Activision Rocks 2007: Profits Practically Double, Shares Jump, Announcements for Top Franchises

Fri, May 9, 2008

This morning, the Associated Press reported that Activision's stock today hit an all-time high of $30.15 and was trading at $29.71 at the time of publication, a 7.3 percent increase. But you might not want to write down that all-time high quite yet -- ATVI just closed at $31.39. Why the sudden jump? Perhaps because yesterday, Activision announced that for the fiscal year ending March 31, 2008, they've all but doubled their business.

(for financial information and mild boasting, read on; otherwise skip ahead for news that appeals to the average gamer.)

Financial surge

After "16 consecutive years of revenue growth," Activision boasts net revenues of $2.90 billion, up 92% from the $1.51 billion they reported one year ago. This 92% increase was also mirrored nearly exactly in their Q4 results, with revenue of $602.5 million compared to last year's $312.5.

Backed by NPD data, Activision now claims to be the #1 console and handheld software publisher (in terms of dollars, not units) with each of its Guitar Hero and Call of Duty franchises contributing a billion dollars in life-to-date sales.

Looking at Q4 alone, the company takes the PC retail publishing throne as well... and with the impending Activision Blizzard merger adding more than 10 million World of Warcraft subscribers to their arsenal, the company's future looks, well, massive.

Breakdown

While it's difficult to pinpoint why Activision might have surged so quickly (though we're sure having three games in the NPD top ten certainly helped) there are a couple of facts hidden in their financial report that might interest you:

While Activision did the majority of their business abroad in Q4 of last year (63%), in 2008 it's the opposite, and North American business is now 61%. That's not because revenues from either region shrunk, but rather that domestic business exploded by 216%. On an annual basis, the shift to North America is also evident, but less pronounced since the publisher averaged 50% international and 50% domestic revenue last year.
Perhaps more interesting is how the PlayStation 2 has managed to keep pace in Activision's lineup. While down from the 45% the aging console commanded last year, almost one-third (29%) of Activision revenues comes from software published for the PS2. That's nearly as much as the 31% lead held by Xbox 360; and more than for the PS3 and Nintendo Wii combined at 13% and 12% respectively.

Hinting at the future

In a conference call that accompanied the release, Activision dropped hints about a number of its popular franchises.

Call of Duty 5 will arrive on Xbox 360, PlayStation 3, PC, Wii, PS2 and the Nintendo DS this fiscal year. There was no mention of a PSP version. Activision president Mike Griffith mentioned that it will take place in "yet a new military theatre," indicating that we may have finally seen the last of Normandy.

James Bond's new Quantum of Solace title will use the Call of Duty 4 engine.

The next Tony Hawk title will be a Nintendo DS exclusive, and is apparently innovative enough that it inspired Griffith to use phrases like "We're inventing Tony from the ground up," and "it won't be your father's Tony Hawk." We wonder what Tony, a father himself and already at version 3.0, thinks of that.

Last but not least, Guitar Hero is apparently getting "a significant leap forward in innovation," prompting many to recall Bobby Kotick's remarks to Conde Nast Portfolio that all but revealed the existence of other instruments for future titles in the series. We're holding out hope for Sitar Hero.