The unprecedented success of
Activision Blizzard Inc.
's (
ATVI
) blockbuster title
Call of Duty: Modern Warfare 3
(MW3) has prompted the company to further extend its offerings. The
hugely popular game, with certain upgraded contents, will be
available in the form of downloadable content through
Call of Duty Elite
, Activision's online portal.
Modern Warfare 3 Content Season for Call of Duty Elite
will be available for the
Call of Duty Elite
's premium members on Xbox LIVE starting from the 24
th
of this month. Subsequently at a later stage, this downloadable
content will be available on other platforms as well. The premium
members will get upgraded and new multiplayer maps, Liberation and
Piazza, with new game modes, special ops missions and much more
until September.
In all, there will be 20 upgrades that will be available for
downloading in a space of nine months (Jan - Sept). Activision has
always excelled at promoting
Call of Duty
, which has turned into a money-making franchise. The
Call of Duty
community has more than 30 million gamers and has already raked in
more than $6.0 billion in sales (life to date).
MW3's Popularity & the Strategy
Call of Duty: MW3
has touched the $1 billion mark in sales in the first 16 days of
its release and there seems to be no end to its popularity.
Activision expects to sell more than 25 million units of Modern
Warfare 3, which is expected to boost revenue for the upcoming
quarter. The preliminary figures bode well with Activision's
revenue projection of $2.17 billion for the current quarter.
The company's intention of expanding in the online segment was
apparent from the launch of
Call of Duty Elite
. Digital gaming is now a rave. Moreover, given the popularity of
this particular franchise, Activision surely could not have missed
out on the opportunity of grabbing the rich dividends that MW3's
online presence will offer. Activision has experienced growth in
the digital segment, which accounted for 62% of its third quarter
revenues.
Apart from the original title, the
Call of Duty
franchise has always offered content that could be downloaded
online. Not only did this keep fans happy, but it also generated
additional revenue for the company.
While the release of
Call of Duty
games every year might eventually tire gamers due to the over
exposure of the game, Activision has plans of releasing two games
of the same franchise in 2012.
Our Take
We believe that the release of Activision's famous franchise
games and their subsequent content enhancements will continue to
benefit the company in the forthcoming quarters, driving its
top-line growth.
We expect that the company's continued initiatives to expand in
the digital/online segment will bring in rich dividends for the
company over the next 12-18 months. A healthy product pipeline for
the holiday season will help Activision tap the strong demand,
thereby driving its top-line growth.
However, Activision continues to face tough competition from
Electronic Arts Inc. (
EA
)
and
Take-Two Interactive Software Inc. (
TTWO
)
, which will act as a headwind going forward.
Moreover, a gloomy macro-economic environment in North America
and Europe, increasing competition and weak video game results
during the last 12 months, as well as Activision's limited presence
in the social and mobile gaming platforms will act as headwinds in
the near term.
In the long run, we maintain our 'Neutral' rating. We currently
have a Zacks #3 Rank for Activision Blizzard Inc., 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
TAKE-TWO INTER (
TTWO
): Free Stock Analysis Report
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