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Archive for the ‘B.2 Spec Equity Updates’ Category

Material news on specific equity positions currently held in the Intelledgement Speculative Opportunity Portfolio (ISOP).

Activision Blizzard (ATVI) update #22—OK 4Q10 results, disappointing guidance

Posted by intelledgement on Thu, 10 Feb 11

Our game publishing company, Activision Blizzard (ATVI), announced 4Q10 results yesterday and while they generally met expectations—down a tad from 2009’s fourth quarter but overall better for the full 2010 year than 2009—the outlook for 2011 was very disappointing: the company is projecting a decline in annual revenues. In addition, management announced the disbanding of the Guitar Hero business unit and dropping of plans for a 2011 Guitar Hero release “due to continued declines in the music genre.”

CEO Bobby Kotick emphasized the company’s strong online presence in his comments: “Activision Blizzard’s key franchises have larger audience bases than ever before and we continue to see significantly enhanced user activity and engagement for our expanding online communities.  Our revenues from digital channels, which now account for over 30% of our overall revenues, were driven by increased sales of Activision Publishing’s Call of Duty map packs and value-added services for Blizzard Entertainment’s World of Warcraft…. Notably, since Call of Duty: Black Ops was launched in November players have spent an average of 52 minutes per day playing online, roughly equivalent to the 55 minutes that the average user spends each day on Facebook. As of February 2, 2011, more than 27 million gamers have played Call of Duty games online, logging more than 2 billion hours, or the equivalent of more than 229,000 years of gameplay…. We expect to continue to drive long-term growth, increase our return on invested capital and generate strong cash flow as we have over the last few years. Our strong balance sheet affords us the financial flexibility to invest in games that few companies have the ability to create and allows us to provide our shareholders with value through dividends and share repurchases.”

4Q10 revenues declined from $1.6 billion in 4Q09 to $1.4 billion, but for the full year, 2010 sales were an all-time record $4.5 billion, as compared to $4.3 billion in 2009. The company lost 20 cents per share in 4Q10 as compared with a loss of 23 cents per share in 4Q09. For the full year, the company was in the black by 33 cents per share—another all-time best—as compared to nine cents per share of earnings for 2009; earnings were improved year-over-year for every single quarter in 2010.

Unfortunately, 2011 does not look so bright. Company guidance includes revenues of $4.0 billion (a decline from 2010) and earnings per share of 56 cents (an improvement). This includes projected 1Q11 revenues of $1.3 billion, and earnings per share of 28 cents, both slight declines from the 2010 numbers.

Highlights included:

Also, the company announced a new stock repurchase program authorizing the repurchase of up to $1.5 billion shares of common stock. The $1 billion share buyback announced in February 2010, expired at the end of the year. Activision Blizzard purchased 86 million shares of ATVI for approximately $966 million under the 2010 program. And, according to the press release, “the Board of Directors also declared a cash dividend of $0.165 per common share payable on May 11, 2011 to shareholders of record at the close of business on March 16, 2011.  This is the company’s second-ever cash dividend and it represents a 10% increase over its first-ever dividend that was issued in 2010.”

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Activision Blizzard (ATVI) update #21—Why do we love Activision Blizzard?

Posted by intelledgement on Sun, 02 Jan 11

Well…actually, we don’t. Or at least we try not to. Our relationship with the stocks in our Intelledgement Speculative Opportunity Portfolio (ISOP) is based mostly on enlightened mutual financial self interest.

The company originally sold shares to the public in order to raise capital; they could only be successful in this if the buyers thought the stock price was likely to go up. So the company have an interest in seeing the share value appreciate because it makes it easier for them to raise more capital in the future, if necessary, and makes the treasury stock they still own more valuable for purposes of acquisitions.

We buy (or occasionally sell short) shares of a company’s stock because we believe the value of the stock as determined by the market is—or soon will be—out of whack with the true value of the company.

Should either party decide it is not in their best interest to continue the relationship, it ends. Either we unload the position or the company “goes private,” buying back all the stock in the hands of outside shareholders (rare, but it does happen). No regrets. No emotional entanglements.

Now admittedly, we do prefer companies that are involved in interesting stuff to write about, because that is either entertaining or educational—or, preferably, both. And we do tend to root for the companies whose stock we own. But we would never buy or sell short a stock just because it was interesting, unload a position because the company was too boring, or hold on to a stock when fortune turns against it because we are “in love” with it.

Why are we talking about this now? Well a couple of months back, there was an article published about our game publishing company, Activision Blizzard (ATVI) by an ATVI skeptic, one Anders Bylund, entitled, “Why Do You Love Activision Blizzard?” The thesis of the article is that ATVI stock is unlikely to perform well going forward because the company’s growth has stalled, primarily because they have a dearth of genuinely new product and their existing franchises are—or will be—in decline.

It’s always a good idea to be familiar with the things that can go wrong for any company you invest in, so whenever someone volunteers a cogent opinion as to why some stock you own is a bad investment, it’s worth paying attention just in case he or she has some fresh insight to contribute. According to Bylund, “On a trailing-12-month basis to smooth out seasonal effects, Activision’s sales are on a 4.9% growth trajectory and earnings are rising by just 18%. That’s a serious slowdown from recent years….” And the reason for the slowdown, Bylund says, is the company’s overreliance on their franchise—that is, publishing sequels and add-ons—and a lack of fresh, innovative product: “Where’s the innovation? How is Activision changing to keep up with the times? …Check back in five years, and the new giants of the gaming industry may very well be Zynga and Rovio, with the former market leaders reduced to dinosaur status and fighting over table scraps.”

So is this criticism valid? Well starting with the bottom line, since we purchased ATVI stock for $9.12 a share exactly two years ago today, the price has appreciated to $12.44 as of the close on Friday. Figuring in the 15-cent dividend, we are up 38% or about 17% on an annualized basis. Sounds good…except that our benchmark for this portfolio is the NASDAQ index, and in the same time frame, it has appreciated from 1632.21 to 2652.87, which is an ROI of 63%…a compounded annual growth rate (CAGR) of 28%. So, so far, ATVI is not keeping up with the Joneses.

What about the sales growth falloff? When we purchased ATVI, their trailing twelve-month (TTM) sales were $3.4 billion (that is through the 30 Sep 08 quarter because results for the CY08 fourth quarter were not yet available in early January 2009). Their TTM sales now (again not counting 4Q10 because we do not have those data yet) stand at $4.6 billion. That is a two-year CAGR of 15%, which, while not spectacular, is reasonably healthy. While as Bylund pointed out, the 2010 growth was only +5%, in 2009 it was +26%.

So the key question is, how valid is Bylund’s contention that the anemic 5% sales growth in the last twelve months is likely to be the norm for ATVI going forward because they are failing to innovate and are likely to be knocked off by the likes of Farmville and Mafia Wars? And the answer is: not so much.

First of all, while the supercharged growth of Facebook has created a market for social network gaming, anyone who has played Mafia Wars knows that comparing it to World of Warcraft (WoW) is roughly akin to comparing tic-tac-toe to chess. Yes, they are both games, but someone who is looking to fill in a casual five minutes waiting for the movie to start is going to prefer the former and someone looking for an immersive gaming experience requiring more powerful hardware than a smartphone and prepared to spend an hour or more is going to prefer the latter. In other words, they appeal to different audiences with different needs and Farmville is no more likely to supplant WoW than vice versa.

As for the decline of their franchise properties, while it is true that sales of the Guitar Hero follow-ons have been very poor, there is no sign of any slackening of enthusiasm for Call of Duty or WoW. Call of Duty: Black Ops was released 9 November and generated $650 million in sales in the first five days. It bagged $1 billion in sales in the first seven weeks. Cataclysm, the latest WoW expansion module sold 3.3 million copies within the first 24 hours of its release on 7 December, a new record for a PC game. WoW now has over 12 million subscriber/players worldwide. And last July, the company revived the hoary old Starcraft real-time strategy game franchise—last previously updated in 1998—and their Starcraft II: Wings of Liberty game sold three million copies in the first two months of release.

The observation that Activision Blizzard is short on innovation is fair in the narrow sense that most of their best properties have been acquired rather than designed inhouse. But they have been innovative in their marketing. Turning a decent real time strategy (Warcraft) game into the most successful MMORPG (WoW) ever counts as innovative. Perfecting the subscription model counts. Cracking the Asian market (Starcraft in Korea and WoW in China) counts. It’s too soon to tell with Major League Gaming as to whether that will succeed or not, but Blizzard’s support of that effort counts as innovative. And how about adding zombies to Call of Duty? Do you see Zynga thinking of putting zombies in Farmville?  🙂

Let’s see how 4Q10 turns out with the release of Call of Duty: Black Ops and Cataclysm…plus a full quarter of subscription income from China, where WoW was shut down for several months in 2010 through 31 August. The decline in the growth of sales in 2010 is a legitimate matter for concern, but it is too early to hit the panic button.

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Activision Blizzard (ATVI) update #20—Good 3Q10 results, cautious guidance

Posted by intelledgement on Fri, 05 Nov 10

Our game publishing company, Activision Blizzard (ATVI), announced 3Q10 results yesterday that handily surprised to the upside—profits of 12 cents per share vs. the analysts’ consensus expectations of nine cents per share on a non-GAAP basis. But the guidance the company offered for 4Q10 fell short of expectations: profits of 47 cents per share vs. the consensus expectation of 51 cents per share. CEO Bobby Kotick stated, “Our better-than-expected results are due to our leadership in online entertainment, including strong performance from Activision Publishing’s Call of Duty franchise, and Blizzard Entertainment’s World of Warcraft and StarCraft II: Wings of Liberty.  For the nine months ending September 30, 2010, our digital offerings contributed close to half of our total non-GAAP net revenues and our digital revenues have increased more than 15% over the prior year.”

Third quarter highlights included:

Also, since the $1 billion share buyback announced in February, the company has repurchased approximately 55 million shares of ATVI stock for about $600 million.

In the fourth quarter of 2010, seven new releases are scheduled:

  • Bakugan: Defenders of the Core
  • Call of Duty: Black Ops
  • Cataclysm, the third expansion module for World of Warcraft
  • DJ Hero 2
  • Goldeneye 007 for Nintendo Wii
  • James Bond 007: Bloodstone
  • Tony Hawk: SHRED

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Activision Blizzard (ATVI) update #19—Activision to release Cataclysm 7 Dec 10

Posted by intelledgement on Tue, 05 Oct 10

Our game publisher Activision Blizzard (ATVI) announced yesterday that their third expansion module for their World of Warcraft (WoW) massively multiplayer online role-playing game will be released 7 December 2010. The module will be available on DVD-ROM for Windows(R) XP/Windows Vista(R)/Windows(R) 7 and Macintosh(R) as a digital download from the Blizzard Store for $40 or in retail stores. A “collector’s edition” that includes extra music, print material, and sundry other goodies will also be offered in stores for $80.

The previous two WoW expansion modules, The Burning Crusade and Wrath of the Lich King, each set new PC game sales records. With the WoW worldwide subscriber base now north of 11 million, most expect Cataclysm to set a new record.

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Activision Blizzard (ATVI) update #18—Activision files friend of court brief in Schwarzenegger v. EMA

Posted by intelledgement on Wed, 22 Sep 10

Our game publisher Activision (ATVI) distributed a press release yesterday announcing the filing of an amicus curiae brief with the Supreme Court in support of the respondents in the Schwarzenegger v. EMA case. The case concerns a California law enacted in 2005 that would ban the sale of video/computer games that are determined to be “violent” to minors. The bill was authored by California state senator Leland Yee, who has a PhD in psychology and believes there is a causal link between media violence and real-world violence. The law has never gone into effect, having been first stayed and ultimately ruled unconstitutional by a U.S. District Court in 2007. California appealed to the Court of Appeals, which upheld the District Court’s ruling in 2009. In a surprize move earlier this year—given that similar laws from other states had previously been ruled unconstitutional—the Supreme Court agreed to hear the case.

The main arguments of the brief are that [a] there is already an effective rating system for video games that sufficiently informs parents about their content such that they have the opportunity to regulate access of their minor children to such games and [b] the proposed remedy is too restrictive. The Court is expected to hear oral arguments later this Fall and a ruling would presumably be forthcoming next Spring.

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Activision Blizzard (ATVI) update #17—Finally! China approves “Wrath of the Lich King”

Posted by intelledgement on Wed, 11 Aug 10

Citing a Wall Street Journal story, the leading World of Warcraft (WoW) fansite, WoW Insider, reported yesterday that the “Wrath of the Lich King” expansion module will finally be made available in China by Activision’s (ATVI) licensee, NetEase (NTES) next week. Wrath of the Lich King is the second expansion module to be released for WoW following “The Burning Crusade,” and sold an all-time computer game record 2.7 million copies within the first 24 hours of its release in November 2008 in the USA and Europe. Worldwide, there are in excess of 11 million active WoW players.

The process of gaining approval in China has been arduous and protracted, replete with dueling bureaucracies and—in the midst of everything else—Activision firing their original Chinese WoW licensee and switching to NetEase. Many mainland Chinese players had reportedly been logging on to Taiwan-based servers, where the Wrath of the Lich King has been installed for over a year. No word on whether NetEase will make it possible to port characters developed on Taiwanese WoW servers back to the mainland (otherwise, mainland players who want to switch back to NetEase servers—which would presumably be cheaper and less likely to suffer network issues—would have to start over with new characters).

No official announcement yet from Activision, but if confirmed, this news appears to obviate the embarrassing prospect of the third WoW expansion module—Cataclysm, currently in beta testing—being released in the West before Wrath of the Lich King was available in China.

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Activision Blizzard (ATVI) update #16—2Q10 results beat guidance but disappoint investors

Posted by intelledgement on Fri, 06 Aug 10

Our game publishing company, Activision Blizzard (ATVI), announced 2Q10 results yesterday that exceeded management’s guidance from three months ago, but failed to impress The Street…and the stock is trading sharply lower today, currently down over 6%. The guidance had called for revenues of $925 million and a profit of eleven cents per share in the quarter and the actual results included revenues of $967 million and a profit of 17 cents per share. While exceeding the guidance, the revenue results did fall short of what was achieved a year ago (1.038 billion).

CEO Bobby Kotick stated, “Our quarterly results were fueled by continued strong consumer response to Activision Publishing’s ‘Call of Duty’ franchise and Blizzard Entertainment’s ‘World of Warcraft.’ For the first and second quarters, we outperformed our earnings per share outlook, and we grew our operating margin year over year for the six month period, driven by our focused effort to increase digital revenues…. Looking to the balance of the year, we expect to release the best slate in our company’s history. Blizzard Entertainment’s ‘StarCraft II: Wings of Liberty’ is off to a strong start worldwide with midnight openings on July 27, 2010 at 3,100 GameStop stores in the U.S. and 8,000 retailers around the world. We are, of course, enthusiastic about Blizzard Entertainment’s upcoming release of ‘World of Warcraft: Cataclysm,’ which began a closed beta test on June 30. ‘Call of Duty: Black Ops’ is shaping up to be one of the best games Activision Publishing has ever created, the marketing programs are the biggest in the company’s history and to date, pre-orders of the game exceed the pre-orders for Modern Warfare 2 at this time last year. This fall, our lineup includes Activision Publishing’s ‘Guitar Hero: Warriors of Rock,’ ‘DJ Hero 2,’ ‘Tony Hawk: SHRED,’ ‘Spider-Man: Shattered Dimensions,’ ‘GoldenEye 007,’ and ‘Bakugan,’ all of which look to be very promising as well. We have never been better positioned for the holiday season than we are today with such a strong slate of games and the best team in our industry to bring them to market.”

Management also announced that as of 30 June the company had purchased $334 million—approximately 3.1 million shares—of common stock under the $1 billion stock purchase program announced in February. Also, during the second quarter revenue from digital online channels grew more than 20% year-over-year. Guidance for 2010 still calls for revenues of $4.2 billion including $600 million in 3Q10 and 49¢/share of earnings including 0¢ (breakeven) in 3Q10.

Second quarter highlights included:

  • For the first six months of 2010, “Call of Duty: Modern Warfare 2” was the #1 first-person shooter game in the USA and Europe
  • For the first six months of 2010, “Call of Duty” was the #1 third-party franchise in the USA and Europe
  • For the first six months of 2010, Activision Publishing was the #2 third-party console and handheld publisher in the USA
  • For the quarter, “Call of Duty” was the #3 franchise overall and the #1 first-person shooter franchise in the USA
  • For the quarter, “Call of Duty: Modern Warfare 2” was the #1 first-person shooter title in the USA
  • For the quarter, Activision Blizzard had four top-10 PC games—Activision Publishing’s “Call of Duty: Modern Warfare 2” and Blizzard Entertainment’s “World of Warcraft: Wrath of the Lich King,” “World of Warcraft Battle Chest,” and “Diablo Battle Chest” in the USA
  • 19 May—“Shrek Forever After” released
  • 25 May—“Blur” released
  • 14 June—Activision Publishing extends deal with Microsoft (MSFT) to release new “Call of Duty” releases first on Xbox LIVE through 2012
  • 22 June—“Transformers: War for Cybertron” released
  • 24 June—“Wipeout: The Game” released
  • 29 June—“Singularity” released
  • 30 June—“World of Warcraft: Cataclysm” beta testing initiated

Things seem relatively calm in China, although Netease (NTES), Blizzard’s partner who runs the “World of Warcraft” (WoW) subscription business there—and will run “Starcraft” if that game ever gets approved—had a bad quarter. Still no word on the oft-delayed “Wrath of the Lich King” expansion, which Chinese WoW players have been awaiting—excepting those who have “defected” to Taiwan-based servers—for 21 months now. It would be embarrassing if the “Cataclysm” WoW expansion is released in the West before the “Wrath of the Lich King” is available in China.

Speaking of Blizzard, they did manage to cause a stir last month with an announcement that all posters on their gaming forums—which are quite lively—would henceforth be forced to sign their posts with their real names, instead of their game-playing screen name pseudonyms, as has always been the case heretofore. The intent was to constrain the activity of so-called “troll” posters, who lurk on message boards and are quick to castigate other posters for no discernible reason other than to gain attention or cure boredom. The idea was that if the trolls had to ascribe the real names to their noxious messages, they would cease and desist, and the forums would be more civil and more pleasant for everyone else. Unfortunately, it turns out it was not only the trolls who objected to losing the cloak of anonymity. According to a CNBC report, “Others…were more worried that anything they wrote on those message boards could be easily found with a Google search—and an off-the-cuff comment made online could have repercussions for them in real-world relationships…. Still others were concerned that with access to their real name, other players could dig up additional information about them, including photos, addresses, phone numbers and more. Some female players said they feared harassment.”

After three days of increasingly bad PR, Blizzard management recanted, apologized, and scrapped the change.

In 3Q10, three games are expected to be released: “StarCraft II: Wings of Liberty,” which was published 27 July, “Guitar Hero: Warriors of Rock” for the Xbox 360, the PLAYSTATION3, and the Wii, and “Spider-Man: Shattered Dimensions” for the Xbox 360, the PLAYSTATION3, the Wii, and the Nintendo DS.

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Activision Blizzard (ATVI) update #15—E3 interviews provide insights to the future

Posted by intelledgement on Sun, 27 Jun 10

A couple of interviews with managers of our game publishing company, Activision Blizzard (ATVI), conducted earlier this month at the Electronic Entertainment Expo in LA shed some light on where the company might be going over the next year and beyond.

The first interview, conducted by CNBC reporter Julia Boorstin, queried company CEO Bobby Kotick about the status of products for motion sensor game machines (Activision Blizzard is not announcing any at E3, but some are in the works), extending the “World of Warcraft” (WoW) subscription model to online play of other games such as “Call of Duty,” “Starcraft,” and “Diablo” (Kotick was noncommittal), and why ATVI continues to pour so much energy into the music game sector despite a drastic dropoff in sales (Kotick believes the addition of many more musicians to the mix of available content will reverse the downtrend).

The second interview, conducted by The Motley Fool analysts David Gardner and Matthew Argersinger, elicited answers from COO Thomas Tippl about some of those same topics, plus what it’s like to work for Bobby Kotick (fun), the future of WoW (it will still be a big thing in ten years so long as Blizzard keeps updating the content), gaming in the cloud (still not suitable for graphics-intense games such as “Call of Duty”), among others.

And speaking of TMF, on a semi-related note here is a risk analysis assessment of ATVI by Jim Mueller they published recently which we read with interest. We generally agree with the Mueller’s assessments, although we do think he is too optimistic to assert of the stock that “there really aren’t any binary outcomes, such as drug approval, that can affect it.” What about the Chinese authorities shutting down WoW for seven months so they could re-approve it? What about the potential for an unfavorable ruling in the “Call of Duty” suits potentially leading to heavy damages and/or loss of control of the franchise? What about the possibility of regulations limiting the sale or use of video games with a violent theme? Mueller’s conclusion—that ATVI has only low-to-moderate risk—is right on…or so we believe, at least.

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Activision Blizzard (ATVI) update #14—1Q10 results surge on early Call of Duty release

Posted by intelledgement on Fri, 07 May 10

Our game publishing company, Activision Blizzard (ATVI), announced 1Q10 results yesterday that materially exceeded management’s guidance from three months ago. The guidance had called for revenues of $1.1 billion and a profit of twenty cents per share in the quarter and the actual results included revenues of $1.3 billion and a profit of 30  cents per share. The good news was tempered, however, by the realization that the bounty was largely attributable to the early release of a “Modern Warfare 2” expansion kit that had not been expected until the second quarter…and ergo the boost from which shall now be missing in 2Q10. And the beat was not a surprize, as management had preannounced it last month.

CEO Bobby Kotick stated, “Our better-than-expected first quarter performance was driven by strong global consumer demand for Activision’s ‘Call of Duty’ and Blizzard Entertainment’s ‘World of Warcraft’. Activision’s ‘Call of Duty: Modern Warfare 2’ was the #1 title overall in the U.S. and Europe for the quarter, which illustrates the continued momentum of our catalogue. Additionally, during the quarter, Activision launched DreamWorks’ ‘How To Train Your Dragon’ and the ’Call of Duty: Modern Warfare 2 Stimulus Package,’ which shattered Xbox LIVE records with more than one million packages downloaded in the first 24 hours…. We expect to deliver record calendar year non-GAAP net earnings and expanded non-GAAP operating margins. In addition, we continue to strengthen our franchise portfolio and development resources for the future. Our high-quality brands, industry leading operational capabilities and solid balance sheet should enable us to take full advantage of the opportunities afforded by the expanding interactive entertainment market and allow us to deliver continued superior returns to our shareholders. As of March 31, 2010, we have delivered compound shareholder returns of 28% compared to the S&P average of -2 % over a ten-year period. We continue to find ways to add profitable franchises that allow us to increase our operating margins. In this regard we recently announced a ten-year alliance with Bungie, one of the premier studios in our industry. This relationship will allow Activision to broaden its product portfolio with exciting new games and underscores our commitment to partnering with the best creative talent in the industry.”

Management also announced that as of 31 March the company had purchased $92 million—approximately 8.5 million shares—of common stock at an average price of $10.84 per share under the $1 billion stock purchase program announced in February. Guidance for 2010 still calls for revenues of $4.2 billion including $925 million in 2Q10 and 49¢/share of earnings (up from the previously projected 47¢) including 11¢ in 2Q10.

First quarter highlights included:

  • In the quarter, “Call of Duty: Modern Warfare 2” became the #1 best-selling third-party video game of all time
  • For the quarter, “Call of Duty” was the #1 third-party franchise in the USA and Europe
  • For the quarter, “Band Hero” and “Cabela’s Big Game Hunter 2010” were top-10 titles on the Nintendo Wii in the USA
  • For the quarter, “Call of Duty: Modern Warfare 2” and “World of Warcraft: Wrath of the Lich King” were top-10 PC titles in the USA
  • 10 February—stock repurchase program announced under which the company can repurchase up to $1 billion of ATVI shares
  • 11 February—Percy Jackson & The Olympians: The Lightning Thief released
  • 2 March—Activision Publishing announced the firing of Infinity Ward co-founders Jason West and Vince Zampella and the formation of a new business unit dedicated to the “Call of Duty” franchise headed by Philip Earl with the missions of expanding the brand to new geographies and devising “new margin expanding digital business models.”
  • 23 March—Zhu Zhu Pets released
  • 23 March—How to Train Your Dragon released
  • 30 March—Cabela’s Monster Buck Hunter released
  • 30 March—Call of Duty: Modern Warfare 2 Stimulus Package released

In China, the good news finally panned out as on 12 February, Blizzard licensee Netease received permission from the General Administration of Press and Publications (GAPP) to (re)release The Burning Crusade, the first expansion released for World of Warcraft (WoW) back in January 2007. This ends seven months of uncertainty and intermittent interruptions in WoW availability on the mainland, ever since the expiration of Blizzard’s five-year deal with The9, their previous licensee. Still no word on the oft-delayed Wrath of the Lich King expansion, which Chinese WoW players have been awaiting—excepting those who have “defected” to Taiwan-based servers—for 18 months now.

Now that the China WoW contretemps winding down, we will have to content ourselves with the Infinity Ward legal warfare drama. That heated up late last month as 38 additional Infinity Ward employees sued Activision over alleged delinquent royalties. They are seeking between $75 and $125 million plus $500 million in punitive damages. This is in addition to the $36 million in royalties sought by fired Infinity Ward co-founders West and Zampella in their suit filed in March. It is unclear how many of the 38 employees involved in the second suit have left Activision, but clearly there are some morale issues in the “Call of Duty” business unit, to say the least.

In 2Q10, four games are expected to be released: the new racing title “Blur,” “Shrek Forever After” based on DreamWorks Animation’s upcoming feature film, an original Transformers game, “Transformers: War For Cybertron,” and “Singularity.” Also, in the last ten days the company announced release dates for “Starcraft II” (27 July and separately, as of 28 April the Mac beta was released and Intelledgement staff are expecting to install it imminently) and “Call of Duty: Black Ops” (30 November).

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Activision Blizzard (ATVI) update #13—1Q10 results beat guidance

Posted by intelledgement on Fri, 16 Apr 10

Our game publishing company, Activision Blizzard (ATVI), is not due to announce 1Q10 results for another few weeks, but they did issue a press release yesterday stating that “March quarter 2010 GAAP and non-GAAP net revenues and earnings per share are tracking ahead of the company’s prior outlook.” And no wonder, given the outstanding performance of the “Call of Duty” franchise, which experienced over one million downloads of the latest expansion pack in the first 24 hours for the Xbox LIVE platform according to an ATVI press release last week. “According to Microsoft, Call of Duty: Modern Warfare 2 players have invested more than 1.75 billion hours of gameplay on Xbox LIVE alone since the title’s release in November, which is equal to more than 200,000 years of gameplay,” stated the press release. Not sure what that says about the state of modern civilization, but ATVI stock closed yesterday at $11.67, which is up 6% YTD (counting a fifteen-cent dividend issued in February).

Speaking of “Call of Duty,” the Infinity Ward co-founders fired by Activision Blizzard last month, Jason West and Vince Zampella, announced on Monday that they have formed a new game design studio—archly monikered Respawn Entertainment—and signed an exclusive distribution deal with ATVI arch-rival Electronic Arts. It will be interesting to see how many Infinity Ward design staffers follow their ex-bosses into exile.

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