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Activision Increases Quarterly Profits As Online Revenue Grows

Major publisher Activision Blizzard saw its second quarter profits grow 12 percent year-over-year to $219 million, in no small part due to its "focused effort to increase digital revenues," which carry a higher profit margin.
Major publisher Activision Blizzard saw its second quarter profits grow 12 percent year-over-year to $219 million, in no small part due to its "focused effort to increase digital revenues," which carry a higher profit margin, the company said today. In the three-month period that ended June 30, total revenue was down 7 percent to $967 million, from $1.04 billion in the same quarter last year, but online revenue was actually up by 20 percent, providing a profit margin boost. Activision did not provide a specific financial breakdown between its digital and retail sales performance, but the company claimed that "Q2 sales from online channels exceeded retail sales for the first time" -- an extremely uncommon milestone for such a large publisher. Despite the profit growth, Activision didn't hit Wall Street analyst estimates, which send the company's stock price down around 6 percent late in the trading day. The Call of Duty franchise was a star performer for Activision during this quarter, with the company calling it the number one third-party franchise and the number three overall franchise by NPD's calculation. Modern Warfare 2's lucrative map packs, which recently contributed to a 20 million units sold milestone for franchise DLC, are very likely a big part of why Activision saw such a boost in digital revenues. Blizzard was also cited as a top performer, with its catalogue titles World of Warcraft: Wrath of the Lich King, World of Warcraft Battle Chest, and Diablo Battle Chest. Activision also trumpeted the 1.5 million units sold so far of StarCraft II, but those sales will not impact financials until the end of the current quarter. "Our quarterly results were fueled by continued strong consumer response to Activision Publishing's Call of Duty franchise and Blizzard Entertainment's World of Warcraft," said CEO Bobby Kotick in a statement. "For the first and second quarters, we outperformed our earnings per share outlook, and we grew our operating margin year over year for the six month period, driven by our focused effort to increase digital revenues." "There are clearly more opportunities than ever before to create great games and we are at the forefront of doing so," he added.

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