Kotick: 70% Of Activision Operating Profit Comes From 'Non-Console-Based' Games

In the face of lagging disc-based video game sales across the industry, Activision CEO Bobby Kotick is confident that his company's online strategy will compensate for the industry's shifting models. Asked by the Wall Street Journal if he was concerned about weak disc-based sales in the industry, he replied, "I care a lot less. It used to be, I would religiously look at weekly retail sell-through data, but it's a very small part of our business now." He added, "Today, probably 70 percent of our operating profit comes from non-console-based video games. So, while you might see a month-to-month change or volatility against expectations, that doesn't really get us too concerned." Operating income for Activision's January-March 2010 quarter alone was $511 million. While such a large percentage of operating profit could indicate that Kotick was also referring to non-retail DLC for consoles, such as the multi-million-selling Stimulus Package for Call of Duty: Modern Warfare 2, that is not the case, a company spokesperson said. Maryanne Lataif, VP of corporate communications for Activision Blizzard, said in a phone call with Gamasutra that "non-console-based video games" means just that. That shows the power of World of Warcraft, which is easily Activision Blizzard's primary online breadwinner, with 11.5 million active subscribers. At E3 2009, Activision said that operating margins for World of Warcraft were 55 percent. That's compared to a 39 percent overall operating margin from all of Activision during the March 2010 quarter. Other "non-console-based" Activision games include iPhone titles and PC games, but those businesses are small compared to World of Warcraft. Lataif added, "Five years ago, DLC and subscription services weren’t as popular [as they are today,] and as a result monthly volatility at retail is now less impactful than in the past." Activision plans on bringing an increasing proportion of its properties to online models. Kotick has repeatedly hinted at a subscription-based Call of Duty, and the publisher has a strong focus on DLC. Blizzard's revamped Battle.net will also give Activision more online business opportunities when the PC-exclusive StarCraft II launches later this year.