Activision Blizzard, Inc. (NASDAQ:ATVI) stocks soared after the company announced that World of Warcraft had added 200,000 new subscribers in the last quarter after more than a year of declining numbers. Total subscribers were down from 9.6 million at the end of 2012 to 7.8 million at the end of 2013 and fourth quarter profits had fallen 51%, but investors still seemed optimistic about the bump in WoW’s user base, reports Ian Sherr for The Wall Street Journal.
New subscriptions probably won’t repeat this quarter
Fourth quarter net income was down from $354 million ($0.31 per share) in 2012 to $174 million ($0.22 per share) in 2013 and revenues fell from $1.52 billion to $1.77 billion. Activision forecast adjusted income of $1.26 per share on $4.6 billion in revenue for 2014, about 1% below consensus. Activision Blizzard, Inc. (NASDAQ:ATVI)’s stock price has risen from $16.89 to $19.5 since earnings were announced.
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The new subscriptions are partly attributable to excitement about a new chapter in the game, announced back in November, and partly just a seasonal gain as interest in video games goes up over the holidays generally. Activision Blizzard, Inc. (NASDAQ:ATVI) CEO Bobby Kotick warned investors not expect the same gains again this quarter.
Activision Blizzard has strong 2014 lineup
Activision Blizzard, Inc. (NASDAQ:ATVI) investors must include some hardcore gamers, because the disappointing news (both lower than last year and lower than expected) only makes sense if people are really excited about the games that are set to come out this year.
Kotick told analysts in a conference call that a strong product lineup should drive profits up this year, including new installments for the hit franchises WoW, Call of Duty, and Diablo, as well as a new line of Skylanders. There is also a lot of buzz around Hearthstone: Heroes of Warcraft, a freemium (free to play, extras cost money) online card game currently in open beta. Hearthstone has a similar backstory to Wow and, more importantly, everyone with a WoW account will automatically have a Hearthstone account on Battle.net when the game goes live.
Kotick also said that the upcoming sci-fi shooter Destiny will be Activision Blizzard, Inc. (NASDAQ:ATVI)’s “next billion dollar franchise.” WoW, Diablo, and Call of Duty have all become mainstays in the gaming world, with each installment being an almost guaranteed hit, so adding another major franchise to its stable would go a long way to reversing Activision’s slide in profitability.