Activision Posts Strong Diablo Sales But MMORPG Competition Persists

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Activision Blizzard (NASDAQ:ATVI) reported a 12% increase in total net revenues in the third quarter of 2012 driven by strong sales of Diablo III. The latest edition in the Diablo franchise has sold more than 10 million copies this year and is the top-selling game in North America and Europe. Revenues from product sales increased by 45%. Digital revenues earned through online sales of games, subscriptions and value added services are becoming an important income stream, accounting for more than half of the company’s revenues.

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Activision is fighting an industry-wide decline in video game sales. Retail sales in the first six months of the year across the U.S. were down 24% from last year, according to data compiled by NPD Group. [1] Console sales also fell by 40% year-on-year. This might be due to the fact Microsoft’s (NASDAQ:MSFT) X-Box 360 and Sony’s Playstation 3 are in the waning phase of their product cycles. Nintendo recently unveiled its next generation game console Wii U. [2] We expect a  revival in sales after the three giants release their next generation consoles.

One of the biggest drivers of console revenues for Activision is the first-person shooter (FPS) Call of Duty franchise, which releases a new edition each year. The latest version, Call of Duty: Black Ops II, is expected to release in the fourth quarter of 2012. It will however face stiff competition from Microsoft’s Halo 4 which comes several years after Halo 3 and Halo Reach and is highly anticipated by the franchise’s fans.

The good news for Activision is that it has finally bucked the trend of declining online subscribers for its popular World of Warcraft (WoW) series. The latest edition, Mists of Pandaria, sold 2.7 million copies in the first week of release and pushed the number of subscribers from 9.1 million in August to over 10 million at the end of September. Although it has arrested the slide, at least temporarily, the question remains whether WoW will be able to compete with other massively multiplayer online role-playing games (MMORPG). Following the success of Riot Game’s League of Legends, which has more than 30 million subscribers, Electronic Arts (NASDAQ:EA) launched a free-to-play version of Star Wars: The Old Republic. The game was well received by critics after its launch last year and could threaten WoW’s subscriber base in the coming years.

Activision’s innovative Skylander franchise proved to be a hit, generating life-to-date revenues of more than $500 million. The game is the top-selling game through retail avenues in North America and Europe this year. Apart from earning revenues through unit sales, the company also manufactures and sells physical models of the franchise’s characters. These models have to be bought separately and placed on the “The Portal of Power” for the user to access the character. Activision has also released the game on Amazon’s Kindle Fire HD; refer to our article Activision Targets Tablet Gaming Boom With Hit Games For The New Kindle Fire HD for more details.

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Notes:
  1. U.S. Videogame Industry Sales Fell by Nearly a Quarter in September –NPD, 11th October, 2012 []
  2. Taking the Wraps Off Nintendo’s New Wii U, Wired, 8th November, 2012 []
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  • commented 2 years ago
  • tags: ATVI EA MSFT
  • league of shadows isn't a real game, you might be thinking of league of legends, a free to play action RTS which is in some ways similar to starcraft 2, but not at all like world of warcraft or any other MMO on the market, as it, you know, isn't an MMO. Also 30 million 'subscribers' is a very inflated figure, as many of those are not unique money generating accounts. Poor article, would not read again.