Activision Blizzard Inc. (ATVI) and Marvel Entertainment LLC, a subsidiary of
The Walt Disney Company (DIS) , continue to expand their partnership as
another comic book super hero is set to join Activision's gaming
bandwagon.
According to a recent Forbes article, Activision's High Moon
studio is in the process of developing an original game around
Marvel comic super hero character Deadpool. The game, earlier
unveiled by the company at San-Diego's Comic-Con in July 2012, is
scheduled to release some time in 2013.
Reportedly the game will be powered by Epic Games Unreal Engine
3 technology. The same technology has been used for Activision's
critically acclaimed franchise Transformers, also
developed by the High Moon studio.
Deadpool is not new to the video game world. Over the last few
years, the character has made a number of supporting appearances in
Marvel games such as X-Men Legends 2 , Marvel:
Ultimate Alliance and Marvel vs. Capcom 3 . However,
this will be its first appearance as the lead character in a
full-fledged video game.
Over the years, Activision has successfully transformed a number
of comic characters such as Spider Man and
Transformers into video games. Lately, the company has
been criticised for the lack of a new franchise. The inclusion of
Deadpool and another Marvel comic book series Hit
Monkey in its gaming portfolio will boost subscriber base
going forward.
Activision has been expanding its gaming portfolio by launching
games featuring characters from television series such as The
Walking Dead . Most recently, the company released Family
Guy: Back to the Multiverse , which is based on the comic
animated series Family Guy.
We believe that the addition of these new popular franchises
will boost Activision's top-line growth going forward. Moreover,
the expanding gaming portfolio will provide it a significant
competitive edge over Electronic Arts (EA) and Zynga (ZNGA) going forward.
Recently, the company had launched its much anticipated Call
of Duty: Black Ops II , which received tremendous response
from Call of Duty fans. We believe that Activision's recent
releases such as 007 Legends , Skylanders Giants
, Cabela's Dangerous Hunts 2013 , Cabela's Hunting
Expeditions and Transformers Prime will be
incrementally beneficial for the company's holiday season.
However, continued softness in the video game industry, limited
presence in the mobile gaming segment, higher adoption of
free-to-play games and significant competition are the major
headwinds going forward.
We maintain an Outperform recommendation on the company over the
long term (6-12 months). Currently, Activision has a Zacks #3 Rank,
which implies a Hold rating over the short term (3-6 months).
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