Hearthstone helps offset sagging profits as Activision Blizzard's digital business booms

Digital sales make up over a third of quarterly revenue

Hearthstone helps offset sagging profits as Activision Blizzard's digital business booms

Activision Blizzard's quarterly financials show a continued trend toward embracing digital games, as profits and revenue both dipped.

Compared to the same quarter last year, profits for Activision Blizzard (NASDAQ:ATVI) were down 35 percent - falling to $293 million - while revenue slid down 16 percent, falling to $1.1 billion.

The silver lining to this picture is that Activision Blizzard's digital games have hit record sales numbers, thanks in no small part to titles like Hearthstone: Heroes of Warcraft and its long-running MMO World of Warcraft.

These digital titles combined to make up a full 34 percent of Activision Blizzard's total revenue for the quarter.

Horde tough

Speaking on what appears to be a transitional period for his company, CEO Bobby Kotick was upbeat.

"Our better-than-expected performance was driven by record digital sales in Blizzard Entertainment's franchises, including World of Warcraft, Diablo, and Hearthstone: Heroes of Warcraft, a new free-to-play game which had already registered more than 10 million users as of its March 11, 2014 launch on Windows and Mac," Kotick began.

"In addition to plans for new content for Hearthstone: Heroes of Warcraft and the release of Diablo III: Ultimate Evil Edition on console later this year, Blizzard Entertainment expects to launch World of Warcraft: Warlords of Draenor, which is already one of the fastest selling expansions in the franchise's history based on pre-sales, in the second half of 2014," he concluded.

Hearthstone made its iPad debut in mid-April, and has yet to see a release for iPhone or Android.

Looking up

As a result of Activision Blizzard's "better-than-expected" first quarter, the company revised its financial outlook for the year ahead.

Annual revenue guidance was bumped up slightly to $4.2 billion for the year - from $4 billion - while expected profits were adjusted to $667.5 million, up from a previously-expected $570 million.

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