Acti-Blizz Q4 FY13: digital nets $1.54B, WoW subs slide

Activision-Blizzard has released its Q4 and year-end fiscal year 2013 results, and reported net revenue of $4.86 billion for the calender year, compared to $4.76 billion year-over-year.

Change in our pocket goes jingle-lingle-ling

For the calendar year, digital revenues were $1.54 billion and represented 32% of the company’s total revenues.

During Q4, ending December 31, 2012, the company reported revenues of $1.77 billion, compared with $1.41 billion year-over-year.

The firm announced yesterday that the Skylanders franchise has surpassed $500 million in revenue, and that over 100 million toys have been sold.

“We are very pleased to report that Activision-Blizzard delivered the best performance in its history," said CEO Bobby Kotick in a prepared statement. "With better-than expected net revenues, record operating margins and record earnings, and over $1.3 billion in operating cash flow, we continue to set the industry success bar. I would like to thank our incredibly talented employees around the world for their passion, drive and creativity, which continues to fuel our success.

“As we look to 2013, we will continue to invest in our established franchises, as well as several new properties. In the short-term, we expect to continue delivering strong profitability, but below our record setting 2012 performance, due to a challenged global economy, the ongoing console transition and a difficult year-over-year comparison because of Blizzard’s record-shattering Diablo 3 success in 2012.”

During his opening remarks on the call to investors this evening, Kotick said the firm will continue to invest in Skylanders, as the firm is confident it will continue to be successful despite the "slow adoption rate" of Wii U.

He also said the firm plans to continue to invest in Blizzard's MOBA, Blizzard All-Star, its "Titan" MMO, and Bungie's Destiny. This support and investment, also includes Skylanders and Call of Duty for FY14.

Kotick has said he expects development costs for next-gen to increase, as new tech always causes an increase in costs, and this "transition will not be an exception."

He also said the firm was "somewhat disappointed with the launch of the Wii U," and it is something "we are concerned about," despite the success of Skylanders.

"We were somewhat disappointed with the launch of the Wii U, and I think it's a challenging environment this year," said Kotick. "And one of the things we are concerned about is what the installed base of hardware will be like for 6 to 11-year-olds. But we have a lot of confidence in the [Skylanders] franchise for the long-term.

"I think we're delivering another great product this year, but [Wii U] it's something we are concerned about."

As far as Internet-enabled TVs were concerned, Kotick said: "It's hard for us to compete with Internet TVs," so the firm would have to have a look at what it can do to compete in the 99-cent and free field.

Business Highlights

In both North America and Europe, Skylanders Giants was the number onr best-selling kids’ title in dollars for the fourth quarter. Additionally, for the calendar year, in North America and Europe combined, Skylanders Giants was the number five best-selling game in dollars, and Skylanders Spyro’s Adventure was the number four best-selling game in dollars.

"We were somewhat disappointed with the launch of the Wii U," and it is something "we are concerned about." - Kotick

As of December 31, 2012, the Skylanders franchise has generated, life-to-date, more than $1 billion in worldwide sales, and through January 2013, Activision has sold more than
100 million Skylanders toys worldwide.

For the calendar year, Blizzard Entertainment had two top-10 PC games in North America and Europe. Diablo 3 was the number one best-selling PC game at retail, breaking PC game sales records with more than 12 million copies sold worldwide through December 31, 2012, and World of Warcraft: Mists of Pandaria was the number three best-selling PC game at retail.

New content for both games is currently in development.

"Diablo is extremely important to Blizzard and we'll continue to invest aggressively to support the franchise and its community," said Blizzard boss Mike Morhaime. "Looking ahead, the next major content update for World of Warcraft is already in testing and should reach players in the coming weeks.

"The development team continues to stick with the plan of more frequent content updates in the wake of the expansion launch, applying lessons that we've learned from past expansions."

As of December 31, 2012, Blizzard Entertainment’s World of Warcraft remains the number one subscription-based MMORPG, with more than 9.6 million subscribers - which is down from the over 10 million subs reported for Q3. At the time, subs were up from 9.1 million reported at the end of Q2 2012 in August.