"Guitar Hero" has helped turn Activision Inc. into an entertainment-industry hero.
The popular video game helped the Santa Monica company swing into the No. 1 spot in video game sales for the first half of 2007, according to data released Monday by the NPD Group, a research firm.
Activision became the first independent publisher this decade to knock out Electronic Arts Inc., ringing up $397.8 million in sales of games for consoles and hand-held game players from January through June, compared with EA's $365.7 million.
The lead could be fleeting: Redwood City, Calif.-based EA is widely expected to pull ahead in the more crucial second half of the year.
But Activision executives said the company's achievement gave validation to its strategy: grow market share by aggressively acquiring development studios, winning licenses to make games based on movies such as "Transformers," and cultivating homegrown franchises including "Call of Duty" and "Tony Hawk."
"We've never been better positioned as a company to take advantage of the growth in the video game industry," said Bobby Kotick, Activision's longtime chief executive. "For 17 years, I've focused on becoming the No. 1 video game company, and we're getting a lot closer to achieving that objective."
Of course, it helped that EA was undergoing a lull, with many of its blockbuster titles -- such as "Medal of Honor: Airborne" and "Madden NFL 08" -- not due out until later this year.
Moreover, Activision's sales were pumped up by the "Guitar Hero" franchise, which lets players simulate performing in rock concerts. Chief Financial Officer Thomas Tippl said the runaway hit would be "the fastest Activision brand in the company's history to hit $1 billion in sales."
Investors have noticed. Activision's shares have jumped 54% over the last year, falling 7 cents to $18.12 on Monday. EA shares have gained 15% from the year-earlier period, ending Monday at $51.85, down 2 pennies.
An EA spokeswoman did not respond to a request for comment Monday.
"Activision is doing a lot of things right," said Michael Pachter, an analyst with Wedbush Morgan Securities. "They're growing really fast, and they're being opportunistic."
One opportunity came last year, when Activision acquired RedOctane, the Sunnyvale, Calif.-based publisher of "Guitar Hero," for a reported $100 million.
"When that deal was done a year ago, a lot of people were scratching their heads," said John G. Taylor, managing director of Arcadia Investments Corp.
