Activision seeks new hits to ease reliance on Call of Duty, World of Warcraft revenue

Activision says that 83% of its net revenue comes from only four franchises (Call of Duty, Diablo, Skylanders, and World of Warcraft), so it has set plans in motion to generate new earners in case any of those fall short.

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Activision isn't exactly hurting for money. Between the annualized blockbuster success of Call of Duty and the millions of people still paying a monthly fee for World of Warcraft, the company seems to be sitting pretty. But it doesn't want to stake its future on those successes, and has set other plans in motion in case they fizzle.

"A significant portion of our revenues has historically been derived from products based on a relatively small number of popular franchises and these products are responsible for a disproportionately high percentage of our profits," reads an amended annual report. "For example, our four largest franchises in 2012--Call of Duty, Diablo, Skylanders and World of Warcraft--accounted for approximately 83% of our net revenues, and a significantly higher percentage of our operating income, for the year."

The report goes on to state that the "disproportionately high percentage" of revenues means they're dependent on those, and "failure to achieve anticipated results by one or more products based on these franchises may significantly harm our business and financial results."

To deal with this potential pitfall, the annual report claims that Activision will be taking a few steps: shifting toward digital delivery and supporting online communities like those surrounding CoD and WoW, looking into free-to-play models with microtransactions, and developing new intellectual properties. It cites Skylanders as an example of a new IP that paid off, generating more than $1 billion in worldwide sales so far. Its deal to publish the upcoming Bungie FPS Destiny is said to be its next large step.

Editor-In-Chief
From The Chatty
  • reply
    February 28, 2013 10:10 AM

    Steve Watts posted a new article, Activision seeks new hits to ease reliance on Call of Duty, World of Warcraft revenue.

    Activision says that 83% of its net revenue comes from only four franchises (Call of Duty, Diablo, Skylanders, and World of Warcraft), so it has set plans in motion to generate new earners in case any of those fall short.

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      February 28, 2013 10:14 AM

      interesting that of the major properties half are PC centric, and I guess skylanders is too right? 3/4 PC centric.

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      February 28, 2013 10:15 AM

      wow surprised to see Skylanders in there

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        February 28, 2013 10:15 AM

        holy shiz

        As of March 31, 2012, Activision has sold over 30 million Skylanders toys, and sales are expected to exceed $500 million by the end of the year.[10][11]

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        February 28, 2013 10:16 AM

        Obviously you're not a parent.

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        February 28, 2013 10:19 AM

        ? are you kidding me? It probably has outsold every other video in existence ..put together. it's easily $500 for every character made which my son and plenty of my son's friend have

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        February 28, 2013 10:30 AM

        Skylanders has been of the most profitable franchises in gaming now. 500MM gross retail, and hasn't shown signs of slowing down.

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        February 28, 2013 10:40 AM

        Have you not been in a store that sells toys in the past year or so?

        The figures for skylanders have a display both in the electronics section and in the toy section at my local department store, and sometimes they add a third display near one of the doors. Shit's bananas

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          February 28, 2013 1:11 PM

          I have not been in a year store in toys.

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          February 28, 2013 2:31 PM

          no I'm not a paedophile and I have no kids. this is honestly the first time I can remember hearing about it

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            February 28, 2013 3:44 PM

            You don't have to be a pedophile to know about Skylanders. Jesus, that's a leap in logic.

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            February 28, 2013 9:17 PM

            Nothing but pedophiles in... best buy and target.

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        February 28, 2013 10:42 AM

        I don't even have kids and I know Skylanders is huge. I hear it's surprisingly fun for adults, too. The games are apparently actually good rather than just being junk to sucker kids.

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        February 28, 2013 10:43 AM

        [deleted]

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        February 28, 2013 1:08 PM

        when i saw skylanders at E3, they had a huge presentation/display with costumes and smoke and everything. i thought to myself, 'how silly to go that far for a game that's going to flop'.

        i have been shown how wrong i was ever since my 4 year old boy asked me for skylanders as his christmas present. i had no idea he knew about them. maybe a passing tv commercial, other kids or cousins, who knows. of course, his attention has since moved on to other things now that christmas has passed.

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        February 28, 2013 1:48 PM

        Disney's version is incoming, so Activision may be worried about the sudden competition.

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        February 28, 2013 2:30 PM

        [deleted]

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      February 28, 2013 10:27 AM

      Good luck with that fools!

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      February 28, 2013 10:37 AM

      Clearly the answer is to have Diablo IV come out next year, followed by Starcraft III in 2015.

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        February 28, 2013 9:38 PM

        If Activision was running Blizzard they'd have Diablo, Starcraft, and WoW on yearly cycles like they have with CoD.

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      February 28, 2013 10:42 AM

      What is Skylanders? That's the first time I hear about that game.

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      February 28, 2013 11:45 AM

      This isn't really news; it's customary in SEC 10-K forms to state risks to the business.

      However, the FY2010 SEC form released on March 1, 2010 was where Activision first announced the termination of employment of Jason West and Vince Zampella. That wasn't ordinary; that was bizarre. And wow, that was three years ago.

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      February 28, 2013 11:52 AM

      I do not understand why my older brother bought the Skylanders toy and game.

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      February 28, 2013 12:22 PM

      [deleted]

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      February 28, 2013 12:47 PM

      awesome, didn't they basically dump a lot of games over the last few years because they were so confident on call of duty selling so well?

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        March 1, 2013 5:55 PM

        Yes, including my beloved Project Gotham Racing franchise/developer. :-(

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      February 28, 2013 1:05 PM

      What a well run business.

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        February 28, 2013 1:07 PM

        how is it not? THey have 4 huge franchises and see the need to make new ones.

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          February 28, 2013 1:41 PM

          Three of those four franchises are in decline and have been for at least a year and they're only now thinking about diversifying? And where will they find the talent? They've cut everything to focus on these tent pole franchises and haven't fostered the kind of creativity you need to perpetuate a business in the long term. I'm not saying they're doomed, but I don't think they're well positioned, and I would not hold their stock.

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            February 28, 2013 1:45 PM

            you seem to think because people bitch about WoW and D3 on here that is means they are making less revenue from those games. I bet you D3 is far more profitable now.

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              February 28, 2013 1:50 PM

              Oh yeah. D3 is probably making bank, and is only going to get bigger when a console version is released. The Chatty is the last place to go to take a mainstream measurement of almost anything's popularity.

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                February 28, 2013 3:46 PM

                I think its sold like 12 million copies, yeah it's making money

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            February 28, 2013 1:54 PM

            The only one of those three in decline is WoW although CoD looks to be waning.

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              February 28, 2013 2:28 PM

              Pretty sure new consoles will spark interest in CoD again.

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              February 28, 2013 3:41 PM

              and to be fair, WoW being in decline is still making more money than many other entire game companies.

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                March 1, 2013 10:38 AM

                Yup, it's obviously not hurting too bad if it's still one of the top earners.

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              February 28, 2013 3:47 PM

              yeah 9 mill subs is terrible

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                February 28, 2013 4:21 PM

                Somewhere an accountant is having sperge fits over 3M lost subscribers

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                  February 28, 2013 4:57 PM

                  I can just imagine the cancer developing in him over the stress.

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        February 28, 2013 1:33 PM

        Activision is definitely pretty damn successful.

        But look at half the IPs that account for their success: motherfucking Blizzard.

        Also, I'm betting that CoD sales are slowing down as well. Haven't looked at the annual report, but given the trend for them to start offering discounts on NEW CoD games in the last six months, I'm betting that it's not quite the money-train it used to be. Recall that Modern Warfare 1, 2, and Black Ops didn't drop in price nor were they offered for a discount for the LONGEST time.

        I just saw Black Ops II on sale for 33% off recently.

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          February 28, 2013 1:49 PM

          Regarding the last point, I think you'll see stuff hit sales a lot faster in the wake of Steam-sales and numbers showing how much better games do uring those.

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          February 28, 2013 10:21 PM

          Yeah BO2 outsold any other CoD game. I feel like it's even MORE of a money train than it was before.

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            March 1, 2013 4:15 AM

            Every Call of Duty game has had a bigger launch than its predecessors, but the first Black Ops is the best selling game overall.

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          February 28, 2013 11:27 PM

          I bet they've already reached their peak profitability.

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          March 1, 2013 12:19 AM

          [deleted]

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            March 1, 2013 1:25 AM

            Yep. It was very good. I bought it. Haven't bought one since.

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              March 1, 2013 5:53 PM

              The campaign in MW2 was dogturd, compared to MW1's masterful campaign, but the mutliplayer in MW2 is truly fucking epic.

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      February 28, 2013 2:15 PM

      Easy, give call of duty to Gearbox and then start working on new IPs in house.

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      March 1, 2013 1:14 AM

      Out of curiosity, does anyone know how this compares to big movie studios? How much do successful summer tent-pole films support their books?

      Because four huge franchises doesn't actually seem that bad to me.

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