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Activision is rocking the gaming world today with the news that it’s in the works to buy Candy Crush Saga publisher King for $5.9 billion, but the company also had a monster third quarter.
The Call of Duty publisher revealed that it generated $1.04 billion in revenues during the three-month period ending September 30. That is down 11 percent from the same period last year when the company generated $1.17 billion, but it is well beyond Wall Street consensus. Analysts were predicting that Activision would generate around $951.73 million. The experts also expected the company to bring in earnings of 16 cents per share, but Activision bested that with 21 cents per share. This means that, even before acquiring King, Activision is already one of the most lucrative companies in the space. But once the deal goes through, and Candy Crush Saga is sitting alongside World of Warcraft, Destiny, and Call of Duty, Activision may have more ways of making in money from games than any other company on Earth.
The company credits its digital business with leading it to a strong quarter. Games like the home console sci-fi shooter Destiny, the Hearthstone: Heroes of Warcraft card battler, and Heroes of the Storm online strategy game have kept players engaged and spending on digital good, which inherently have a higher profit margin than physical discs thanks to in-game purchases and steady streams of new content.
On top of the growing digital business, Activision noted that Call of Duty experienced growth. Its revenues increased “by a double-digit percentage year-over-year” as Black Ops, Black Ops II, and Advanced Warfare all sold well. Advanced Warfare in particular is the top-selling game on Xbox One and PlayStation 4, and its Supply Drop items — which players can buy for real money — continue to generate income for Activision. One game that the publisher left off this list of successful Call of Duty games is Call of Duty: Ghosts. That was the last entry in the series from original developer Infinity Ward, and many fans consider it a recent low point for the series.
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Activision also saw serious contributions to its bottom line from the aforementioned Destiny along with Skylanders and World of Warcraft — although the Blizzard MMO is continuing to lose steam. It is now down to just 5.5 million subscribers.
Looking forward, Activision expects to close the deal with King, launch a new expansion for World of Warcraft, and debut the Warcraft film from director Duncan Jones. And for the rest of the calendar year, Activision is raising its revenue guidance. The company previously predicted it would generate $4.6 billion in revenue for 2015, but it now think it is more likely to bring in $4.65 billion.
With the gift-giving holidays still to come along with the new Call of Duty: Black Ops III later this week, the publisher should have a clear path to achieving those goals.
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