Activision quarter revenue up 93%

Growth driven by 'Call of Duty', 'Guitar Hero'

By BEN FRITZ

'Call of Duty 4'

'Guitar Hero'
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Continuing its red-hot growth fueled by hit franchises "Guitar Hero" and "Call of Duty," Activision reported 93% revenue growth in the most recent fiscal quarter to $602.5 million, while net income more than tripled to $44.2 million.

Activision's revenue was up 92% to $2.9 billion for the fiscal year ended March 31. Profits more than quadrupled to $344.9 million.

During the fiscal year, Activision surged past traditional market leader Electronic Arts for the first time to become the biggest third-party videogame publisher in the U.S., though it still trails on a worldwide basis.

Perf is particularly impressive because Activision had no new releases during the winter quarter. Growth was driven entirely by holiday releases "Call of Duty 4: Modern Warfare" and "Guitar Hero III: Legends of Rock." Former has sold 9 million units and was the No. 2 game worldwide during the fiscal year. Latter was the No. 1 game in the U.S. and Europe in dollars, driven in part by its price, which is higher than that of other games due to the included guitar controller.

Licensed games "Spider-Man 3" and "Transformers" were also big sellers.

Activision's perf significantly exceeded the domestic industry average for 2007, during which the NPD group reported that overall videogame software revenue rose 37%. It also demonstrated that the softening economy doesn't seem to be impacting the vidgame biz.

Activision topper Bobby Kotick noted that strong returns from the traditionally soft winter, along with the boffo bow of "Grand Theft Auto IV" last week, demonstrate that the vidgame biz may no longer have to be as focused on the lucrative holiday season.

"As the mass market is materializing for our business, our success and the success of 'GTA' shows that some of the seasonality is coming out of the business too," he told Daily Variety.

Activision will soon be completing a merger with Vivendi Games, which should flatten out yearly revenue even more since the combined company, which Kotick will continue to head, will have regular monthly revenue from Vivendi's hugely successful subscription-based game "World of Warcraft."

For the current fiscal year, Activision is expecting revenue to grow to $3.1 billion, excluding the impact of new accounting for online enabled titles coming out this year. Including that impact, which pushes some revenue into next fiscal year, revenue is predicted to be $2.75 billion. Excluding the online costs and those of the Vivendi merger and equity-based compensation, profits are expected to rise from $1.10 per share to $1.30 per share. With all costs included, they'll fall to 72¢.

In the current quarter, Activision's big releases are "Guitar Hero: Aerosmith Edition," "Guitar Hero on Tour" for Nintendo's DS and an adaptation of DreamWorks Animation's "Kung Fu Panda," which Kotick predicted will be the company's biggest kid-oriented title yet. Later in the year, Activision will have "Guitar Hero IV," which is expected to have multiple instruments to compete with MTV's "Rock Band"; "Call of Duty 5"; and adaptations of the James Bond pic "Quantum of Solace" and DreamWorks' "Madagascar" sequel.

Activision shares were up 3% in after-hours trading after closing up 1% at $27.70 Thursday.