Video game giant Activision Blizzard unveiled a 7% increase in revenues to a record $4.76bn (£3bn) in 2011, up from 2010's $4.45bn thanks in part to the sales success of the latest Call of Duty game.
The seemingly unstoppable Call of Duty series remains the publisher's biggest asset. Last November, the latest title in the franchise – Call of Duty: Modern Warfare 3 – broke records with $775m in retail sales within five days of its release. It later went on to reach the $1bn mark faster than any other entertainment franchise, including movies such as Avatar.
The subscription service, Call of Duty: Elite – which launched alongside Modern Warfare 3 to offer extra maps and other content to gamers – has also proved successful, attracting more than 7 million subscribers with 1.5 million choosing the paid-for premium membership.
The company's online fantasy game World of Warcraft retained its position as the biggest subscription-based title in the world. However, subscription rates are falling from a peak of 12m in 2010 to 10.2m at the close of 2011.
But as retail game sales stutter, digital titles such as World of Warcraft, as well as downloadable content such as Call of Duty map packs, are becoming increasingly important to the publisher.
Digital revenues were $1.6b in 2011, more than 34% of the total revenue. This is now an established industry phenomenon, with close rival Electronic Arts also attributing 40% of its annual revenues to digital content.
The big surprise has been the success of children's title Skylanders: Spyro's Adventure, which represents a whole new market for the games industry. Released last October, the software product itself is accompanied by a range of collectible action figures, which can share data with the virtual game world via a 'portal of power' peripheral.
Sales of the games and toys together stand at more than 20m, and Activision has just announced a sequel called Skylanders Giants.
The challenge for Activision will be to maintain this momentum in 2012, which is set to be a landmark year for the industry.
Two new pieces of hardware – the PlayStation Vita handheld games console and the Nintendo Wii U – will be launching, while a new Xbox is expected to be announced at the E3 event in Los Angeles in the summer.
Meanwhile, the market for subscription-based games such as WoW is being eroded by free-to-play fantasy titles, which earn money from in-game purchases.
