World of Warcraft: Warlords of Draenor,” the newest expansion in the franchise, later in the year, that’s already had 1.5 million subscribers pre-purchase the game, a first for the franchise.

The company is looking toward expansions like “Draenor” to compete with free-to-play games, which are taking a toll on “Warcraft.”

The franchise reported another decline in subscribers during the second quarter. It now has  6.8 million, after declining to 7.6 million at the end of the first quarter in March.

Activision doesn’t seem phased, however. “The numbers ebb and flow with each expansion,” Kotick said.

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