Call of Duty to Decline $250 Million This Year, says Pachter

In advance of Activision Blizzard's holiday fiscal report (expected on Wednesday), Wedbush Morgan Securities analyst Michael Pachter has chimed in, noting that the publisher probably generated sales around $2.24 billion with earnings per share of $0.44. "Massive sales of Call of Duty: Modern Warfare 2 (likely over 13 million units) were likely enough to offset lower than expected sales of DJ Hero, Tony Hawk: Ride, and Band Hero,"  he said.

For 2010, Activision Blizzard should still be in fine shape, but the Call of Duty juggernaut probably won't contribute as much as it did last year, and Guitar Hero isn't expected to boost the bottom line as much either. "...we expect the music genre to decline modestly (another $50 – 100 million) and expect Call of Duty to generate sharply lower revenue. Music games should continue to sell well to new console owners, and our forecast projects a 15% attach rate to new console purchases. Call of Duty’s phenomenal launch poses a difficult comparison, and we expect a year-over-year decline of $250 million for the franchise," Pachter said.

Where Activision Blizzard should gain a substantial boost, however, is from its Blizzard titles. This is where the Activision/Vivendi Games merger really shows its strength. "Activision’s core business remains strong, and we expect game shifts to allow it to grow market share next year. We expect sales of at least 12 million incremental PC software units for Blizzard games next year, with a bias that the number could be higher. This should drive revenues $400 – 600 million higher, with substantial margin contribution," Pachter noted.