Digital game sales grow

Read time 2min 00sec

Video game-maker Activision Blizzard raised its full-year profit and revenue forecasts, and reported better-than-expected quarterly results, helped by growth in its high-margin digital business.

Video game publishers are shifting to the lucrative digital business from physical sales of games as consumers shift from consoles to playing on smartphones and tablets.

Revenue from Activision Blizzard's digital business rose 53.3% in the first quarter ended 31 March from a year earlier, helped by robust online sales of "Destiny" and its "Call of Duty" franchise.

Last month, the company launched "Hearthstone: Heroes of Warcraft" on iOS and Android mobile phones.

Rival Electronic Arts (EA) has already made smartphone versions of its top-selling games "Madden NFL" and "FIFA". EA reported better-than-expected results on Tuesday, helped by strong digital sales and the release of "Battlefield Hardline".

In May 2006, Activision Blizzard bought RedOctane, the video game publisher behind the popular Guitar Hero franchise, which has been played by more than 40 million gamers.

Activision Blizzard had said earlier it planned to launch the next generation of Guitar Hero later this year and the game would be available across consoles, smartphones and tablet devices.

"It's a good story," Wedbush Securities analyst Michael Pachter said, adding Guitar Hero would "add a lot" to the company's slate.

Activision Blizzard, also known for its "World of Warcraft", "Skylanders" and "Diablo" franchises, raised its full-year adjusted profit forecast to $1.20 per share from $1.15 earlier.

Analysts were expecting a profit of $1.18 per share, according to Thomson Reuters.

The company also raised its full-year adjusted revenue forecast to $4.43 billion from $4.40 billion earlier.

Activision Blizzard reported adjusted revenue of $703 million in the first quarter, beating the average analyst estimate of $655.4 million.

The company's net income rose to $394 million, or 53 cents per share, in the first quarter, from $293 million, or 40 cents per share, a year earlier.

On an adjusted basis, it earned 16 cents per share, well above the average estimate of 7 cents.

Up to Wednesday's close, Activision Blizzard's shares had risen about 15% this year. The stock was little changed in after-market trading.

See also