Activision-Blizzard Beat Q2 Expectations News

The usual heavyweights of World of Warcraft, Guitar Hero, and Call of Duty fuelled Activision-Blizzard's results beyond expectations for the fiscal second quarter ended June 30th 2009.

For the period, the world's largest third-party publisher posted GAAP net revenues of $1.04 billion and a GAAP operating income of $218 million.  On a non-GAAP basis, the publisher recorded net revenues of $801 million and an operating income of $156 million for the period.

Alongside the three franchises, Activision-Blizzard also attributed the success to Prototype, Transformers 2: Revenge of the Fallen and X-Men Origins: Wolverine.

For calendar 09, Activision-Blizzard expects GAAP net revenues of $4.05 billion as compared to a prior forecast of $4.3 billion; and non-GAAP net revenues of $4.5 billion as compared to a previous outlook of $4.8 billion.

Michael J. Griffith Activision-Blizzard President & CEO of Publishing Unit provided an outlook on the current state of the video games market in Europe and North America, suggesting that the installed hardware base for both territories combined has surpassed 179 million units, representing an increase of 54% year-on-year.  Griffith, however, highlighted the fact that it's been a tough quarter, suggesting that console sales had fallen by 37% in the US compared to the same period last year.

"... in the U.S., the two consoles that have not cut price are down roughly 50% year over year," Griffith claimed.  "While the two that have cut price over the last year are down less than 1%." 

As a result of the downturn, Activision-Blizzard has adjusted its hardware sales expectations accordingly, reducing its expectations by 1 million units.

"For calendar 2009, we are adjusting our hardware installed base projections in North America and Europe to the following: we expect up 7 million units for PS3 and up 9 million for the Xbox 360, and we expect Wii to add more than 15 million units; and finally, we expect handhelds will grow in excess of 21 million units."

During the earnings call, Activision-Blizzard confirmed that Starcraft 2 had been pushed into 2010 as previously rumoured.  The reason behind the decision was attributed to focussing on Battle.net, an online service that Activision suggests will be on-par to Xbox Live.  Despite the delay, Activision-Blizard maintains that this will have no effect on the plan to release a further Blizzard title next year, claiming during a Q&A session following the call:

"While we have not announced the release dates of any of the titles, I will confirm that the move of Starcraft into 2010 does not affect the release schedules of any of our other games."

Michael Morhaime President and Chief Executive Officer of Blizzard Entertainment, Inc. later added: "I would just like to reiterate that we haven't announced any release dates on any future titles. And I will also reiterate that the move of Starcraft into next year does not impact the schedule and so it would be correct to conclude that you could expect two releases of Blizzard next year but I would not make any conclusion on what those titles are going to be."

In addition, the publisher also confirmed that Tony Hawk: Ride will only be released in North America, the UK and Germany this year, followed by other territories in 2010.  Griffith revealed that map pack sales for the Call of duty franchise have surpassed 8 million to-date on the Xbox 360 and Playstation3.

Griffith also revealed that new games based on James Bond, Tony Hawk and Spider-Man are planned for the financial year, alongside Shrek 4, How To Train A Dragon, and an "innovative property in the $4 billion action genre".

The publisher also confirmed that two downloadable map packs are planned for Modern Warfare 2, the first of which has been confirmed as a timed-exclusive for the Xbox 360 back at E3.

We've long held a stance against Activision-Blizzard's decision to bump up the RRP of Modern Warfare 2 having spotted it many, many months ago.  However, it seems that the publisher is quite happy with the decision and the future of expensive peripherals.

"... we've had for all of our launch titles in the back half of this year, some of which contain peripherals, as you point out, very strong retailer acceptance and support for all parts of our plan, including our merchandising plans, our marketing programs, and our price points."

Before Bobby Kotick added:

"... you know if it was left to me, I would raise the prices even further."

Let them eat cake!