November 6, 2008 / 7:33 AM / 9 years ago

"Guitar Hero" strikes right chord

LOS ANGELES (Hollywood Reporter) - It sure helps to have the “Guitar Hero” franchise. On Wednesday, two big video game companies reported quarterly earnings, with Activision Blizzard impressing investors while THQ depressed them.

Activision Blizzard gave most of the credit to “Guitar Hero” and its many spinoffs, and executives called the game one of the most successful entertainment products of all time, in any medium.

At last count, 24 million units had shipped worldwide. More will move ahead of the holidays, though executives were cautious not to set the bar too high given the sorry state of the economy.

Shares of Activision Blizzard soared 11% to $12.14 in after-hours trading when third-quarter results were announced.

Competitor THQ didn’t fare as well. In after-the-bell trading, its shares slid 16% to $5.49, well below their 52-week low.

Two women play the video game "Guitar Hero: Aerosmith" before the game release press conference in New York, June 27, 2008. REUTERS/Lucas Jackson

Despite all the enthusiasm, Activision Blizzard still reported a $108 million loss for the period, but that’s because of charges related to the merger of Activision and Blizzard. Without those charges, the company earned 7 cents a share while analysts expected 4 cents. Adjusted revenue was $717 million, crushing the company’s guidance of $620 million. The company also affirmed its full-year guidance and authorized a $1 billion stock buyback.

As for THQ, the company said its fiscal second-quarter loss was $115.3 million, up from a $7 million loss a year ago. Net revenue fell from $229.3 million a year ago to $164.8 million.

Besides “Guitar Hero,” Activision also noted strong sales of games based on the franchises “Call of Duty,” “World of Warcraft” and “Star Wars,” and executives expressed enthusiasm for upcoming games based on such movies as “Transformers,” “Madagascar: Escape 2 Africa” and “Monsters vs. Aliens.”

THQ gave props to its “Saints Row” franchise and its new “de Blob” franchise.

THQ also said it would, going forward, focus on fewer, higher-quality titles and rein in its cost structure, and the company lowered its fiscal 2009 financial guidance.

Reuters/Hollywood Reporter

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