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Activision Will Beat Analyst NPD Revenue Estimate Today

By Perry Rod, Published: December 10th, 2009 10:27 AM CST

ANALYSIS - Wedbush Morgan analyst Michael Pachter is predicting that NPD will show that publisher Activision Blizzard is going to bring in 455 million in U.S. revenue in the month of November.  Pachter also predicts that 6 million units of Call of Duty: Modern Warfare 2 will be sold.

These two predictions do not make sense, considering November 2008 numbers.  At that time, as the financial crisis hit the market, Call of Duty and Guitar Hero accounted for around two thirds of overall Activision revenue.  One-third, or around 110 million was catalog titles.  Pachter is suggesting in his research that the new Call of Duty will bring in around 360 million revenue and their entire catalog and newer titles will only account for 95 million more.

The reason that does not work out is that Activision had four high price point titles on the market in November: a Cabela's shooter game at $120, Band Hero at $200, Tony Hawk Ride at $120, and DJ Hero at $120.  Each of these games is on several SKUs.  His suggestion is that none of these titles will break 100,000 units sold combined, since the rest of the catalog should also account for a reasonable amount of sales.

Let's say Mr. Pachter is overestimating Call of Duty's sales and it should be more like 5 million or 300 million in revenue (which is more likely given the information that is available).  If we put the high price point titles at around 250,000 unit sales each (which would still be a massive failure at retail), then we get around 100 million revenue.  Since catalog was 110 million last year, it would be a stretch to drop that estimate to 55 million to get to that 455 million number.

In other words, look for Activision Blizzard to exceed Mr. Pachter's estimate.

Disclosure: author has no position in Activision

Related: ATVI

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