Reuters Edge

Activision CEO confident in tough economy

SAN FRANCISCO (Reuters) - Video game publisher Activision Blizzard Inc ATVI.O sees opportunity in international markets and in developing stronger content for the hot-selling Wii gaming console, the company's chief executive said.

In an interview with Reuters on Monday, Chief Executive Robert Kotick expressed confidence in both the company’s prospects and in the overall strength of the video game sector, which has held up relatively well in a brutal economic downturn.

“There’s probably more opportunity for our industry than just about any other industry I can think of other than maybe bankruptcy lawyers,” Kotick joked.

He said the sector is healthy in part because money-strapped consumers see good entertainment value in video games. Kotick said sales would improve further if console makers cut prices, although he doesn’t expect such a move.

“The price on platforms today has still not gotten down to mass-market price points and I think when you’re in the economic circumstances that the world has found itself in, there really is a difference between a $199 game system and a $299 game system.”

Even as demand in other industries has plunged, video games have shown resilience. U.S. sales of video game hardware and software rose 13 percent in January from a year earlier, according to market researcher NPD.

Armed with a $3 billion cash pile, Kotick said Activision plans share buybacks along with select acquisitions of intellectual property and development talent.

Although the company he leads was formed through the merger of Activision with Blizzard, the former games unit of France's Vivendi SA VIV.PA, Kotick was skeptical of any further large-scale consolidation in the gaming sector, even though valuations have been hammered in the economic downturn.

Kotick believes Activision can still find growth, especially overseas. “We’re just scratching the surface of opportunity as a publisher in Europe. There’s a lot more that we can do.”

“In China and Korea, Blizzard has had great success but Activision products have not really had any success there.”

The company’s Blizzard Entertainment arm is responsible for the massively-multi player online game “World of Warcraft” -- which has 11.5 million subscribers -- while the Activision side publishes hit franchises like “Guitar Hero” and “Call of Duty.”

Kotick also sees an opportunity to develop stronger games for Nintendo's 7974.OS Wii console.

“In the past we approached the Wii as an extension of what we were doing on PlayStation and the Xbox and I think we can do a better job of creating original content for the Wii, and I think you’ll see more of that this year.”

Activision plans to launch three franchises in 2009, the first-person shooter game “Singularity,” the action game “Prototype” and a still-to-be named racing game.

Activision’s shares have outperformed its rivals, who have been shedding jobs and delaying games.

The company's shares are up around 20 percent this year, while rival Electronic Arts' ERTS.O stock is down around 5 percent. Shares of smaller publisher Take Two Interactive TTWO.O are down around 18 percent, while THQ Inc's THQI.O stock has tumbled around 45 percent.

Shares of Santa Monica, California-based Activision closed down 15 cents at $10.18 on the Nasdaq.

Reporting by Gabriel Madway; Editing by Anshuman Daga