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Activision Blizzard profits are down, but  Hearthstone  helps drive digital
Activision Blizzard profits are down, but Hearthstone helps drive digital
May 6, 2014 | By Kris Graft

May 6, 2014 | By Kris Graft
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Activision Blizzard's continued transition to a digital game business is moving along, as the company raised its annual outlook and reported better-than-expected results for the quarter.

But profits for the company were down 35 percent to $293 million, compared to the same quarter a year ago. Revenue was down 16 percent to $1.1 billion.

CEO Bobby Kotick was still confident in recent digital gains, specifically noted record digital sales, driven by Blizzard's World of Warcraft, Diablo, and Hearthstone: Heroes of Warcraft.

Hearthstone as a revenue-driver is particularly notable, as it is a bit of a departure from Activision Blizzard's typical heavy-hitters. It's a free-to-play trading card game for PC, Mac and iPad, and instead of being developed by a large team, like other games under the Blizzard umbrella, Hearthstone came from a smaller team within the company. Hearthstone had over 10 million users as of March 11, according to the company.

Those record digital sales Kotick mentioned made up over one-third -- 34 percent -- of Activision Blizzard's total revenues for the quarter.

Looking ahead, Activision Blizzard plans to launch September's Bungie-developed shooter Destiny, which Kotick recently said will cost the company $500 million between production, marketing and manufacturing. While that cost is high, Kotick expects Destiny will become Activision Blizzard's next billion-dollar franchise.

As for World of Warcraft, the game continues to be the most popular subscription-based MMORPG at 7.6 million subscribers during the quarter, but its growth is stagnant (it was at 7.8 million as of last quarter). The expansion Diablo III: Reaper of Souls sold 2.7 million units through to customers in its first week.

Thanks to the better-than-expected results for the quarter and the strong 2014 portfolio, Activision Blizzard bumped its annual revenue guidance to $4.2 billion for the year, up from $4 billion. Profits are now expected to come in at $667.5 million, up from a previously-expected $570 million.


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Comments


Michael Wenk
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Doesn't look all that good to ATVI. D3 went from 6.7 million to 2.7. They said Hearthstone did them good, but didn't release any numbers based on revenue. WoW's still slowly bleeding, and likely will continue to do so.

They haven't really pegged any revenue numbers on Skylanders or CoD like they used to. And their raw numbers are down.

Of course they have the new Skylanders coming out in the fall, and a new WoW expansion which should halt the bleed for quarter or two.

However, I wouldn't be at all surprised to see cost cutting layoffs from them.. :(


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