The video gaming industry and the movie industry share a lot of common ground – narrative techniques, visual style, entertainment – but no factor is more influential to either industry than the importance of good titles. It’s a little like the line from the movie “Field of Dreams” : “If you build it they will come.” If you have good quality games, you draw audiences and build money making franchises. But if you make a dud? Revenues are sure to slump.
For the fiscal year ending in March, the company recorded $2.9b in revenue, a 92% year over year gain and a return nearly $300m above analyst expectations of $2.66b. In the 4th quarter alone, the company drew $602.5m in revenue – a 93% year over year gain and an absurd $373.6m ahead of analyst forecasts. It was also the most profitable quarter in the company’s history. EPS of 15cents a share was a 400% year over year gain and triple analyst projections.
The strong results and unit sales have pushed Activision, according to NPD data cited by the company, ahead of EA to the throne of Number 1 U.S. third party publisher. Over the past year he company’s market share grew from 7.2 to 17.3 percent.
CEO Bobby Kotick told those listening to the analysts call, “the video game market fundamentals have never been stronger. There is no evidence that this growth will slow.”
With a new title based on the upcoming James Bond film Quantum of Solace, a major overhaul of the popular Tony Hawk skating franchise (a “ground up” reinvention called Project 8), along with a confirmation that the Guitar Hero franchise will expand to other instruments and titles (more on Beatles Guitar Hero rumors here), that certainly seems likely for Activision, if not the rest of the industry. And just in case that’s not enough, the company also announced they’ll begin offering downloadable content for select titles too.
Kotick said he expects installed user base for current generation consoles will grow 60 percent in the coming year. That should drive substantial growth, he believes.
In year ahead guidance, Activision is forecasting fiscal 2009 revenue of $2.75b with earnings of 72 cents a share. Less deferred revenue from online enabled games, revenue projections are for $3.1b.
For the first quarter, Activision expects earnings of 13 cents per share on revenue of $500m. Analysts are expecting revenue of $493m.
In December, Activision announced they would merge with Vivendi games to form a new company called Activision Blizzard. The merger has already gotten regulatory approvals and is moving ahead “on track.” It should close some time in the coming few months.
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•Milking the Franchise: Guitar Hero Spinoff Stories
•Activision Q3 Press Release
•Jury Pool: Gibson vs. Guitar Hero et all, You Decide
•Vivendi Activision Gets Green Light
•Vivendi Games and Activision: Inside the Merger
•NPD March Gaming Data
•Beyond Gaming: Wii Warfare, Cancer Research and More
•Gaming and Movie Convergence: a retrospective timeline