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Activision (NASDAQ:ATVI) is joining the zombie video game market with its announcement of a "Walking Dead" video game. Based on the hit comic book started in 2003 by Robert Kirkman, and the popular television show on AMC, the game will actually become one of a few based on the TV version. Will Activision's entry be a blockbuster out of the gate, or just another small player?

Activision competitor Telltale Games released an episodic "Walking Dead" game in April for PC, Mac, the Playstation Network, and XBOX Live. The company focuses mainly on episodic storylines, and releases a new episode every month for users to download and play. The game can be purchased for PC and Macs on the company's website or Amazon (NASDAQ:AMZN). It retails for $24.99 on both sites. The Playstation and XBOX versions can be downloaded through their respective online gaming platforms. People who buy the game receive all five episodes for Season One, which includes:

  • Episode 1: A New Day
  • Episode 2: Starved For Help
  • Episode 3: Long Road Ahead
  • Episode 4: Around Every Corner
  • Episode 5: No Time Left

The game from Telltale sold over one million copies in two weeks on the market. Either the episodic gameplay, or the game's association with "The Walking Dead" TV show may be driving fans to eagerly shell out $25 to virtually fight off the undead. Telltale has already announced that it will be adding a second season of episodes to the game play.

So where does all of this leave Activision? The company isn't set to release a game based on the television show/comic book until 2013, and it hasn't divulged any specific details yet. The new game could be multiplayer, a massive multiplayer online role playing game (MMORPG), or a conventional console game. With its great team of game developers, Activision likely has something up its sleeve to compete either way with the Telltale game that's already on the market. If an episodic game from a small company like Telltale can sell over a million copies, the behemoth Activision could easily do more than three million.

A social game version of "The Walking Dead" is also coming to Facebook soon. The game is in testing right now and closed to the public. However, more than 449,000 people on Facebook "Like" the page, showing its strong pre-release popularity.

All of this publicity and game play bodes well for AMC (NASDAQ:AMCX), which airs "The Walking Dead" television series. To date, the network has aired 19 episodes over two seasons, with a third season slated for October. The new 16-episode season was signed shortly after Season Two began. The show picked up viewers in the second season, especially in the coveted 18-49 age demographic. Season Two's finale drew over 9 million fans, breaking the record for viewers of a cable drama.

Popularity of "The Walking Dead," along with new video games, could also help the company in its suit with DISH Network (NASDAQ:DISH). DISH dropped AMC and its other owned channels (IFC, WeTV) from its lineup after refusing to agree on subscription rates. With premiers of Breaking Bad coming this month, and Walking Dead later this fall, AMC might have the upper hand, however. DISH customers will likely complain if they can't see their favorite shows, and may consider switching services. I wrote about AMC last August, calling the recently spun off stock expensive in the high $30s. I was looking for a cheaper price. Now, I think shares of AMC are tradable. I also continue to believe the company will be bought out or merged with a company like Discovery Communications (NASDAQ:DISCA) or Lions Gate Entertainment (NYSE:LGF).

I remain bullish on shares of Activision Blizzard and continue to be a shareholder. Despite not gaining significantly for shareholders recently, I think the future is bright for the gaming company. I continue to hold my position, and offer caution to anyone thinking of creating a new position until the Vivendi spin-off or sale of Activision stock happens. Activision shares will see a couple of swings while this process happens, but hopefully, that will be over in enough time for the company to enjoy a strong holiday season in 2012.

Disclosure: I am long ATVI.