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Activision Q2 earnings, Guitar Hero III launch break records

[UPDATE] Rhythm game sells over $115 million in week after launch--over one-third of publisher's entire July-September earnings; company expecting $1B holiday quarter, reveals three new titles.

When MTV bought Harmonix for $175 million in September 2006, many feared for the future of the Guitar Hero franchise. They shouldn't have. Today, Activision reported that Guitar Hero III: Legends of Rock minted over $100 million in North American retail sales in the seven days after it went on sale on October 28. [UPDATE] On Tuesday, Activision revised that figure upwards to $115 million, and touted the fact it doesn't include numbers from Europe, where the game will go on sale November 23.

"It is, by far, the most successful launch in Activision history," said Activision CEO Bobby Kotick of the well-reviewed game, which was internally developed by Neversoft and released for the PlayStation 2, PlayStation 3, Xbox 360, and Wii. (PC and Macintosh version are due out later this month.)

Indeed, Guitar Hero III's seven-day sales were nearly one-third of Activision's revenue for its entire second fiscal quarter. Today the Santa Monica, California-based publisher reported that it took in $317.7 million in net revenue from July 1-September 30, an increase of 69 percent over the same period in 2006. Despite the record-setting figure, net Q2 income was just $700,000. That gave investors no per-share return, but was a marked improvement over the $24.3 million the company lost during the same quarter in the prior year.

Though striking, the discrepancy between Activision's high earnings and low profit has a reasonable explanation. Sales were stoked by the launch of the tepidly reviewed movie tie-in Transformers and strong sales of the Guitar Hero franchise, including the debut of Guitar Hero: Rocks the 80s. However, income from sales was apparently gobbled up by Activision's late September purchase of Bizarre Creations, developer of the acclaimed Project Gotham Racing series.

The Guitar Hero III launch--which Kotick touted as "one of the biggest in entertainment history" to analysts in a postreport conference call--caused Activision to revise earnings projections for the October-December period. The company now expects $1.05 billion during its fiscal third quarter, thanks to the aforementioned rhythm game and this week's launch of Call of Duty 4: Modern Warfare (PC, PS3, 360, DS). For the full fiscal year ending March 31, 2008, the company now predicts it will take in roughly $2.07 billion in net revenue.

Speaking with analysts after the call, Activision executives revealed that the company would be continuing its relationship with Shrek maker DreamWorks Animation by making a game based on the 2008 animated film Monsters versus Aliens. The game will arrive on unspecified platforms during the publisher's 2009 fiscal year alongside two new superhero games which have yet to be announced. Activision executives also told analysts that the company is "looking at a number of new vectors to take the Guitar Hero franchise for next fiscal year," and said it will increase the number of original recordings used in the series.

135 Comments

  • delcidanddarth

    Posted Nov 14, 2007 12:07 pm GMT

    Not directly related to the story above, but to the comments below. I pre-ordered Rock Band a couple of months ago at EB, and when I recently went in to pick up CoD4:MW, they said that I was lucky to have pre-ordered Rock Band. They don't expect to have any more bundles until March of next year. Although, they did say the game would be available, just not the bundle (i.e. the instruments are in short supply).

    If this information is true, there's only one way we can interpret this. The popularity of Rock Band outpaced production of the instruments. The only thing we need to know now is how high was their production level. If it is really low, then even a small amount of popularity will cause this to happen. If it is really high, then Rock Band might break the GH3 "record". It's probably somewhere in-between, but I'm just dishing on what I was told.

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  • delcidanddarth

    Posted Nov 14, 2007 11:56 am GMT

    Do they mean the most successful Activision launch game in American history? I thought Halo3 sold over $150 million in the first day?

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  • Lumenadducere

    Posted Nov 8, 2007 6:01 pm GMT

    Same here, greater_bird...

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  • greater_bird

    Posted Nov 8, 2007 4:54 pm GMT

    I really hope this isn't the start of millions of rehashed Guitar Hero expansions coming out all year. I think the game is great, but I suspect it's about to be diluted into a lot of derivative versions, just because it's seen as a money spinner for its company. :-(

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  • Flame_Co

    Posted Nov 8, 2007 5:43 am GMT

    meh I know I liked GH3 so whoopdy do..............

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  • Noobberry

    Posted Nov 7, 2007 7:55 pm GMT

    wow, now i have to get this game

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  • Darkside2501

    Posted Nov 7, 2007 2:05 pm GMT

    I'm getting it today!

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  • killercortez88

    Posted Nov 6, 2007 6:52 pm GMT

    I do have to say, the Guitar Hero franchise isn't what its cracked up to be anymore. GH III does have great songs, and a terrific online mode, but anyone who is everyone that has played Guitar Hero in the past is looking for a change. I think Rock Band is going to exceed those expectations. Its doing so many things differently this time around that it will feel like playing Guitar Hero one again

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  • Lonely_VG_Nerd

    Posted Nov 6, 2007 6:10 pm GMT

    vass86, you are DEAD WRONG! Hear me? D-E-A-D W-R-O-N-G! GH the best music/rythm game created! Everyone, quit insulting GH because it rules!!!!!!!!!!!!! And if you don't agree, you know nothing! Hahahahahahahahahahahahahahahahahahahahahahahahahahahahaha!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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  • vass86

    Posted Nov 6, 2007 1:58 pm GMT

    guitar hero is easily the most overated game franchise ever. the "career" mode is crap and all the gameplay boils down to is practice for a while then play songs over and over.

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  • RaiKageRyu

    Posted Nov 6, 2007 1:34 pm GMT

    Activision can't keep doing this.

    People will tire sooner or later.

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  • monty_4256

    Posted Nov 6, 2007 1:21 pm GMT

    lol iron man and wolverine are those games obviously

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  • Chirico_Cuvie

    Posted Nov 6, 2007 12:41 pm GMT

    Enough of this one game a year crap. I've waited a year for GH III and I beat it in a few hours, now it will sit until I feel like playing a game I've beaten again. The core game is done, now make a ton of DLC for the rest of the year and make titles like the 80's disc every few months. Look what Singstar does, THAT'S what Guitar Hero should be doing with content.

    But that's what Rock Band is doing, so Guitar Hero's days are over come November 20 unless they get on the ball and start doing more than what little they have been so far. Harmonix created it, and they've shown what the next step is, don't follow the heir to the thrown, follow the king.

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  • pete_merlin

    Posted Nov 6, 2007 12:27 pm GMT

    boom!

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  • StillWingless

    Posted Nov 6, 2007 11:46 am GMT

    Wow, between GH3 and CoD4, Activision is having a great holiday retail season.

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  • mcbride69

    Posted Nov 6, 2007 11:40 am GMT

    Guitar Hero Acoustic Id love to play that Drum Hero?!?!
    Guitar Teacher that teaches you to play guitar, theyll just have to change the buttons

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  • nephthyswandere

    Posted Nov 6, 2007 11:27 am GMT

    Am I the only person left who doesn't really think this game is any fun?

    *crickets*

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  • XBASX

    Posted Nov 6, 2007 11:21 am GMT

    Another week like this and ...

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  • VegetaMaelstrom

    Posted Nov 6, 2007 10:47 am GMT

    {Activision executives also told analysts that the company is "looking at a number of new vectors to take the Guitar Hero franchise for next fiscal year,"} ---- Let the extreme, hardcore milkage that Activision is known for officially begin.

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  • Chief_Kuuni

    Posted Nov 6, 2007 10:40 am GMT

    doesn't matter it's not like I'm gonna get the game even though I'm sure it's really fun

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  • smarb001

    Posted Nov 6, 2007 10:29 am GMT

    halo 3 pwns more

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  • Jshaw71

    Posted Nov 6, 2007 10:26 am GMT

    HA take that halo 3 ugh yea' ok, I am good now, anyways, was there any doubt this would happen? not from me, not with a killer song list, and the clout the game had behind it, I dunno why ppl where worried...

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  • mill-z

    Posted Nov 6, 2007 10:20 am GMT

    i never got gh3 being slash or w/e i didn't even care what char i was in gh2 hahah and i can't wait for rockband with some songs being original recordings no more of those horrible covers from the GH series

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  • Zerosumgame

    Posted Nov 6, 2007 9:35 am GMT

    Look like it is gonna break Halo 3's record by all counts.

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  • polsci1503

    Posted Nov 6, 2007 9:28 am GMT

    they can keep this series going forever - total cash cow. Plus, there is plenty of room for Rock Band. I bet we see even more music games released than we've seen in the past.

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  • longhair72

    Posted Nov 6, 2007 9:26 am GMT

    chazzx21
    It is funny you say that because apart from the online play GH3 is a rehash if Gh2.
    Don't get me wrong i own and enjoy the game a lot but i d not understand why GH3 falls in a different category from Madden wich would be get a tried and true formula improve a bit on it and people will buy itt.

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  • qiwihead

    Posted Nov 6, 2007 9:24 am GMT

    chazzx21: Not to bash the GH franchise, but how is 4 games in just 2 years not "cashing in" on a franchise? GH 1 certainly was innovative, but I haven't read anything about GH3 to indicate that there's much innovation beyond what the previous GH games have offered. Still, it's nice to see that the series is still going strong. I hope this doesn't hurt Rock Band's sales, though. That game is where the real innovation is in music games this year.

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  • chazzx21

    Posted Nov 6, 2007 9:09 am GMT

    I hope this along with Wii sports sends a strong message to EA that people are willing to buy ideas that are innovative and not just rehashes or cash ins of a license. But as long as people keep eating up madden I doubt it.

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  • MoeSyslak

    Posted Nov 6, 2007 8:31 am GMT

    I'm just gonna wait to get it for xmas. Cod4 and Ass Creed will keep me busy for a long time.

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  • ftjx

    Posted Nov 6, 2007 8:22 am GMT

    I'm actually surprised to see this game succed at all! Why you ask; Rock band. guess a lot of people prefers to play by themselves...........

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  • codyt95

    Posted Nov 6, 2007 7:47 am GMT

    ok gh and gh2 was good but gh3 and gh80s ok

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  • Digital_Hitman

    Posted Nov 6, 2007 7:31 am GMT

    I think the quote was.."Halo 3 made more money than any product in three days than anything sold on the planet before." GH is selling great, but READ the article. It set records for Activision not for anyone else. Halo is casual...and hardcore...so is GH.

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  • Pedro7_2000

    Posted Nov 6, 2007 7:31 am GMT

    GH3 rocks, but Halo 3 rocked it harder. Either way, I'm happy to own both.

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  • Karkanof-Ops

    Posted Nov 6, 2007 7:14 am GMT

    No Halo 3 had 170 million in its first day. It is the record for highest entertainment sales in a single day. Halo sold a lot more than GH3.
    So your wrong about that "bardkieran"

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  • bardkieran

    Posted Nov 6, 2007 6:58 am GMT

    So, that means that GH3 had a more successful launch than Halo 3? How does that correlate the hardcore vs casual market difference? I mean, GH3 surely isnt a "hardcore gamer" game, its more of a party/casual game in its own genre. Of course, Halo 3 was only on one platform, and GH3 is on 4. Anyway, Im not surprized, GH games are fun to play. This will be the first one I'd own, as I dont have a PS2, so I couldnt play GH 1 or 2 in my own house. Will pick up GH3 for the Wii after Christmas shopping is done!

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  • playwiz

    Posted Nov 6, 2007 6:43 am GMT

    rock band wont be as good...since it is not concentrating on one instrument only...ive never played GH but i think that ill start with guitar hero 3 for my ps3

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  • sun_spirit

    Posted Nov 6, 2007 5:28 am GMT

    I just hope it really has a good set-list, I've seen some really guff songs on it so far, but some are okay!

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  • diablobasher

    Posted Nov 6, 2007 5:19 am GMT

    Through Fire and Flames and Number of the Beast make this an auto buy. Not to mention Paranoid and other amazing songs. Anyone who says it blows has a very narrow taste in music. Admittedly i would like some hendrix and whatnot in here, but it's still awesome.

    Could do with less Slayer though, IE none.

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  • zidan4000

    Posted Nov 6, 2007 3:45 am GMT

    not a weird thing from this game , i easily put more than 4 hours on the demo and had a lot of fun with it , and all that only with a joystick , im just wondering what will happen when i play the full game with a guitar , xbox360 will get the lights of death if that happens (you know what i mean)
    cant wait to buy this game , i just feel its somehow hard but everything will go easier with training.

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  • Montrealien

    Posted Nov 6, 2007 3:32 am GMT

    Oh, and if it was not for Guitar Hero and Harmonix, Red Octane would still be pushing cheap Dance Dance rip offs...

    I don t like Red Octane that much...does it show?

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  • Montrealien

    Posted Nov 6, 2007 3:29 am GMT

    I got one thing to say, if they could have actually met demands they would have sold much much more. Red Octane screwed up the manifacturing of this title on the PS3 and te Wii incredibly and even though they broke records, they had a chance to make more money, they are such a crap company. Hope activision can straigthen them up and get rid of the original Red Octane importers...cause that is all they are, importers...

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  • rallykupojr

    Posted Nov 6, 2007 3:19 am GMT

    GH3 has My Name is Jonas, which automatically makes it the best GH to date.

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  • MSG-Deathscythe

    Posted Nov 6, 2007 3:03 am GMT

    loved gh3, but the boss battles could've been better. the song list was not everything i've dreamed of but was above average for my taste. it was nice to play as tom morello or slash too. i don't know about rock band. i play the drums and it looks like i'll smash the peripheral in under 2 days. i think it is realeasing too close to gh3 and high profile releases of the holiday season too. it probably would do better if it would release mid-next year instead.

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  • sofalover

    Posted Nov 6, 2007 2:45 am GMT

    I love GH1, GH2 and GH80's but I think GH3 blows, big time.

    The track listing has a few good songs but overall I'm very dissapointed with the direction it is going in.

    Looks like the future is with Rock Band.

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  • raghraghragh

    Posted Nov 6, 2007 2:15 am GMT

    @hamorage

    I meant some downloadable packs along side the more 'mainstream' ones. Just to have a mess around with. trust me, i'd be all over a Metallica pack with preferably) Master and Lightning tracks in it. that'd be freakin' sweet. Mmm...Fade to Black and Creeping Death.

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  • NyGin07

    Posted Nov 6, 2007 2:01 am GMT

    they should just chill and not realese to many now or people will get sick of them (TONY HAWK)...maybe one every other year?

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