Activision Game Breaks First Day Sales Records

Activision Blizzard (NASDAQ: ATVI ) has learned to love the month of November, and not just because the annual flood of Black Friday-related holiday deals is always the most lucrative period from the video game industry. For the fourth year in a row, November has given Activision one of the biggest sales openings for a video game in the history of the medium, and in the case of Call of Duty: Black Ops , the single best opening day ever.  The latest game in the long-running military shooter franchise sold 5.6 million copies in its first 24 hours on the market, pulling in $360 million. This is the second consecutive year that Activision has broken day one sales; Call of Duty: Modern Warfare 2 , released on Nov. 10 th , 2009, sold 4.7 million copies within 24 hours, trouncing the record previously held by Microsoft (NASDAQ: MSFT ) and Bungie’s Halo series. The most recent entry Halo: Reach , released last September, had a record breaking day itself, selling 3.3 million copies on day one, earning Microsoft a cool $200 million in the process. Halo ‘s console exclusivity, though, has kept it from hitting the lofty heights of Activision’s behemoth. Before the release of Modern Warfare 2 , Halo 3 was the record holder for biggest sales debut, with 2.45 million in first day sales in 2007, but even that year Activision was making waves in November. While Guitar Hero 3 (released on October 28 th , 2007) didn’t match Halo 3 or any of the subsequent record breakers with sales during its first day on shelves, the game went on to become the first piece of game software in history to break $1 billion in sales. Black Ops big open couldn’t come at a better time for Activision Blizzard. The company reported strong third quarter earnings last week thanks to sales of summer releases like Starcraft II: Wings of Liberty that were stronger than expected and a strong uptick in new subscriptions for the company’s evergreen massively multiplayer online role-playing game, World of Warcraft . Warcraft should also help Activision Blizzard maintain its momentum through the holiday season when the latest expansion for the software, World of Warcraft: Cataclysm , releases during the first week of December. Going into 2011, though, ATVI may be at an impasse. Wedbush Morgan analyst Michael Pachter said back in August that he did not expect Black Ops to outsell Modern Warfare 2 on day one let alone in lifetime sales. Though Black Ops has exceeded those day one expectations, it’s still questionable whether or not it can match Modern Warfare 2 overall, a game that has sold in excess of 21 million copies since releasing last year and that, as of last month, was still charting in the NPD Group’s top ten sales. Considering that Modern Warfare 2 still controls a sizable player community on Microsoft’s Xbox 360 and Sony ‘s (NYSE: SNE ) Playstation 3, it’s doubtful that those players will flock to the new software en masse. There is one indisputable bright spot in the company’s future business plan. Activision Blizzard is expected to publish the first game under a 10-year contract with Halo creators Bungie Studios sometime in the next two years. The new franchise will create a new annual cash cow for Activision, and they will need it. Call of Duty may be strong now, but Activision has habitually oversaturated the market with their most popular franchises. Annual entries of inconsistent quality in the Tony Hawk Pro Skater and Guitar Hero franchises have ended up devaluing those properties beyond hope of rehabilitation. ATVI shares are up more than +8% from last September, trading around $11.50 today, but still down -8% from the company’s 52-week high. Given strong projections for its holiday software line up, now would be a good time to buy ATVI, but only if you plan to turn the stock around quickly come the beginning of the next fiscal year. As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
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