Does Activision Need a New Play?
Activision Blizzard (NASDAQ:ATVI) beat market expectations and raised its outlook for the year, even as its World of Warcraft fantasy does appear to be fading a little. Net income for the largest video game publisher in the United States fell to $384 million, or 33 cents per share, from $503 million, or 42 cents per share a year ago, while revenue dropped to $1.17 billion from $1.45 billion.
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Activision said adjusted earnings were $67 million, or 6 cents per share, while adjusted revenue fell 22 percent to $587 million. That beat average expectations of 4 cents a share on revenue of $555.9 million.
Its better-than-expected results prompted Activision to raise full-year numbers, forecasting revenue of $4.53 billion, up from a previously projected $4.5 billion, and earnings of 95 cents a share, up from 94 cents.
However, World of Warcraft has been showing weaknesses in recent quarters, dropping to 10.2 million paying subscribers from past highs of around 12 million. The number at the end of the first quarter was static compared with last quarter, but lower than 11.4 million players from a year ago. It continues to be the company’s most profitable business, with millions of users paying $15 per month, and has investors watching subscriber numbers closely.
Analysts have been worried about an increasing reliance on the game as the market continues to become saturated with similar titles. Activision has also not experimented as much as competitor Electronic Arts (NASDAQ:EA) in social, mobile, and free-to-play online games.
Call of Duty: Modern Warfare 3, which has also been a hot-seller for Activision, now has over 10 million registered, including two million premium members, the company said. “Through March 31, players have logged more than 1.6 billion hours of online gameplay of Activision Publishing’s Call of Duty: Modern Warfare 3,” chief executive Bobby Kotick said in a statement.
The stock grew marginally in after-hours trading, rising 15 cents, or 1.21 percent, to be at $12.55.