San Francisco: Activision Blizzard Inc's quarterly sales beat Wall Street expectations on Thursday as the video game publisher lost fewer World of Warcraft subscribers than it did a quarter ago.

Investors are closely watching subscriber numbers for World of Warcraft because the franchise is the company's most profitable business and generates a steady stream of monthly revenue from its millions of users.

The company ended the quarter with 10.2 million World of Warcraft subscribers, which is down from 10.3 million from the previous quarter. The net loss of 100,000 subscribers is smaller than the 700,000 subscribers it lost during the third quarter.

For the first quarter, the company expects EPS of 3 cents per share on revenue of $525 million (Dh1.92 billion), which falls short of analysts' expectations of EPS of 14 cents per share on revenue of $771.1 million.

Protracted slump

Activision's fourth-quarter sales for the three months that ended on December 30 fell 6 per cent to $2.4 billion. Analysts were expecting sales of $2.2 billion, according to Thomson Reuters I/B/E/S.

Adjusted for the deferral of revenue from digital content, Activision posted a profit of $725 million, or 62 cents per share, which beat Wall Street estimates of 56 cents a share.

The industry is struggling to pull out of a protracted slump. Video game sales were down 34 per cent year over year in January, according to data released by industry research house NPD on Thursday. Chief Executive Bobby Kotick told Reuters in an interview that Wall Street has over-reacted to declines. He said the content update of the game in late November helped keep players. "When we introduced the content patch we thought the numbers would stabilise and they have," he said in an interview.

Skylanders becomes a surprise hit

One of the surprise hits for Activision this year was its kids game Skylanders, which incorporated plastic toys with a console video game. It sold more than 20 million toys so far and CEO of Activision Publishing Eric Hirshberg told analysts on the conference call that the franchise was on track to being "a $1 billion [Dh3.67 billion] business".

In recent quarters, investors have been concerned the company is not diversified enough with its titles.