Activision Inc.: Customer Service, Battle Of Bull Run To Boost Bottom Line

Oct. 12, 2006
Video game maker hopes that history and service will remedy revenue woes.

Who knew that the battles of Gettysburg and Bull Run would be good concepts for an interactive game?

Apparently Santa Monica, Calif.-based Activision Inc. did. The company, an IndustryWeek IW 50 Best Manufacturer for 2006, will release The History Channel Civil War game in time for the 2006 holiday-buying season.

In addition to learning about famous battles, gamers can choose which side to fight for -- the Confederacy or the Union.

Seemingly enamored with the past, Activision also is revamping old-school Atari games, including Decathlon, Grand Prix and Tennis.

Why the look back? Maybe because Activision's fiscal results were more robust in the past.

In August, the company announced the end of its first fiscal quarter for 2007, which ended June 30, 2006. Net revenues were $188 million compared to $241 million the year before. The company also reported a net loss of $18 million.

However, the company did better than expected.

"Activision delivered better-than-expected results for the first quarter and our balance sheet remains one of the strongest in the industry," said Robert Kotick, chairman and CEO of Activision in an Aug. 3 statement. "While there is still uncertainty with respect to the opportunities next-generation consoles will provide for the fiscal year, we remain confident about the long-term industry prospects and our ability to realize superior returns for our shareholders."

Kotick also spoke of long-term prospects at the Goldman Sachs Communicopia Conference held September 2006.

Noting that his company is the No. 2 publisher of videogames -- Electronic Arts produces two times the revenue in North American and three times the revenue on an international basis -- Kotick is "laser focused on closing that gap."

To do so, Activision will continue exploiting its franchises.

"We have a huge competitive advantage owning and controlling some of the world's most valuable franchises in the videogame industry," Kotick told conference attendees.

One such franchise is Tony Hawk, a game that simulates skateboarding that has generated over $1 billion in revenue according to Kotick. Currently there are nine Tony Hawk franchises.

Another way Activision is aiming to close the market-share gap: expanding in emerging markets.

Activision Inc.
At A Glance
Activision Inc.Santa Monica, Calif.Primary Industry: Computer softwareNumber of employees: 2,1492005 In ReviewRevenue: $1.4 billionProfit Margin: 9.84%Sales Turnover: 1.08Inventory Turnover: 22.70Revenue Growth: 48.35%Return On Assets: 14.28%

According to Kotick, Italy and Spain have seen 100% year-on-year increases in revenue. And the company's expansion in the Asian market also is growing. Indeed, Activision recently opened a publishing office in Seoul, Korea.

"The establishment of a Korean publishing office represents an important and integral part of our Asian expansion strategy," said John Watts, senior vice president and managing director for the Asia Pacific region, in a June 21 statement.

And to serve its many markets, Activision announced Oct. 3 that it appointed Brian Hodous as Chief Customer Officer. Hodous, who was group director and executive vice president of global sales at Cadbury Schweppes, will be responsible for Activision Publishing's global sales operations in North America, Europe and Asia Pacific.

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