Activision Beats Q1 Earnings Estimates But World of Warcraft Subscribers Are Leaving
Activision Blizzard has reported better-than-predicted results for the financial period of January - March 2013, but the company sees bumps in the road ahead.
StarCraft II: Heart of the Swarm and Diablo III brought in large profits for Activision, with Heart of the Swarm alone selling more than 1.1 million copies in its first two days of release.
Skylanders: Giants and Call of Duty: Black Ops II pushed profits even more, sitting at #1 and #2 in North America and Europe for best-selling games overall, respectively. This includes both physical games and figures or accessories for the Skylanders brand, but does not include the Call of Duty: Uprising DLC pack, which was released in Q2 of 2013.
Prior estimates for Q1 2013 predicted revenues of $1.16 billion, which is in line with the $1.17 billion in net revenue earned in Q1 2012. Actual figures place the company’s net revenue at $1.32 billion for the quarter for a year-over-year Q1 increase of $150 million.
Despite Activision Blizzard’s gains, in the company's Q1 earnings statement, Chief Executive Officer Bobby Kotick was cautiously optimistic about the months ahead.
"While we have had a solid start to the year, we now believe that the risks and uncertainties in the back half of 2013 are more challenging than our earlier view, especially in the holiday quarter," Kotick said. "The shift in release dates of competing products, the disappointing launch of the Wii U, uncertainties regarding next-generation hardware, and subscriber declines in our World of Warcraft business all raise concerns."
Activision's concern for World of Warcraft is merited, as the world's largest MMORPG lost 1.3 million subscribers in Q1, leaving the game with 8 million remaining subscriptions. The company plans to combat further losses by releasing new content for the game more frequently, and by re-examining the boundaries in place for returning players.
“Our focused and disciplined approach to our business has served us well in the past,” Kotick added. “Through continued investment and careful management of our costs, we expect to continue delivering shareholder value over the long term as we have for the last 20 years.”