Hits & Misses

(Business 2.0 Magazine) -- You've sold 3.3 million copies of Guitar Hero II, a game in which would-be Claptons try to match the furious fingering of onscreen musicians. So what do you play for an encore? If you're Activision, you strike a profitable new chord by selling songs to players who've grown bored with the tunes that came with the game. In April the company began offering three-song downloads for $6.25 - yup, more than double the price of songs on iTunes - and sold 300,000 in the first three months.

It's a model Activision is replicating throughout its lineup, selling maps for Call of Duty and packs of new heroes and villains for Marvel Ultimate Alliance. Analysts at Lehman Bros. are bullish on the play, noting that such "incremental content" carries higher margins than the games themselves. The company expects revenue from such micro-transactions to double from $6 million to $12 million this fiscal year.

Attention, Wal-Mart shoplifters

To many observers, Wal-Mart's most surprising recent move wasn't going green or stocking organic produce - it was last year's shift from a zero-tolerance policy on shoplifting to one that let some first-time offenders under 18 get off with a warning. Certainly the decision would've surprised the company's founder, who called shrinkage "one of the biggest enemies of profitability."

Well, when it comes to retail, never doubt Sam Walton. After the company announced that its first-quarter gross margins had fallen, Eduardo Castro-Wright, CEO of Wal-Mart Stores USA, cited higher shrinkage as a factor, adding, "We are concerned... and are investigating the cause." In July the company changed course and toughened its shoplifting rules, dropping the prosecution age for first-time pilferers down to 16.

Stunning turnaround

Two years ago Taser International's stock was pummeled by accounting issues and a raft of lawsuits filed by people who'd been zapped by its stun guns. But the company has made an electrifying comeback. This year it has settled all of its shareholder litigation and extended its winning record in product liability cases to 52-0.

Meanwhile, its fast-growing core business - sales to law enforcement agencies - rose 59 percent in the second quarter. And in July it made a major play for the consumer market with the C2, a $300 palm-size Taser that comes in designer colors like electric blue. The torrent of good news sparked a rally on Wall Street, with shares more than doubling to upwards of $17.

Book smarts

Until now, Ulysses Press has been the quintessential "long tail" book publisher. Its spirituality, fitness, and travel titles typically sell tens of thousands of copies over many years and editions. But last year Ulysses hatched an idea with a narrower window and more upside potential: a volume of predictions about the final installment of the Harry Potter series.

To write the book, Mugglenet.com's What Will Happen in Harry Potter 7, Ulysses cleverly recruited the teen wizards behind the series's No. 1 fan site, which draws 30 million page views a month. From the book's debut in November until the July release of Deathly Hallows, Ulysses shipped 335,000 copies and reaped more than $2 million in revenue - nearly the same figures that Ulysses pulls in from the catalog of 50 titles it typically publishes each year.

iBunny

In sales of alkaline batteries, Energizer runs a distant second to Duracell. But in the fast-growing market for alternative batteries such as the longer-lasting lithium-ions preferred for high-tech gadgets, it's running rings around the competition. A year ago Energizer barged its way into the cell-phone market with a pocket-size instant charger, called Energi to Go, powered by two of its lithium AAs.

Bear Stearns analysts credit the product for fueling Energizer's consecutive quarters of 20 percent growth in non-alkaline batteries, a market in which it now holds a 60 percent share. Energizer plans to maintain its momentum with the October debut of Energi to Go for iPods, which combines external batteries with a control chip to recharge the ubiquitous media players while they're in use.