Activision Blizzard Inc.
's (
ATVI
) Call of Duty ("COD") franchise has set the cash register
ringing once again. According to Chart-Track and retail customer
sell-through information, the sales of the recently-launched
Call of Duty: Black Ops II
exceeded $500 million on the very first day of its release.
This marked Call of Duty's fourth consecutive year of breaking
its own first-day sales record. Activision's preceding games such
as
Call of Duty: Modern Warfare 3
,
Call of Duty: Black Ops
and
Call of Duty: Modern Warfare 2
had raked in $400 million, $360 million and $310 million,
respectively, on the first day of their releases.
Going by the first day sales figure, the $1 billion sales
target looks easy and we believe that the game will likely set
another record in this category as well.
Call of Duty: Modern Warfare 3
had achieved this feat in 16 days. Moreover, with Metascores
(provided by Metacritic) of 83, 82 and 80 for the Xbox360,
PlayStation 3 and the PC version, respectively, the game should
significantly increase the cash inflow for Activision.
The Call of Duty franchise is touted as one of the most valued
entertainment properties and has already generated more than $6
billion in sales (life to date). The release of
Call of Duty: Black Ops II
will not only augment the franchise's popularity, but will also
fill the coffers of the company during the holiday season.
Apart from
Call of Duty: Black Ops II,
Activision has a strong product pipeline for the upcoming holiday
season, which is expected to drive the top line in the near term.
Activision expects its recently-launched titles namely
007 Legends
,
Skylanders Giants
,
Cabela's Dangerous Hunts 2013
,
Cabela's Hunting Expeditions
and
Transformers Prime
to drive its holiday sales. Moreover, games such as
Wipeout 3
and
Family Guy: Back to the Multiverse
would be incrementally beneficial for the company's top-line
growth.
As for the overall video game industry, Activision's
Call of Duty: Black Ops II
,
Microsoft
's (
MSFT
)
Halo 4
and Ubisoft's
Assassin's Creed III
are expected to lend support to the dwindling sales of the video
game industry.
Halo 4,
which was released in early November, had recorded first day
sales of $220 million. Moreover,
Assassin's Creed III,
released in late October, had sold 3.5 million copies of the game
in the first week of its release. Therefore, the video game
industry sales during the holiday season and the coming months
largely depend on these games.
While Activision Blizzard will benefit from its attractive
products, the continued softness in the video game industry
coupled with the sluggish macroeconomic conditions and
Activision's limited presence in the mobile and social gaming
segment remain headwinds going forward.
Thus, we have a Zacks #3 Rank for Activision Blizzard, which
implies a short term Hold rating.
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