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A Hole Burned in Billions of Pockets Print E-mail
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Written by Christophor "SuperGuido" Rick   
Tuesday, 27 November 2007


It's no surprise that some game companies are posting record results of late. GameStop revenue was up 283%, Nintendo is one of the the highest valued companies in Japan and perhaps the world and now, Activision has boosted its expected revenue. The company is raising its net revenue and earnings. Activision expects record net revenues of $1.225 billion and earnings per diluted share of $0.66 just for the third quarter of 2007. Meanwhile, for the full fiscal year 2008, Activision expects record net revenues of $2.30 billion

That's a lot of games in a lot of homes and a lot of empty pockets. Didn't I hear something about games not being profitable and that companies HAD TO charge $60 or more for a game? Didn't someone try to tell us that recently? Only earlier this year, wasn't it? Well apparently the millions they're putting into game development is turning into billions for them. A nice safe venture it would seem.

For the month of October, Activision was the #1 U.S. console and handheld publisher, increasing its U.S. market share to a record 28.7%, according to The NPD Group. The company's performance was driven by the success of Guitar Hero III: Legends of Rock, which was the #1 U.S. best-selling title across all platforms, despite only one week of sales during the month.

Robert Kotick, Chairman and CEO, Activision, Inc., said, "We are well on our way to delivering our 16th consecutive year of revenue growth and the most profitable year in our history. We are confident that the third quarter of fiscal 2008 will be the largest and most profitable quarter ever. Guitar Hero III: Legends of Rock and our newly released Call of Duty 4: Modern Warfare already are two of the biggest entertainment titles this year. Due to the strong consumer response to our slate through October and strong retail sales over the Thanksgiving weekend, we are raising our financial outlook for the December quarter and the fiscal year."

Kotick added, "As an organization we continue to exceed our growth goals. This year, we expect that we will generate operating margins in our peak cycle target range, which is about two to three years ahead of plan. We continue to strengthen and grow our franchise portfolio and internal development resources with new brands like Guitar Hero and TRANSFORMERS and the acquisition of Bizarre Creations. This combined with our market momentum and the expanding installed hardware base worldwide, should enable us to continue growing our top and bottom line results through the remainder of this console cycle."

SIXTEEN years of revenue growth. Growth that comes at a price.  Oh and from the reviews I'm sure they put a lot of work into Transformers. And do they know where all this newfound wealth comes from? Well they probably have an inkling. 

I suspect it's the $60 they HAD TO charge for all the new games they are making. If it had been $55 or $50 they never would have hit $2.3 Billion I'm sure...

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Last Updated ( Tuesday, 27 November 2007 )

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