Activision unseats chief rival EA
Activision Inc. said Thursday it had rocked into the No. 1 position in video game sales in North America last year, becoming the first company to unseat Electronic Arts Inc.
The Santa Monica-based game company snagged 17.7% of the market for games played on consoles in 2007, besting EA’s 15.2% share, according to research firm NPD Group Inc. The figures do not include sales of games played on computers, where EA maintained its leadership position.
Activision, which is merging with the game unit of French media conglomerate Vivendi, also reported strong growth in quarterly revenue and profit Thursday.
Sales of two games -- “Call of Duty 4: Modern Warfare” and “Guitar Hero III: Legends of Rock” -- helped Activision’s fiscal third-quarter sales jump 80% to $1.48 billion from a year earlier. Profit in the quarter, which ended Dec. 31, soared 90% to $272.2 million, or 86 cents a share, from $142.8 million, or 46 cents a share.
The “Guitar Hero” franchise has generated more than $1 billion in sales in North America since its launch two years ago.
“It won’t be easy to maintain the No. 1 position,” Activision Chief Executive Robert Kotick said in an interview. “EA is a tough competitor.”
Activision’s shares gained 38 cents to $26.29 in regular trading, then rose 61 cents in after-hours trading after the earnings release.
Although Activision claimed bragging rights for North America, EA, based in Redwood City, Calif., remained the largest game publisher in terms of worldwide sales, with revenue projected to be as much as $3.59 billion in the fiscal year that ends March 31.
Activision expects sales of $2.65 billion in the same time frame.
Kotick said he was confident his company would beat EA on another metric: profit.
An EA spokesman declined to comment. CEO John Riccitiello said during an earnings call last week that he was not pleased with EA’s lost market share and was working to improve the company’s performance.
“We’ll certainly be the most profitable game publisher company for the foreseeable future,” Activision’s Kotick said.
That’s because much of the company’s sales are generated by games based on intellectual properties it owns, said Colin Sebastian, an analyst with Lazard Capital Markets.
“Their strength is largely from two franchises: ‘Call of Duty’ and ‘Guitar Hero,’ ” Sebastian said. “And these are wholly owned and internally developed franchises, which means they are also higher margin.”
Some games, such as “Spider-Man 3” and “Transformers: The Game,” require Activision to pay licensing fees or share in the games’ profits.
Activision said Thursday that it expected to complete its $18-billion marriage with Vivendi’s game unit by the end of June. The deal would combine Activision with Blizzard Entertainment, an Irvine-based developer of “World of Warcraft,” an online game that boasts more than 10 million subscribers who each pay about $15 a month to play.
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