Skylanders series hits $1 billion in sales, but Activision must remember past mistakes

Skylanders

It was almost exactly one year ago during its annual earnings briefing that Activision Blizzard declared Skylanders its “next $1 billion franchise.” Activision already held the billion-dollar crown in gaming. Guitar Hero 3 was the first individual game to hit that milestone back in 2007, a feat later replicated by the company’s booming Call of Duty series with Call of Duty: Modern Warfare 2. The Call of Duty series has maintained its earning power in the market, but with the plastic instrument bubble burst, the Guitar Hero series on ice, and the World of Warcraft revenue machine slowing down, Activision has been desperate for a new winner. One year later, Skylanders hit its goal.

It still hasn’t matched the single game record set by Guitar Hero 3 or recent Call of Duty entries, but Activision Blizzard announced on Monday morning that the Skylanders franchise has hit $1 billion in total revenue. That includes sales of 2011’s Skylanders: Spyro’s Adventure and 2012’s Skylanders Giants, a number of mobile apps and games, and in excess of 100 million Skylanders action figures.

“We knew that the simple, but magical idea, of brining your toys to life in a video game could change both the video game and the toy industries, and more importantly, change the way kids play,” said Activision Publishing CEO Eric Hirshberg, “And this fall, we’re looking forward to delivering to fans out latest break-through innovation, Skylanders SWAP Force, which lets kids customize their own character, bringing toys to life on a whole new level.”

Skylanders SWAP Force, though, will have to face challenges in the market that its predecessors did not. For one, Activision Blizzard was expecting the Wii U to be a greater success and as such kept SWAP Force built for that technology—the Xbox 360 is the lead platform for development—and the publisher is already concerned about the decision. “[We] were somewhat disappointed with the launch of the Wii U,” said Activision Blizzard CEO Bobby Kotick during the company’s earnings briefing on Wednesday, “I think it’s a challenging environment this year, and one of the things we are concerned about is what the install base of hardware will be like for six-to-eleven year-olds.”

Hirshberg is also correct that Skylanders has changed the way kids play, and so Skylanders will no longer remain an unchallenged force in the market. Disney Infinity borrows Skylanders model of figures and games wholesale. Can Skylanders keep earning billions as its formulas is copied by others?

Activision Blizzard would do well to remember the past. Guitar Hero, another series whose wealth rested in the sale of physical add-ons, also had a market all to itself. When competitors like Rock Band entered the market, Activision escalated production so rapidly that it literally destroyed the instrument-based game market.

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