Activision Blizzard Inc.
(
ATVI
) is toying with the idea to bring its most successful and
widely-played massively multiplayer role paying game (MMO),
World of Warcraft
(WoW), to mobile devices, according to Forbes. Though its
subscription base dwindled to 10.2 million in December 2011 from
over 12 million in December 2010, yet the game boasts of one of the
highest subscriber bases among the present generation of MMOs.
The
World of Warcraft
has been competing with
Electronic Arts Inc.
's (
EA
)
Star Wars: The Old Republic
, which has also garnered a huge publicity and significant
subscriber base since its release in December 2011. Moreover, the
emergence of free to play MMOs by social game makers like
Zynga Inc.
(
ZNGA
) has also been eating into the market share that Activision
enjoys.
According to ABI research, mobile gaming is expected to generate
$16.0 billion in revenues by 2016, a massive increase from
approximately $5.0 billion reported in 2011. On the other hand,
advertising spending on mobile games is expected to reach
approximately $900.0 million by 2015. With the growing popularity
of hand held devices, Activision's decision to go mobile seems to
be a prudent idea in the present context.
Additionally, if
World of Warcraft
goes mobile, gamers will get to play the game on the move, leading
to increased popularity and subscriber base, in turn generating a
recurring revenue stream for the company. This also might prompt
other big publishers to follow suit and provide some of the biggest
names of MMO through mobile for the avid gamers.
We expect that the company's continued initiatives to expand in
the digital online business segment will pay rich dividends over
the next 12-18 months. A healthy product pipeline for 2012 will
also boost Activision's top-line growth in the long term.
However, we believe that Activision's limited presence in the
social and mobile gaming platforms will also impact its performance
in near term. We expect Activision to continue to face significant
competition from both EA and Zynga in the mobile gaming sector
going forward.
Thus, we maintain our Neutral rating over the long term (6-12
months). Currently, Activision has a Zacks #3 Rank, which implies a
'Hold' rating in the short term (1-3 months).
ACTIVISION BLZD (
ATVI
): Free Stock Analysis Report
ELECTR ARTS INC (
EA
): Free Stock Analysis Report
ZYNGA INC (
ZNGA
): Free Stock Analysis Report
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