Macro Tsimmis

intelligently hedged investment

Activision Blizzard (ATVI) update #4—1Q09 results surprize to upside

Posted by intelledgement on Thu, 07 May 09

Our game publishing company, Activision Blizzard (ATVI), today announced 1Q09 results that materially exceeded expectations. The company reported $981 million of revenues, as compared to guidance of $860 million and a profit of 14¢/share, as compared to guidance of 8¢. (Management had announced last month that 1Q09 results were tracking ahead of their prior guidance by had not provided any revisions to their guidance at that time.)

CEO Robert Kotick stated, “Our better-than-expected first quarter results were driven by strong global consumer response to the Call of Duty and Guitar Hero franchises and Blizzard Entertainment’s World of Warcraft, despite challenging economic times.” The company now expects 2Q09 revenues of $1B and profits of 10¢/share, powered by a spate of new product releases including three games inspired by theatrical motion pictures, X-Men Origins (which was released last week), Transformers™: Revenge of the Fallen and Ice Age™: Dawn of the Dinosaurs, as well as a new third-person action game Prototype™, Guitar Hero: Smash Hits™, a compilation of the most popular songs from previous Guitar Hero games that will now be playable as a full band experience and Guitar Hero On Tour: Modern Hits™ for the Nintendo DS. And they raised guidance for the full year from $4.2B of revenues to $4.3B and profits from 22¢/share to 24¢.

Highlights of the first quarter included:

  • Guitar Hero World Tour was the #1 best-selling third-party title in the U.S. across all platforms in dollars
  • In the U.S. and Europe, Guitar Hero World Tour was the #1 best-selling third-party title in dollars for the Nintendo Wii and the only third-party game to rank as a top-five best seller for the platform
  • Blizzard Entertainment’s World of Warcraft: Wrath of the Lich King remained the #1 PC game in dollars in the U.S.
  • Activision Blizzard had three of the top-10 best-selling PC titles in dollars in the U.S.
  • 1Q09 European sales for the Guitar Hero franchise grew 84% year over year
  • As of 10 April, Activision Publishing’s Crash Bandicoot Nitro Kart was the #1 paid app for the iPhone of all time
  • On February 24, 2009, Activision Publishing announced an agreement with Corus Entertainment Inc.’s Nelvana Enterprises to develop and distribute video games based on the breakout hit toy and wildly popular action animated television series Bakugan
  • On April 16, 2009, Blizzard Entertainment announced that its World of Warcraft (WoW) will be licensed to an affiliated company of, Inc. (NTES) in mainland China for a term of three years following the expiration of the current license agreement with The9 (NCTY).

Speaking of China, that remains one revenue wildcard for 2009. Over 10% of WoW players are in China, and the transition path for them from The9 servers to servers is still unclear. (That is, will players be able to keep their characters—and in some cases months and years of invested gameplay—intact? Or will they have to start over from scratch?) Not to mention the prognosis for the “Wrath of the Lich King” WoW upgrade, the release of which in China has been long delayed, reportedly due to government review/approval issues (although some have speculated that The9 engineered the delays as a negotiating tactic). The The9 license expires in June and if is not up-and-running by then—or there are issues migrating The9 players to the servers—it would have an impact on revenues. Stay tuned.

Previous ATVI-related posts:

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