Updated from 10:05 a.m. EDT

The computing gaming sector got a shot in the arm Thursday when Activision ( ATVI) forecast better-than-expected first-quarter results thanks to strong performance from its Call of Duty and Guitar Hero titles.

Video game makers such as Activision, Take-Two Interactive ( TTWO) and Electronic Arts ( EA) have been struggling with tighter consumer spending as the recession has reached gamers' wallets. Even Activision, which has largely avoided the worst of the economic downturn, reported a $72 million loss in its fourth-quarter results, underlining the challenges facing the industry.

The Santa Monica, Calif.-based firm had initially forecast first-quarter revenue of $860 million and earnings of 8 cents a share, but now says that it is "tracking ahead" of its prior outlook. Excluding charges, the company had expected revenue of $550 million and 3 cents a share. Analysts had estimated revenue of $569.32 million and 4 cents a share.

"Global consumer response to the Call of Duty and Guitar Hero franchises and Blizzard Entertainment's World of Warcraft remains strong despite the challenging economic environment," said Activision CEO Robert Kotick in a statement. "We exceeded our quarterly financial goals as the video game market continues to grow and our franchises continue to perform."

Kotick added that the upswing in demand bodes well for upcoming Activision titles such as Transformers, X-Men Origins: Wolverine and Ice Age: Dawn of the Dinosaurs and Guitar Hero Smash Hits.

Investors responded positively to Activision's rosier outlook. The stock was recently up 1.9% to $10.22.

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