The September release of Rockstar Games’ “Grand Theft Auto V” may have broken sales records with its single-day $800 million haul, but gamers have opted to wait on buying other high-profile games until Sony and Microsoft launch their next-generation videogame consoles over the next several weeks.
That’s largely attributed to consumers holding off on investing in “Call of Duty: Ghosts” and “Skylanders SWAP Force” until the PlayStation 4 (out Nov. 15) and the Xbox One (on Nov. 22) become available, the company said while discussing its better-than-expected third quarter results.
“Demand is down as consumers continue to show hesitation” ahead of the new hardware launches, said Eric Hirshberg, president of Activision Publishing.
Activision Blizzard generated $691 million revenue, down from $841 million during the three-month period that ended Sept. 30, and net income of 5 cents a share, up from 3 cents. Activision didn’t complete its $8 billion buyout from Vivendi until Oct. 11.
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The company earned $409 million from digital channels, representing 59% of the company’s total net revenues, a record for the company, with “Call of Duty: Black Ops II” generating more revenue than any console game ever has in a single year, Hirshberg said, thanks to downloadable content and other expansion packs. In fact, based on digital revenue alone, “Call of Duty: Black Ops II” would be the third-largest game this year behind “Grand Theft Auto V” and “Skylanders: Giants.”
Still Activision has shipped $1 billion worth of “Call of Duty: Ghosts” to retailers around the globe, the company said before the earnings were released on Wednesday. Last year’s “Call of Duty: Black Ops II” earned $1 billion in 15 days.
“Our third-quarter results exceeded our expectations, and we are able to raise our outlook for 2013 net revenues and earnings per share,” said Activision Blizzard CEO Bobby Kotick. “Robust continued engagement with our core franchises drove digital revenue, which constituted a majority of all revenue. This quarter demonstrates that games like ‘Call of Duty’ and ‘World of Warcraft’ engage and entertain our fans year round.
“We recently released new titles in two of the most popular franchises in entertainment, ‘Call of Duty: Ghosts’ and ‘Skylanders Swap Force,’ he added. “We are thrilled by the quality of those games, and we are excited to show what we can do with them on next-generation consoles in the coming weeks. We are also in the process of a beta launch for our first major free-to-play game, ‘Hearthstone: Heroes of Warcraft.’”
Blizzard’s “Warcraft” franchise could use the boost. The game lost another 100,000 subscribers during the third quarter, which is an improvement over previous periods of declines. Game had 8.3 million subs during the first quarter and 7.7 million in the second. It’s now at around 7.6 million. “Warcraft” is still the No. 1 subscription-based massively multiplayer online role-playing game.
Blizzard released “World of Warcraft: Mists of Pandaria” and “Diablo III” during the third quarter of 2012, boosting the company’s bottom line. “Diablo III” has sold more than 14 million copies to date.
While there’s plenty of hype surrounding the new console launches, there are still “uncertainties surrounding the console transition,” Kotick said. New platform launches have always provided “great opportunities and short-term challenges,” he added. “The console transition years are hard to predict, and this year is no different.”
Given the franchise’s audience of kids, a majority of Activision’s “Skylanders” sales typically occurs in November and December, leading up to the Christmas holiday.
This year, the franchise has two new competitors in “Disney Infinity” and Nintendo’s latest “Pokemon” title, Activision said.
“‘Skylanders’ is not immune to the effects of the console year,” Hirshberg said, and “is one of the top reasons parents are hesitating” in buying “Skylanders SWAP Force.” Still Activision believes it will score with the latest edition of the game (which enables kids to swap character bodies and powers). “Awareness and purchase intent is stronger than ever,” Hirshberg added.
To boost sales figures, Activision said it will spend more to market the new game and has locked down 20% more shelf space at retail, giving the game its largest retail and marketing presence over previous releases.
“While sell through is down, demand remains strong,” Hirshberg said. “We’re taking nothing for granted.”
As its second billion-dollar franchise, “Skylanders” has earned over $1.5 billion to date from the sale of games, toys and accessories.