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'Call of Duty' steers Activision sales in tough quarter for game makers

FILE PHOTO: Microsoft buys Activision, in New York City

(Reuters) -Videogame publisher Activision Blizzard beat Wall Street estimates for fourth-quarter adjusted sales on Monday, thanks to the success of the latest game in its "Call of Duty" franchise.

A string of launches in October and November, including

"Call of Duty: Modern Warfare II", "Warzone 2.0" and "World of Warcraft: Dragonflight" from the fantastical world of "Azeroth", helped the company hold the attention of the gaming community.

Activision's results are a bright spot as some of its industry peers including Electronics Arts, Take-Two Interactive Software and Xbox maker Microsoft have reported drab results.

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The video-gaming industry is feeling the squeeze of inflation as American households tighten their budgets. However, Activision has managed to largely avoid the issues plaguing the wider industry and keep the buzz around its news launches through its focus on building strong gaming franchises.

"Modern Warfare II" delivered the highest opening-quarter sell-through in the franchise's history and crossed the $1 billion mark within 10 days of its late-October launch, the company said.

"Our specialists have highlighted a flight to quality by gamers and that is what Activision Blizzard is experiencing," said Nicholas Cauley, an analyst at global research firm Third Bridge.

Activision expects its full-year adjusted sales to grow at least in high-single digits, bolstered by the launch of games including "Diablo IV."

Adjusted sales in the quarter ended Dec. 31 came in at $3.57 billion, compared with analysts' estimate of $3.16 billion, according to Refinitiv data.

Activision's $69-billion takeover by Microsoft is being challenged by the U.S. Federal Trade Commission and being investigated by EU authorities. Activision said the companies are continuing to engage with regulators reviewing the transaction.

Fourth quarter net income fell to $403 million, or 51 cents per share, from $564 million, or 72 cents per share, a year earlier.

(Reporting by Chavi Mehta in Bengaluru; Editing by Anil D'Silva)