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Blizzard pushes Activision to record digital numbers in big quarter

Blizzard pushes Activision to record digital numbers in big quarter

August 5, 2014 | By Christian Nutt

Today Activision Blizzard announced much better-than-expected results for its second quarter 2014, with net revenues of $658 million. The company had announced guidance of $600 million; analysts anticipated the company coming in around $607 million.

It's a big year-on-year boost for the company, which made net revenues of $608 million a year ago. Activision mostly ascribes it to Blizzard: While World of Warcraft subscriptions fell, particularly in Asia, to 6.8 million, Hearthstone and Diablo III: Reaper of Souls did big business for the company. (And, hey, 6.8 million only looks bad compared with where World of Warcraft used to be.)

The big news, then, is its digital numbers -- which were pushed to a record high by Blizzard's games, as well as Call of Duty. A record 73 percent of the company's total revenues came from digital sources, particularly strong performance for a company without a robust mobile game business.

The company also pointed out that Call of Duty Ghosts remains the best-selling next-generation game title, and Skylanders' latest iteration, Swap Force, the number-two overall console and handheld franchise (as well as the biggest action figure line in the toy business.)

A roundup of the best info from the call

On its investor call, Activision Blizzard CFO Dennis Durkin told investors that he expects record net revenues of 975 million for the company's next quarter, and yearly net revenues of $4.7 billion, an 8 percent increase.

Call of Duty

Eric Hirshberg, CEO of Activision Publishing, was bullish on the company's upcoming lineup, pointing out that Call of Duty has seen an uptick in online players of late (usually, at this time of year, there's a downturn -- and he had a hard time explaining why that isn't the case in 2014.)

Activision anticipates that Call of Duty: Advanced Warfare will be the most-preordered game of the year -- with numbers that look more in-line with the biggest sellers in the franchise than recent years' games.


As far as Destiny goes, 4.6 million players rushed into its recent beta, preorders are strong, and awareness and purchase intent are both at an "all time high" with the latter "rising" amidst "almost universally positive sentiment" from players of its beta.

Notably, the game will be "marginally profitable" this year, said Durkin, despite hefty development and marketing expenses (to the tune of $500 million.)

When asked if the market can support two blockbuster FPS franchises, Hirshberg said that Destiny is also generating interest in fans of other genres thanks to its setting and gameplay (as compared to Call of Duty).

Blizzard and Hearthstone

On the Blizzard front, Hearthstone expansion Curse of Naxxramas drove its "biggest week ever in terms of engagement and revenue," said Blizzard president and CEO Mike Morhaime. is up 40 percent year-on-year in terms of monthly active users, he noted. The tone around Hearthstone was slightly reserved, reflecting the fact that it hasn't launched on Android or iPhone yet, and has room to grow.

Morhaime seemed to want to prime investors for excitement while tempering their current expectations for the franchise as a current tentpole on the order of WoW or Diablo III -- which he revealed has so far sold over 20 million units (including both retail and digital, on console and PC, and including the Reaper of Souls expansion.)

Activision's future: Bobby Kotick on going mobile, international

At the end of the call, CEO Bobby Kotick got on the line to share a bit of the company's vision moving forward: He foresees expansion into mobile, particularly in markets like China and other places the company hasn't done significant business as yet (it's worth noting that Call of Duty Online on PC is also still in the works for China.)

"When you look at geographies in the past that have been inaccessible to us as a company," said Kotick, Activision sees them as "market opportunities" now and is in the process of creating "new services" to reach their audiences. He sees an opportunity in the next three to five years to reach "greater audiences with deeper, richer experiences" and says that Activision is currently spending "a lot of time and resources planning against future opportunities."

A new subscription service, or early access?

One analyst asked if Activision has plans to launch a subscription service like EA Access for catalogue games or offer monetized early access to its games. Hirshberg didn't seem to like the idea: while Activision is "always evaluating new business models" it's only "once those biz models are proven we'll pursue them," he said. "We tend to focus our resources and our people on the biggest and best," and the company is currently focusing on keeping its "tentpole franchises thriving and establish[ing] new ones as well."

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