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Activision Issues Earnings Warning

Filed under: General Gaming
Posted by Jeremy on December 15, 2005 11:26 AM
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A mere nine months ago, we reported that Activision reported record profits. Ah, how quickly the winds of prosperity can shift into, well, winds of hardship and disease. OK, disease is made up. According to many sources, including Gamespot, Activision has issued an earnings warning saying, "we are disappointed that our earnings performance will come in substantially below our previous outlook." What's the reason for this paucity, this dearth, this famine of profits? (hey, I'm having fun with the thesaurus today)

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Well, the first move is to blame it on lackluster video game sales in general. In a related story, NPD Group issued a revised report stating that year on year sales for November dropped 18%! The reasons for this drop in sales is complicated but has mostly to do with the fact that there are no "blockbuster" games for the Holiday season. Also, the current gen of consoles are drawing their last breath and people are reserving buying new games/consoles until the full slate of new ones is available next year.

Activision itself is a victim of the no "blockbuster" problem. Their hopes were relying on the western-themed action/adventure/shooter, Gun, the second in the True Crime series, True Crime: NYC, and the 83rd Tony Hawk game, Tony's Hawk's American Wasteland.

Although I'm still very interested in playing Gun, it has only sold 225,000 copies and has received mixed reviews, especially when it comes to the reportedly rushed Xbox 360 version. I played and wrote a walkthrough for True Crime: Strees of LA, enjoyed the game (Nick Kang and his Pumas), but have no desire to play NYC. Apparently others have felt the same way with only 73,000 copies sold. Tony Hawk games are simply becoming too repetitive and I have a feeling the series will soon die out. I played THAW for a good 6-8 hours and at the end of it, I wanted nothing to do with Tony Hawk games anymore...and I enjoyed all previous Tony Hawk's. It was simply too complicated. Give me a level, give me goals, and let me have at it. Don't make me talk to people to find out what I need to do and don't make it mandatory for me to visit the clothing shop...this isn't a Mary Kate and Ashley Olsen game.

Despite the rather emaciated Holiday lineup, there was a bright spot for Activision: the Call of Duty series. The Xbox 360 version is the best selling Xbox 360 game so far. The only problem is with only 326,000 Xbox 360s sold thus far, it's not much of an installed base on which to have your best game. However, the console version of the Call of Duty 2, endearingly titled, Big Red One, is in third place overall for game sales in Oct/Nov.

Activision's troubles aren't going to be isolated. Other publishers will feel it too. Until the next gen console cycle kicks off late next year, we're going to see sales continue to fall. However, the good days of GTAs and Halos will be upon us before we know it.






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