Wins for Call of Duty and Skylanders
Citing its own numbers, along with data from research firm NPD, Activision announced that Call of Duty had posted a sixth straight year of leading the console video game sales charts in the U.S. The latest CoD installment, Advanced Warfare, also finished 2014 as the top-selling game in the world.
Meanwhile, Skylanders: Trap Team successfully defended Activision's lead in the kids' games segment. That title beat out Disney's (NYSE:DIS) Infinity 2.0 to finish as the No. 1 franchise in the category for the year. It also pushed the Skylanders franchise to over $2 billion of toys and game revenue since Activision launched the brand in 2011. The game publisher didn't provide absolute numbers, but it did say that Trap Team notched 17% higher sales than Infinity 2.0 could manage. "As the creators of the 'Toys-to-life' category, we are thrilled to continue to lead it for the third straight year," Activision Publishing CEO Eric Hirshburg said in the press release.
What it means for investors
It's no surprise that Advanced Warfare dominated 2014, but Call of Duty's ongoing popularity is still good news for investors. For one, it confirms the franchise is healthy even as it enters its second decade. Advanced Warfare was the first game in the brand to benefit from a three-year, rather than a two-year, development cycle. The results show the extra investment in time and money paid off. Since all future titles in the series will have the same extra development time, it also raises the bar for competitors such as Electronics Arts' Battlefield brand. Finally, investors can look forward to Advanced Warfare padding its sales and profit tally this year as new expansion packs and downloadable content are released.
But it's arguably even more impressive that Skylanders fended off Disney's challenge for another year. After all, Infinity 2.0 had a lot going for it in 2014. It was a sequel and also boasted some of the most popular Marvel superhero characters. Moreover, as the king of consumer product sales, Disney had the best shot of any company of securing enough retail shelf space to push Skylanders aside. But Activision came out on top in 2014 despite those challenges. And in the meantime the competition has grown the category, which is good news for both companies.
A fourth-quarter surprise?
Investors last heard from Activision's management in early November when it boosted the company's official 2014 outlook on both sales and profit. Revenue is expected to come in at $4.8 billion for the year, which would be just shy of 2012's record $5 billion haul. Fourth-quarter earnings were targeted at $0.86 a share, which would bring the year's total to $1.35, or about 40% above the prior year. But with two of its biggest franchises performing above expectations, investors could see even better results when the company posts its earnings on Feb. 5.