Activision Blizzard banks $503 million in first quarter profits

by Randy Nelson on May 9th 2011 5:45PM

Beneath the Southern California headquarters of Activision Blizzard there lies a zeppelin-sized vault, near-bursting with piles of gold and riches -- or at least that's how we imagine it. The company today reported its first quarter 2011 earnings, reaping a record $1.4 billion in sales revenue, an increase of $100 million over the same period last year. Net income came to $503 million, up from $381 million in Q1 2010.

Not surprisingly, the publisher attributed a hefty chunk of those profits to continued sales of Call of Duty: Black Ops -- which it also confirmed is not just the best-selling game ever (in terms of revenue) in the US, but in Europe as well. In addition, the company noted that digital sales were up 30 percent over Q1 2010 and accounted for 30 percent of Activision Blizzard's revenue last quarter.

Finally, although it comes second in the "Activision Blizzard" name, Blizzard was first in profit for the quarter. The unit accounted for a whopping $170 million in income, compared to Activision Publishing's $48 million.

Source: Activision Blizzard

Tags: Activision, Activision-Blizzard, Call-of-Duty-Black-Ops, digital-distribution, earnings, financial, fy-2011, q1, sales

Reader Comments (36)

Sparkle Pony must be proud.

@Apakal
Rofl. I never did understand why people bought that....

@trinica

It's an absolutely awesome mount, despite being overpriced especially for a game with a subscription.

@Tempes Magus

Except that awesomeness in WoW is typically defined by exclusivity, which this is very much not.

And its just a cheap reskin of Invincible. Not that awesome.

@Apakal

Invincible isn't made of stars and transparent/translucent though. :P

Seriously, I love the looks of the Celestial Steed over every other mount ever in any game that I have ever seen.
Of course, they haven't made a Celestial Netherwing Drake type mount yet so... :P

Don't forget to buy your $175 BlizzCon tickets.
-_-

Yep, BlizzCon will be a lot of fun! The ticket price also helps Blizzard recover some of the costs of the event, but they actually lose money putting it on.

Yes, seriously. Ticket prices do not cover all the costs of BlizzCon. Blizzard LOSES money hosting it.

You realize they actually lose money on BlizzCon, right?

They lost something like $1-2 million last year.

The tickets don't even pay for the event, let alone make them a profit. And the goody bags used to be stuffed with almost $100 worth of items.

@Drakkenfyre
They don't lose a dime hosting Blizzcon. Whatever temporary losses they may incur they get right back with the customer loyalty those events encourage.

@ticklefist
At least somebody gets it. Its called looking at the big picture, not isolating the profit vs overhead of the event like a junior high bake-sale. Even if the event is a financial loss, that loss is such an insignificant amount of chump change to the company that (IMHO) the tickets could be $50 without hurting their coffers in any meaningful way.

@DeadInside

I'm pretty sure the only reason tickets cost anything at all is to limit attendance to somewhat sane numbers.

Of course it encourages loyalty. That's one of the reasons they hold it, and customer appreciation.

No one is failing to see "the big picture", there are other companies out there where a loss of $2 million at once will sink them, and their parent companies would close them down.

It's still a big chunk to lose and bank on for the future. It also takes considerable manpower. Almost the entire staff, minus the security and the hired performances (the bands, the host, ect.) are Blizzard employees. That takes time away they could be working on other projects. They literally stop working for the three days the event is held, and it's basically a small staff hanging back at Blizzard Headquarters watching the games, and making sure everything's going ok. There are companies out there who won't even let their employees go home on weekends when it comes to crunch time. It's more than just "they'll make it back eventually."

@Drakkenfyre

I think you're seriously underestimating Blizzard's abilities and resources (both personal and finances) as well as overestimating the importance of 3 days.

There's a reason why they won't do a BlizzCon on the East coast. The personel is just one of them. I am not underestimating anything. I am going on what they said themselves.

As far as finances, $2 million may not be alot to Blizzard, but it's still a good chunk to lose and have to wait and assume you are going to make it back quickly.

Name one other company that's willing to take a loss like that on a yearly schedule (in fact, the losses get higher because each year they have to rent out a bigger building) and hope to get it back?

@Skarn

ummm..

why do you think they host it at all?

to make more money after.................................................................................................................

And yet Bizzare Creations couldn't get a second chance..

Well, the subscription revenue from just those 3 months, if all 12 million accounts were standard subscriptions, is 540 million dollars.
Profit is after everyone, even shareholders, get paid too.

Blizzard, do you think you could reduce the subscription to $5 monthly now? Don't you want more customers, like me returning, so you can make more money without milking each person to the point that "the teat is raw"?

Wishful thinking. :(

@Tempes Magus
$5 would be pretty sweet. That might tempt me to come back for 6 months or so.

@Tempes Magus

Actually, no. Profit is not after shareholders get paid. It's what they get paid with.

Activision announced a dividend of around $200 million, payable on May 11.

@Stevorino

Well they still have room to lower the sub price and make more money as their subscription numbers increase from "economy of scale" economics and more word of mouth advertising.

More sales is far preferable to more money per sale because of all the benefits of popularity.

After all, politicians win by popularity, not who is the best person for the job. :P

Not every customer pays $15 a month. Subscriptions that are bought in large-block chunks are cheaper, and Asian customers don't have a monthly fee at all. They pay hourly, but the cost is so low it usually works out to what a monthly subscription would be.

@Tempes Magus
Not every part of economy to scale is a direct ratio of price drop of x% equals a gain of x% of costumers.
$15 likely is shown to be the ideal point of both by internal blizzard market analysis.
Otherwise they would have likely made a drop already.

I don't care how much money Activision makes. I still hate them.

Mostly because of the Bizzare incident.

No, actually mostly because of COD.

I don't really want to be a hater but you would think that with all these profits coming in Activision could stand to NOT fire so many developers and shut down all kinds of studios. I'm just saying.

Can imagine, if this company keeps this pace, will net $2 BILLION in profits for the FY 2011! That's insanity.

@AceManUSC
growth is not a linear model.
Sorry to be a dick but I hate it when people do this. It's like when people look at the 8-9% yearly growth in China and make predictions of when that will pass the U.S.

You would think that Activision can push new IPs with that kind of money. But when I think about it, some wouldn't buy it because it's published by them, and there would be less chances of said new IP getting at least a 10 million copies sold figure.

Why bother when they can make another CoD next year and swim in their pools of money once it sells. As much as I hate Activision, they know how to make a ton of cash.

So, on one hand players are going through content too fast. On the other hand there were no new raids in 4.1 because players weren't progressing fast enough.

I believe both are true.

Cataclysm (not to be confused with the new, vanilla wow post-4.0) did not have nearly as much content as Wrath or TBC. Again, the revamped world is the new vanilla, you get that without Cataclysm. The put less in, and required a greater time investment to get through the repeatables (dungeons-to-heroics-to-raids).

Too little content plus repeating content much more near the end to get to the end MAY seem to equate to few players. Then again, it's 5%, so it may mean nothing.

@CyberNigma

Doesn't sound right. Wrath launched with the main raid being a re-tuned vanilla raid. The only new raid content was Malygos and Sartharion until later patches. Hard mode existed only by doing Sarth 3 Drakes. There wasn't a significant amount of non-recycled raid content in wrath until 3.1 was launched with Ulduar.

@(Unverified)

Sorry, I should have been a bit more clear. When I was referring to content, I was referring to everything leading up to raiding (where Blizz says we are stuck right now) - to include content while leveling (dungeons, quests, zones - both in number and size) as well as the the larger number of dungeons and heroics.

Cataclysm did introduce more raids initially over Wrath. However, the rest of the content leading up to those raids was considerably less than the previous two expansions, which was emphasized through the greater pre-raid requirements in cata over wrath.

It's likely they are losing players after they play through the new non-raid content very quickly, run dungeons a few times (maybe even trying heroics and/or raids) and then quitting until something new comes along. In both TBC and Wrath, the pre-raid and pre-repeatable content lasted these people quite a while.

Today; ActiBlizz announce profits

tomorrow: ActiBlizz announce layoffs

Yay profits!

Feels like reading Binary with all those zeros...

And yet the sequel heavy / dumbing down gaming monster that is E.A. is about 1/5 as far in th red.
Wonder why.

@akeso

Actually Activision is the one that relies on established IP's the most.
EA's evil but slightly less so than Activision.

@Cap Morgan

I have one word. and one number.

Battlefield 3

-------------

Still evil?

Call of Duty: Black Ops

Activision Blizzard banks $503 million in first quarter profits

Reader Comments (36)

Posted: May 9th 2011 5:47PM Apakal said

Posted: May 9th 2011 6:00PM trinica said

Posted: May 9th 2011 6:02PM Tempes Magus said

Posted: May 9th 2011 6:12PM Apakal said

Posted: May 9th 2011 6:27PM Tempes Magus said

Posted: May 9th 2011 5:55PM DeadInside said

Posted: May 9th 2011 6:06PM Skarn said

Posted: May 9th 2011 6:08PM Drakkenfyre said

Posted: May 9th 2011 6:14PM ticklefist said

Posted: May 9th 2011 6:30PM DeadInside said

Posted: May 9th 2011 7:14PM Apakal said

Posted: May 9th 2011 7:19PM Drakkenfyre said

Posted: May 9th 2011 9:02PM Apakal said

Posted: May 9th 2011 9:41PM Drakkenfyre said

Posted: May 10th 2011 9:13AM HedonisticKai said

Posted: May 9th 2011 6:00PM sjenky said

Posted: May 9th 2011 6:01PM Tempes Magus said

Posted: May 9th 2011 6:05PM DeadInside said

Posted: May 9th 2011 6:07PM Stevorino said

Posted: May 9th 2011 6:23PM mattsmeesh said

Posted: May 9th 2011 6:30PM Tempes Magus said

Posted: May 9th 2011 7:21PM Drakkenfyre said

Posted: May 9th 2011 9:09PM akeso said

Posted: May 9th 2011 6:02PM EazySCT said

Posted: May 9th 2011 6:26PM Silent Protagonist said

Posted: May 9th 2011 6:41PM AceManUSC said

Posted: May 9th 2011 9:04PM akeso said

Posted: May 9th 2011 7:57PM WeRequireMOARMinerals said

Posted: May 9th 2011 8:04PM CyberNigma said

Posted: May 10th 2011 7:12AM (Unverified) said

Posted: May 10th 2011 12:23PM CyberNigma said

Posted: May 9th 2011 8:53PM Helghast102 said

Posted: May 9th 2011 8:59PM FreakSheet said

Posted: May 9th 2011 9:00PM akeso said

Posted: May 9th 2011 9:45PM Cap Morgan said

Posted: May 10th 2011 9:16AM HedonisticKai said

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