Activision Blizzard’s chief executive Bobby Kotick would prefer console makers to focus more on their online networks than next-generation machines when the video game industry gathers for its big E3 convention next month.
In a sideways reference to Sony’s problems with its PlayStation Network and Nintendo’s plans to unveil its next-generation console, Mr Kotick told me during a call to discuss first-quarter earnings that the growth of digital sales was changing the game, so to speak.
“The industry is evolving – we had more than 50 per cent of our revenues from digital this quarter – and one of the things you realise is that there’s less of a need for new hardware when people become much more enthusiastic about the online components of the game,” he said.
“The platform used to be defined as just the box, but the platform today is really the box plus all the online services and capabilities.”
The Activision boss said the continued downtime of the PlayStation Network after a security breach was having an impact on sales, but not one that materially affected the company’s financial results.
The company released Call of Duty:Black Ops First Strike, a downloadable content pack with five new battlefields, on February 1 and saw it downloaded 1.4m times in the first 24 hours on Xbox Live.
A second content pack, Black Ops Escalation, was released last week on Xbox Live and Activision hopes to sell it in the PlayStation Store later in the quarter, if the PlayStation network can be restored.
Activision raised its guidance for the calendar year by $50m to $3.95bn in revenues and by 3 cents to 73 cents a share in profits.
“We’ve more confidence in consumer spending, we feel like some of that has stabilised and there are price cuts on the [console] hardware in the works,” said Mr Kotick.
The company should unveil details of Beachhead, a separate online platform for the Call of Duty franchise that has been two years in development, at E3 in Los Angeles next month.
The financial figures for the fourth and first quarters demonstrate how add-on digital sales can sustain a publisher after initial disk-based sales have faded.
When Call of Duty:Black Ops went on sale in the busiest holiday quarter, Activision recorded $1.88bn in sales in the retail channel or 73 per cent of total revenues, with $0.48bn in digital sales. In the quieter first quarter, retail sales were only $0.24bn or 32 per cent of revenues, compared to the $0.44bn in digital sales.
