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Breaking News: Activision Makes Money!

| 4 Nov 2010 23:27
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Activision Blizzard announced that it pulled in $745 million this quarter and is using that money to make hats.

The videogame publishing behemoth that is Activision Blizzard continues to do well, despite the general economic downturn. For the quarter ending on September 20th, Activision reported that it brought in $397 million from game sales in addition to $348 million from subscriptions and licenses. Not surprisingly, that means that a lot of the income comes from the Blizzard half of the company. The importance of Blizzard's offerings for Activision's bottom line was also evidenced by how many times CEO Bobby Kotick mentioned its games.

"For the third quarter, we exceeded our net revenues and earnings per share outlook and delivered strong year-over-year growth. Our better-than-expected results are due to our leadership in online entertainment, including strong performance from Activision Publishing's Call of Duty franchise, and Blizzard Entertainment's World of Warcraft and StarCraft II: Wings of Liberty," Kotick said.

The interesting tidbit is that despite earning all of this money, the company only made $51 million in profit, which is still nothing to sneeze at but doesn't seem like an amazing percentage of nearly $750 million in revenue. The business of making games is expensive and the breakdown of said expenses is intriguing.

Costs in millions:

Product costs: $194

Software royalties and amortization: $61

Intellectual property licenses: $33

Cost of MMORPG sales: $61

Product development: $119

Sales and marketing: $111

General and administrative: $111

Total: $690

So given all of those expenses, it's not quite as impressive that Activision earned $745. Unless that's just creative accounting.

Also, what does MMORPG sales mean? Is that where the accountants hide the server costs?

Source: Activision Blizzard

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