A strong business plan can count for more than a great product, even if you're selling video games.
Activision Blizzard (Nasdaq: ATVI) just presented pleasantly positive sales and profit numbers for its first quarter of 2010, driven mostly by the acclaimed Call of Duty game franchise. The $1.3 billion of net sales was a 33% improvement over the year-ago period and GAAP earnings more than doubled to $0.30 per share.
The latest Call of Duty title scored some important wins: It was the best-selling game from an independent game publisher this quarter in both Europe and the U.S., and a related expansion package broke records in download volume when it was released for the Microsoft (Nasdaq: MSFT) Xbox 360. Call of Duty is now the main focus of Activision's operations, and is managed as a business unit all its own. There are multiple development teams working on this brand across multiple consumer channels and yesterday's winners, like the Guitar Hero franchise, are now yesterday's news.
Electronic Arts (Nasdaq: ERTS) and Take-Two Interactive (Nasdaq: TTWO) have no shortage of excellent titles, but what makes Call of Duty different, according to Activision CEO Bob Kotick, is the business model he built around it.
Kotick drives Call of Duty home with strict retail execution, fresh online gameplay, and exploration of untouched sales markets. It's not personal -- it's all business.
The strategy is working, though Activision's stock hasn't exactly followed suit. Will this fanatical focus on Call of Duty change that story, too? Perhaps, but I wouldn't bet on it. Soldier on and discuss the strategy in the comments section below.
