Activision Rounds Out Strong Year-End for Game Publishers

If Activision Blizzard (NASDAQ:ATVI) can teach us anything, it’s that the video-game industry is defined by blockbusters. The publisher’s record fourth-quarter and full-year 2012 performance was driven by just a few chart-topping titles, demonstrating that it’s quality and not quantity that matters in the entertainment industry.

Activision highlighted the fact that, “in November 2012, Black Ops II became the first video game ever to cross the $1 billion mark in 15-days, eclipsing “Avatar’s” 17-day movie record.” Black Ops II was the number-one best-selling title in aggregate across all platforms in Europe and the U.S. for the 2012 calendar year.

Also highlighted was the fact that World of Warcraft: Mists of Pandaria was the number-three best-selling PC game, and the franchise maintains its spot as the largest subscription-based MMORPG with over 9.6 million players. Diablo III broke a PC-game sales record with 12 million copies sold through December, taking the number-one retail spot. All in all, Activision nailed it. In fact, they did so well that they’ve had to tone down people’s expectations for 2013…

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($)in millions 1,406 1,172 1,075 841.00 1,767
Diluted EPS($) 0.08 0.33 0.16 0.20 0.31

“As we look to 2013, we will continue to invest in our established franchises, as well as several new properties,” commented CEO Bobby Kotick. These franchise investments include the massively-popular Starcraft II, which has become an established e-sport with a tremendous following in the U.S. and South Korea. The second of three expansions for the game is due out in the first quarter, and will no doubt fly off the shelves.

But even with a guaranteed success in the pipeline, results may not stack up well against 2012. “In the short-term, we expect to continue delivering strong profitability, but below our record setting 2012 performance, due to a challenged global economy, the ongoing console transition and a difficult year-over-year comparison because of Blizzard’s record-shattering Diablo® III success in 2012,” continued Kotick.

Fiscal Year 2009 2010 2011 2012 2013*
Revenue ($) in millions 4,279 4,447 4,755 4,856 4,800
Diluted EPS ($) 0.09 0.33 0.92 1.01 1.11

*Average analyst estimate

Activision isn’t the only game publisher to attract shareholder interest after its earnings. Shares of Electronic Arts (NASDAQ:EA) have climbed 16 percent this year to date, spurred by a surprise fourth-quarter beat. The company reported fourth-quarter EPS of $0.57, ahead of estimates for $0.56. However, revenue fell 13.1 percent to $9.22 million, illustrating mixed results and setting the stage for possible weakness in 2013.

EA is forecasting revenue in a range of $3.78 to $3.88 billion, a decrease from previous guidance of between $4.05 and $4.20 billion. Earnings guidance was also revised down, from between $1.00 to $1.15 per share to $0.86 to $1.00 per share. This reflects expected volatility related to the rollover of console generations, as well as general softness in the industry, two of the same concerns that face Activision.

Even beleaguered video-game publisher Take-Two Interactive (NASDAQ:TTWO) is on a tear since the start of 2013, with shares up 28.9 percent this year to date. Even though the company announced a delay in one of its flagship titles, earnings showed a huge year-over-year improvement of 312.5 percent, fueled by 76 percent revenue growth.

Don’t Miss: Your Take-Two Interactive Earnings Breakdown