WoW, Call of Duty Drive Record Q1 Sales of $1.4 Billion for Activision

By James Brightman

Publishing giant Activision Blizzard has reported its first-quarter earnings for the period ended March 31, 2011, and revenues climbed from $1.3 billion to a record $1.4 billion for the quarter. Earnings per share also jumped from $0.30 to $0.42 for the quarter, and digital played a very important role, climbing 30% year-over-year. On the conference call, CEO Bobby Kotick said that 50% of revenues in the quarter were from digital.

Kotick commented in the earnings release, “With over $1.4 billion of GAAP net revenues and $0.42 of GAAP EPS our record first-quarter performance was driven by digital sales and the continued strength of Activision Publishing’s Call of Duty and Blizzard Entertainment’s World of Warcraft franchises.  Digital content continues to represent a significant portion of our revenues and increased by about $100 million year over year, enabling us to deliver record first-quarter operating margins and earnings per share.   The Call of Duty: Black Ops First Strike content pack shattered Xbox LIVE launch records, surpassing 1.4 million downloads in the first 24 hours alone, and Blizzard’s Battle.net service continues to grow its service offerings.  To date, Call of Duty: Black Ops players have logged more than 1.2 billion online hours of online gameplay.”

He continued, “Interactive entertainment continues to see broader audience appeal and powerful positive trends in online gameplay and online distribution.  Our incredibly talented people continue to lead in innovation and we continue to deliver the world’s best games combined with strong financial performance.”

With DLC in mind, Activision noted that digital downloads of the Call of Duty: Black Ops First Strike content pack were more than 20% higher than digital downloads of the Call of Duty: Modern Warfare 2 Stimulus Pack during the comparable period in 2010. And interestingly, as Activision continues to ignore Facebook gaming, the publisher made a comparison to the social network, remarking that “Since Call of Duty: Black Ops First Strike launched on February 1, players have spent an average of 58 minutes per day playing online, exceeding the 55 minutes the average user spends per day on Facebook.”

Looking ahead, Activision continues to invest in its core franchises and the digital opportunities associated with these titles. Activision summarized these investments as followed:

“The company plans to allocate the majority of its resources and focus toward opportunities which it expects will afford it the greatest competitive advantages and the greatest potential for best-in-class quality, high-margin digital growth, and long-term success.  These opportunities include new content for Blizzard Entertainment’s World of Warcraft, StarCraft and Diablo franchises, and its next-generation MMO; robust investment in forthcoming Call of Duty titles, including a micro-transaction game for China; the development of a best-in-class digital platform surrounding theCall of Duty franchise; a new property from Bungie; and Skylander’s Spyro’s Adventure, an innovative new universe bringing the world of toys, video games and the Internet together in an unprecedented way.  These investments should better position Activision Blizzard for long-term growth and enable it to continue expanding its position as the largest digital publisher.”

Activision has also raised its guidance following the record first quarter. For the calendar year, Activision expects total revenues of $4.05 billion (up from $3.95 billion) and earnings per share of $0.61 (up from $0.56).

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