Activision Blizzard Inc.
) recently released
Call of Duty Modern Warfare 3
Content Collection #2
, the new downloadable content ("DLC") pack for Xbox LIVE gamers.
The content pack will feature new missions behind enemy lines,
armed with new weapons in new locations. Moreover, the content pack
also lets players drive the 'Abrams-class tank', adding to the
versatility of the DLC. Activision had earlier released
Call of Duty Modern Warfare 3 Content Collection #1
in March 2012.
Looking back, Activision's content pack phenomenon started in
February 2011, when it released the first content pack -
Call of Duty
fans. Ever since the success of
, the company released subsequent content packs (Escalation,
Annihilation and Rezurrection) for
Call of Duty
. All these releases positively contributed to the company's top
line and the recent release is expected to do the same for the
Electronic Entertainment Design and Research ("EEDAR"), a video
game market research firm, estimates that given the increasing
popularity among the Xbox 360 and Play Station 3 console owners,
DLCs will generate $1.0 billion in sales in 2012. Activision, with
its famous franchises and timely content pack releases, is expected
to grab a chunk of the revenue from this segment.
Despite these factors, Activision reported a 27% drop in
revenues from the Digital online channel in the recently concluded
quarter, which among other items also includes downloadable content
revenues. Alongside other factors like a low subscriber base for
World of Warcraft
, the segment was also negatively impacted by lesser number of DLC
However, Activision is focused on building a number of
franchises that will drive its top and bottom lines in 2012 and
beyond. The company's initiatives to strengthen its
Call of Duty
portfolio through the launch of new versions and content packs
would benefit the company in the long run. Additionally,
Activision's foray into the mobile gaming market is expected to be
a long-term positive.
However, the softness in the video game industry and
Activision's limited presence in the social gaming market coupled
with significant competition from Electronic Arts Inc. (
Take-Two Interactive Software Inc.
) keep us Neutral on the stock over the long term.
Currently, Activision Blizzard has a Zacks #3 Rank, which
implies a 'Hold' rating in the short term.
ACTIVISION BLZD (ATVI): Free Stock Analysis
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