When it comes to making cool video games, Activision Blizzard aims to be sub-zero. The leading global video game publisher (especially in console and handheld games in the US) is best known for industry-dominating franchises such as World of Warcraft from Blizzard Entertainment, and Call of Duty through Activision. The latter division also makes games based on licensed properties from Marvel (Spider-Man and X-Men), DreamWorks Animation (Shrek), MGM and the UK's EON Productions (James Bond), Hasbro (Transformers). Other popular franchises include Diablo III and the children's hit Skylanders. Its games are produced for Sony's PlayStation, Nintendos' Wii, and Microsoft's Xbox, as well as for PC and mobile phones and tablets.
An international company, Activision Blizzard has more than 50 offices in about 20 countries across the Americas, Asia, and Europe. North America accounts for about half of all sales, while European gamers make up 40% and Asia accounts for the remaining 10%.
Like many major video game publishers, Activision Blizzard also maintains a distribution business that provides warehousing, logistical, and distribution services for its own games as well as for third-party publishers. The company's distribution operations are concentrated in Europe.
Sales and Marketing
The company’s games are sold internationally on a direct-to-retail basis, through third-party distribution and licensing arrangements, and through its wholly-owned European distribution subsidiaries: Centresoft in the UK and NBG in Germany.
One customer, GameStop, accounted for 10% of sales in 2012. North American retail customers include Amazon, Best Buy, Target, Toys R Us, and Wal-Mart.
Overall sales rose just 2% in 2012 to $4.8 billion, up from $4.7 billion in 2011. Both its Activision and Blizzard Entertainment gaming studios experienced year-over-year growth – sales at Activision were up 9% while Blizzard soared 29% due to the release of Diablo III and World of Warcraft: Mists of Pandaria. The Activision segment expects a better 2013 from the release of Call of Duty: Black Ops II, which launched in late 2012.
Activision Blizzard makes the most money from console games, which account for 45% of sales. PC games and other products (such as toys and accessories from the Skylanders franchise – a big moneymaker) come in second, with a quarter of sales. Online subscriptions account for another 20% of sales, but that platform suffered in 2012 as World of Warcraft's subscriber base fell from 10.2 million in 2011 to 9.6 million in 2012. (Of course, digital distribution of its software is less expensive and the company would prefer it to replace physical, disc-based products.) Finally, sales from the distribution and handheld segments each account for about 5% of sales.
Activision Blizzard is moving away from casual and music-based games, and -- like many of its competitors -- continuing to publish fewer, more focused titles, as fewer titles dominate more of both the company's and total industry sales. More than 80% of sales came from four game franchises in 2012 – military-focused first-person shooter Call of Duty, Diablo, the children’s hit Skylanders, and the subscription-based massively-multiplayer online role-playing game (MMORPG) World of Warcraft. This new reality has meant the cancellation of even once-hit franchise Guitar Hero, as the popularity of that genre has faded.
Both Activision's Call of Duty and Blizzard's World of Warcraft depend on a robust social gaming community for their success, so maintaining and enhancing that aspect is also a core component of the company's strategy. The company believes in focusing its efforts on online product innovations, such as additional online content and services creates more loyal gamers. In addition, it is exploring new business models for delivering content digitally, including offering free-to-play games with monetization through in-game microtransactions.
In 2010 Activision established a 10-year partnership with Bungie, Inc., the creators of the mega-hit franchise Halo, for exclusive rights to distribute and publish all games based on a new, future property from the developer.
French media giant Vivendi owns a controlling stake (about 61%) in Activision Blizzard. In 2013 Vivendi agreed to sell most of its shares in the company to Activision Blizzard and a management team-led group of investors. Vivendi will retain a 12% stake in the company. The deal, worth a total of some $8.2 billion, will help Vivendi repair its balance sheet and will give Activision Blizzard an increased level of operational independence.