Activision Blizzard Beats Expectations With Q2 Growth

Activision Blizzard has beaten its internal estimates for the fiscal quarter ending June 30, reporting $335 million in profits on $1.1 billion in sales driven by a growing digital market. The $1.1 billion in sales represents a 13 percent increase from the $967 million reported one year ago. Profits, meanwhile, were up 53 percent from the $219 million reported last year, as Call of Duty: Black Ops was the top-selling retail game in the U.S. and Europe for the first half of 2011. But the biggest story here is the company's continued digital growth: its $423 million in digital sales for the quarter is rapidly closing in on the $660 million reported from retail sales, and represents a record 37 percent of the company's total revenues. "Our better-than-expected second-quarter performance was driven by record digital sales of our online-enabled franchises," said CEO Bobby Kotick in a statement. "For the six month period, net revenues from digital channels grew more than 20 percent, driving record operating margin and EPS growth of more than 50 percent." According to Kotick, preorders for its upcoming Call of Duty: Modern Warfare 3 have "significantly exceeded" pre-orders for the series' previous iteration, Black Ops, compared to this time last year. "In addition, we believe that Call of Duty Elite, which was built for Modern Warfare 3 and is expected to launch with the game on November 8, should redefine social connectivity for multiplayer gaming," he continued. Highlights for the quarter, according to the company, include a unique online player increase of 30 percent on Black Ops during its first 8 months on the market compared to Modern Warfare 2. To date, Black Ops players have logged more than 2.2 billion hours of online gameplay, the company said. Looking forward, the company said it would continue to invest in the opportunities it sees as providing the biggest growth potential, specifically naming Blizzard's World of Warcraft, StarCraft and Diablo franchises (as well as its unnamed next MMO), "robust investment" in Call of Duty (including the in-development microtransaction-based title being made specifically for China), and the upcoming game and toy synchronization project, Skylanders: Spyro's Adventure. Update: Following the publication of this story, Activision further commented on a handful of its upcoming releases. First, the company officially unveiled a Wii SKU of the upcoming Modern Warfare 3 which, while previously rumored, was unannounced. Second, the company announced that the next Black Ops expansion pack, Rezurrection, is due August 23. The pack focuses on zombie-themed content, combining "remastered" previous content with a new multiplayer map. Finally, Blizzard president Michael Morhaime once again stressed that Diablo 3 does not yet have a firm release window: while the company still hopes to have it out this calendar year, the company is no closer to finalizing that decision, though says it will be once the game enters its open beta in the coming weeks.