May 6, 2015 / 8:29 PM / 2 years ago

Game maker Activision Blizzard raises forecast as digital sales grow

Visitors look at a presentation at the ActiVision Blizzard exhibition stand during the Gamescom 2013 fair in Cologne August 21, 2013. REUTERS/Ina Fassbender

(Reuters) - Videogame maker Activision Blizzard Inc raised its full-year profit and revenue forecasts and reported better-than-expected quarterly results, helped by growth in its high-margin digital business.

Videogame publishers are shifting to the lucrative digital business from physical sales of games as consumers shift from consoles to playing on smartphones and tablets.

Revenue from Activision Blizzard’s digital business rose 53.3 percent in the first quarter ended March 31 from a year earlier, helped by robust online sales of “Destiny” and its “Call of Duty” franchise.

Last month, the company launched “Hearthstone: Heroes of Warcraft” on iOS and Android mobile phones.

Rival Electronic Arts Inc has already made smartphone versions of its top-selling games “Madden NFL” and “FIFA”. EA reported better-than-expected results on Tuesday, helped by strong digital sales and the release of “Battlefield Hardline”.

In May 2006, Activision Blizzard bought RedOctane Inc, the videogame publisher behind the popular Guitar Hero franchise, which has been played by more than 40 million gamers.

Activision Blizzard had said earlier that it planned to launch the next generation of Guitar Hero this fall and that the game would be available across consoles, smartphones and tablet devices.

“It’s a good story,” Wedbush Securities analyst Michael Pachter said, adding that Guitar Hero would “add a lot” to the company’s slate.

Activision Blizzard, also known for its “World of Warcraft”, “Skylanders” and “Diablo” franchises, raised its full-year adjusted profit forecast to $1.20 per share from $1.15 earlier.

Analysts were expecting a profit of $1.18 per share, according to Thomson Reuters I/B/E/S.

The company also raised its full-year adjusted revenue forecast to $4.43 billion from $4.40 billion earlier.

Activision Blizzard reported adjusted revenue of $703 million in the first quarter, beating the average analyst estimate of $655.4 million.

The company’s net income rose to $394 million, or 53 cents per share, in the first quarter, from $293 million, or 40 cents per share, a year earlier.

On an adjusted basis, it earned 16 cents per share, well above the average estimate of 7 cents.

Up to Wednesday’s close, Activision Blizzard’s shares had risen about 15 percent this year. The stock was little changed in after-market trading.

Reporting by Subrat Patnaik and Anya George Tharakan in Bengaluru; Editing by Simon Jennings

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