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Activision Digital Revenue Now 53 Percent Of Total, Skylanders And Guitar Hero Underperform
Activision has reported its full-year earnings for 2015. The company posted a slight increase in sales, with growth in operating income and net income, also.
Revenues totaled $4.6 billion, up from $4.4 billion in calendar 2014. Of that, 47.5 percent was attributable to subscriptions (including World of Warcraft), licensing (Skylanders fruit snacks, Call of Duty t-shirts, etc.), and other revenue.
Operating income rose from $1.1 billion to $1.3 billion. Net income grew from $835 million to $892 million.
Activision says that Guitar Hero Live and Skylanders Superchargers both fell short of expectations. The Skylanders shortfall was attributed to increased competition in the market, with the introduction of WB’s Lego Dimensions. Activision advised on its earnings call that it expects further declines in 2016 for Skylanders and Call of Duty.
Guitar Hero weakness was aligned with a move to mobile devices. That game is also available on mobile devices, however.
As a result, Activision fell slightly short on its quarterly revenue target. This is despite the strong performance of Call of Duty: Black Ops III as the biggest game of 2015 in terms of revenue in the United States.
[Source: Activision]
Our Take
Activision is a freight train, but those Skylanders and Guitar Hero notes are concerning. The competition in the Toys to Life genre is becoming intense as every major competitor hits its stride. Activision created the genre, but it needs to work to hold onto it. As for Guitar Hero, given what we’re also seeing from Mad Catz, it seems like the plastic instrument rhythm genre might be over for good.
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