Thursday, May 07, 2015

Investors Unsure but Activision Plows Ahead

In spite of their lower than expected sales and profits, Activision Blizzard is still pushing to shift their focus more towards online gaming. In its first-quarter fiscal earnings, released this week, $3 out of every $4 earned by the company were through online sales. These would be World of Warcraft subscriptions, purchasing game time for MMO’s, buying in-game items for Destiny, etc. It’s not strictly retail sales of the games themselves, but the add-on products that make up the bulk of the cash.

Activision also pointed out that over $1 billion in revenue was generated by two games: Destiny and Hearthstone at 50 million registered users. When 76% of your earnings are from online sales, you tend to want to focus on it.

This shift is becoming a trend for many in the industry, with the likes of EA and Take-Two Interactive also changing their marketing focus to online products. Micro transactions are the future of gaming, whether we like it or not. They add up over time to mean big bucks. This is why the latest Call of Duty is continuing to turn a profit. It’s no longer a “one and done” business. Games can have life for years with add-on content. I would argue that some content is just too much and requires more spacing out. Dragon Age: Inquisition comes to mind. A game with multiple classes, races, and choices that it could easily take a year to uncover every inch of the story. And the second add-on is well underway to be out soon. I’m still working on my second play-through guy! Hold off a bit, BioWare. Please!

On the trading floor, stocks didn't move for Activision after the earnings report, but it’s not stopping them from going ahead with the changes. The company feels there will be a sales increase by this summer, an project a $4.425 billion revenue outlook for the year.


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