Activision-Blizzard Profits $113m in January-December 2009 - News
by VGChartz Staff , posted on 10 February 2010 / 14,070 Views
Activision-Blizzard is still having a good run. In January to December 2009, Activision-Blizzard posted a $113 million profit after losing $107 million in January to December 2008. The company earned $4.28 billion in net revenues for the year by GAAP figures up from $3.03 billion in revenues in 2008. For the three months ending December 2009, Activision-Blizzard revenues were $1.557 billion. That is down slightly from the $1.639 billion earned in the three months ending December 2008. On a GAAP basis though, Activision-Blizzard lost $286 million for the December 2009 quarter, a big jump from the $72 million lost in the December 2008 quarter. Much of the GAAP loss is tied to Activision's merger though.
Looking at a different way, Robert Kotick, CEO of Activision Blizzard, stated, "We delivered better-than-expected calendar year non-GAAP financial results and our fourth quarter non-GAAP net revenues and non-GAAP earnings per share were the highest in our company's history. On a non-GAAP basis, our performance enabled us to deliver the most profitable year in our company's history and record operating margin. We generated approximately $1.2 billion in operating cash flow and ended the year with approximately $3.3 billion in cash and investments. For the calendar year, in the U.S. and Europe, Call of Duty®: Modern Warfare™ 2 was the #1 best-selling title overall and DJ Hero™ was the highest grossing new IP launched in 2009. Additionally, through Blizzard Entertainment's World of Warcraft® we remain #1 in the subscription-based massively multiplayer online role-playing game category worldwide, according to The NPD Group and internal Activision Blizzard estimates."
Furthermore, Activision-Blizzard beat EA in several important western metrics.
"In the U.S. and Europe, for calendar year 2009, Activision Blizzard increased its share 1.8 points over the previous year across all platforms to 16% and had two of the top-five best-selling franchises on the consoles across all platforms -- Call of Duty and Guitar Hero®, according to The NPD Group, Charttrack and Gfk. Additionally, the company was the #1 U.S. publisher overall for the PlayStation® 3 computer entertainment system and the Xbox 360™ video game system from Microsoft and the #1 third-party publisher for the Nintendo Wii™, according to The NPD Group, Charttrack and Gfk."
Several days ago, EA announced it was the number one third party publisher for PC, PSP, and PS3 in Europe and the USA combined. EA had also announced it was the number two third party publisher on Wii and X360 in those same Western territories. With Activision announcing it was the biggest USA publisher on Wii and X360, and only claiming to be bigger on PS3 in the USA than any other third party, the claims are logically consistent with EA's report.
Beyond that, Activision-Blizzard saw the following as highlights of their business:
- For calendar year 2009, Activision Blizzard had the highest share point gain of any publisher in Europe from 11.9% to 13.9%, according to Charttrack and Gfk.
- Guitar Hero was a top-four franchise overall and the #1 music franchise in the U.S. and Europe for the calendar year, according to The NPD Group, Charttrack and Gfk.
- In the U.S. and Europe, DJ Hero™ was the highest grossing new intellectual property launched in 2009, according to The NPD Group, Charttrack and Gfk.
- Activision Blizzard had two of the top five best-selling PC titles in dollars in the U.S. and Europe for the calendar year -- Call of Duty®: Modern Warfare™ 2 and Blizzard Entertainment's World of Warcraft: Wrath of the Lich King™, according to The NPD Group, Charttrack and Gfk.
- For the December quarter, Activision Blizzard was the #1 publisher overall in the U.S. and Europe and grew its share 1.7 points over the previous year across all platforms to 20.1%, according to The NPD Group, Charttrack and Gfk.
- During the December quarter, in the U.S. and Europe, Call of Duty: Modern Warfare 2 was the #1 best-selling console title in dollars and the Call of Duty franchise was the #1 franchise overall, according to The NPD Group, Charttrack and Gfk.
- In November 2009, Call of Duty: Modern Warfare 2 became the first video game ever to surpass $550 million in retail sales in its first five days of release, according to Activision Publishing's internal estimates. To date, the game has sold more than $1 billion in retail sales worldwide, according to The NPD, Charttrack and Gfk.
- On November 17, 2009, Activision Publishing announced the appointments of industry veterans Glen A. Schofield as Vice President and General Manager and Michael Condrey as Vice President and COO of Sledgehammer Games, a new wholly-owned game development studio located in Foster City, California.
- On December 14, 2009, Activision Publishing announced that the company is currently in development on a new open world True Crime game inspired by classic Hollywood and Asian cinema-style action thrillers. The game which is being developed by United Front Games is expected to launch later this year.
- As of December 31, 2009, approximately 11.5 million gamers worldwide are subscribed to play Blizzard Entertainment's World of Warcraft.
- As of December 31, 2009, Activision Blizzard completed its $1.25 billion authorized stock repurchase program. The company purchased approximately 115 million shares of common stock at an average price of $10.87 per share since the program's inception in November 2008.
- On February 2, 2010, Activision Publishing announced that David Haddad, Chief Operating Officer of Guitar Hero, has assumed the operational responsibilities for the Guitar Hero business unit.
For the three months ending December 2009, Activision-Blizzard was the largest third party publisher overall in the United States and Europe. That is no easy feat, as the competition over that period is vicious from all sides, as a good 40-50% of all industry revenue comes in the quarter.
With a strong slate of products from both Blizzard and Activision, the company forecasts that 2010 will be strong.
"For calendar year 2010, Activision Blizzard expects GAAP net revenues of $4.2 billion, and GAAP earnings per diluted share of $0.47. On a non-GAAP basis, the company expects net revenues of $4.4 billion and non-GAAP earnings per diluted share of $0.70 for the calendar year.
For the first quarter 2010, Activision Blizzard expects GAAP net revenues of $1.1 billion, and GAAP earnings per diluted share of $0.20. On a non-GAAP basis, the company expects net revenues of $525 million and $0.02 earnings per diluted share for the March quarter."
For the 12 months ending December 2010, Activision-Blizzard also issued a series of projections for the western video game software markets and hardware markets.
- Wii, PS3, X360 software in the USA + Europe is expected to grow in the low to mid single digits (+1% to +6%).
- Western DS, PSP, and PS2 software is supposed to drop off - with PS2 dropping off "significantly" and DS & PSP dropping off in the double digits.
- Total software is expected to be flat to down by mid single digits (+2% to -6%).
- Digitally distributed software is forecast to be up 20%.
- Digital + Retail software combined should be up 5-8% according to Activision-Blizzard estimates.
For hardware, Activision-Blizzard noted that through the end of 2009, going by GFK, Chart Track and NPD figures for the USA and Europe, hardware bases stood at the following levels:
Wii - 51m
X360 - 32m
PS3 - 23m
Handhelds - 112m (this is DS + PSP)
These figures, when the Americas is adjusted downwards to exclude VGC figures for Canada and other markets in the region are in line with what is on the site for those curious. For 2010, Activision-Blizzard forecasts that hardware sales in the USA + Europe will grow by:
- 18m+ DS systems & PSPs (130m+)
- 12m Wiis (63m LTD)
- 9m PS3s (32m LTD)
- 8m X360s (40m LTD)
I'm a bit surprised at the handheld and Wii figures. PSP is still going to do 4-6m in the west in 2010 even if it declines further, and DS will be at 15m+ even if it drops like a rock in the USA and Europe - it did just sell over 11m in the USA in 2009 and Europe is a comparably big market. Wii was at 9.6m in the USA in 2009 by NPD figures. I have it dropping 20% in the USA. Still, even if Wii does ~8m in the USA in 2010, it will be well over 12m in the USA + Europe. I'm left with the impression that Activision-Blizzard is exaggerating these hardware figures to lower expectations for the size of the software market in 2010. The company notes "new technology could drive hardware late in the year", likely referring to the Vitality Sensor, Arc, and Natal technologies presumed to be coming in late 2010.
Activision-Blizzard also broke down its GAAP net revenues by platform in the Dec 2009/Dec 2008 quarters, as well as for 2009 overall. Percentages denote segment contribution to revenue total.
Platform Oct-Dec 2009 Oct-Dec 2008
MMORPG $294m (19%) $325m (20%)
PC & Other $60m (4%) $49m (3%)
PS3 $228m (15%) $163m (10%)
PS2 $53m (3%) $205m (13%)
X360 $324m (21%) $273m (17%)
Wii $260m (17%) $317m (19%)
PSP $16m (1%) $17m (1%)
DS $101m (6%) $118m (7%)
Digital Dist. $221m (14%) $171m (10%)
It should be noted that these are net revenue figures - not net income/net loss totals. Thus they are not indicative of volume or 'success' on a platform as the amount of money Activision-Blizzard gets on each title varies. A Wii game that I buy for $50 may only result in Activision recieving $25, while a PS3 game I buy at $60 may only turn into $30 for Activision. Thus the volume of say, DS games to PSP games sold in the last quarter could be ever greater than $101m/$16m, as PSP games could return say $20 per unit on average while the DS games might return $18 per unit on average to the company.
In the three months ending December 2009, Activision-Blizzard's most important platforms by revenue were X360, MMORPG (Warcraft), Wii, PS3, Digital Distribution (phones, Steam, etc), DS, PC + Other (retail), PS2, PSP. During the previous December quarter, the most important platforms by revenue were MMORPG, Wii, X360, PS2, Digital Distribution, PS3, DS, PC + Other, and PSP.
The biggest drop in revenue year over year was on PS2, which dropped by 75% - more than the growth on PS3 & X360 even with Call of Duty: Modern Warfare 2 shattering records to prop those platforms up. DS and Wii were down nearly 20% each, presumably because the music games performed worse this year for Activision-Blizzard.
For the year ending December 2009, Activision-Blizzard GAAP Net Revenues by platform (page five) were:
MMORPG - $1233m (29%)
X360 - $857m (19%)
Wii - $584m (14%)
PS3 - $584m (14%)
Digital Distribution - $423m (10%)
DS - $196m (5%)
PC + Other - $179m (4%)
PS2 - $174m (4%)
PSP - $47m (1%)
Finally, Activision-Blizzard also provided a geographic look at GAAP net-revenues.
Region Oct-Dec 2009 Oct-Dec 2008 2009
North America $759m (49%) $903m (55%) $2217m (52%)
Europe $710m (46%) $660m (40%) $1798m (42%)
Asia-Pacific $88m (5%) $75m (5%) $263m (6%)
Even with a strong slate of EA content coming in 2010, it doesn't look like Activision-Blizzard is going to relenquish its position as the most powerful third party video game publisher in the world anytime soon.
Contact Vgchartz at jmazel@vgchartz.com
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"As of December 31, 2009, approximately 11.5 million gamers worldwide are subscribed to play Blizzard Entertainment's World of Warcraft."
If my memory is correct WoW reached 12M in the past, so the game is loosing subscribers...
I am so shocked that Blizzard was willing to merge. They were more powerful than the company they merged with. But I guess it bolsters revenue on all fronts, so no harm no foul.
@ Fortidei
you just said what i was going to say ,the buyback of $1.25bln worth of shares has nothing to do with games, but it took a huge chunk of the profits those games made
That is just fucking insane, WoW is truly an unstoppable force.
Activision... riding on Blizzard's coat tails.... again.
well...2008-2009 gains of $6 million is probably considerably better than most companies...as a matter of fact, I bet they are extremely happy with this.
UPD: Ah, I see now, thanks Fortidei.
They've acquired 7 Studios this year, though I don't know the details, doubt it cost them that much since the studio was half-dead. R&D went down a bit compared to last year. So where did the money go? There're some new assets of ATVI I'm missing?
Actually, net profits don't tell the whole story here. Activision made lots of investments in 2009, the biggest being the buyback of $1.25bln worth of shares. If you put that into account you are looking at an operational profit of 30-35%. That is HUGE. Also Blizzard is investing lots of $ in new projects and also in the Batle.net 2.0 service that will probably soon be another cash cow for the company.
That's net profit, so they may have profited more but spent the money on new assets, like that new studio they just established.
wow that is bad news making only 113mil and having a revenue of 4bil is just pathetic. 113 is the prob the developing cost of wow2. the ceo should perform harakiri. i could see the man blaming it on high production cost and u will see them raise the prices of their "games" in stead of 59.99 it is going to be around 69.99 - 79.99. or they will charge u to play wow2 online will be subscription based. or get this their will be commercials in the game before u play story mode and or before each online match. wow i should be ceo i would just sell out big time. this is just the beginning of the end of gaming.
I have to say if WoW is such a cash cow to activision imagine how much of a cash monster titles such as mario wii and kart are to nintendo. Incredible just incredible and Nintendo have countless IPs that can cash in higher than WoW. Incredible to see the difference between number 3 game producer and number one
Really. Without WoW ActivisionBlizzard would be in same situation as EA. Posting constant huge losses. WoW gives them chance to make some money.
Ugh, why did they have to merge... it's clear Blizzard is carrying these fools.
What's up with that ridiculous Wii hardware forecast? The Wii is doomed again? Seriously...
Shio will be pleased. PC wins!
it's pretty shocking that a company like Activision with it's huge IPs only manages to squeeze out ~$100m profits ..
apart from Nintendo this industry seems to be build on sand and once the dune stops growing it will collapse
I've suspected for a while that most or all of Activision's profits came from WoW, and this report only strengthens that suspicion.
$4.3bn in revenue - and only $110m in profit? That is pretty astounding IMO. They are burning through money at an alarming rate...
It's called one-tiem charges caused by the merger folks...ATVI acutally trounced the expectation that it would much more money.
Actually, they lost money in the quarter Modern Warfare 2 released...its based on previous quarters that they made money. Read the beginning of the article closely.
So MW2 sold 500 Million + first day and they only made 113 Million of profit? That is not good, I can say bad managmement of Money.
Honestly, they released WAY too many "whatever" Hero games in 2009. I'm sure they were all probably cheap to make, but the cost of buying the music finally started to out way the profits when sales for most of them took a dive.
I doubt anyone at the company would want to think about how things would have been without the boost from MW2 and sustained influx from WoW. Still, a lot of companies can't claim to have profited in 2009.
Actually these figures are...pretty bad. They only made $113 mil in all of 2009? Basically that meant they lost money in pretty much everything if it weren't for WoW keeping them afloat.
That also means a 2.6% net profit margin if the figures are right. That's a joke for the largest most successful third party in the world.
WoW is a cash cow. EA is taking a lot of risks but really Activision should be doing it since they're in a situation where they can blow $100M on titles that could not sell a single copy and they'd still walk away with a profit at the end of the year. But Acti is smart so that'll never happen :) :(
I always knew WoW was huge, but Net Rev at 29%? Thats just wow (no other word fits :), I have no other words for it.
