- Solid physical sales of "Call of Duty" and impressive success of console-game bundles suggest the title could post high-single or double-digit sales growth in Q4.
- This would be perfectly in line with the out-of-consensus forecasts I made in October.
- I reiterate that Activision's Q4 revenue guide ($2.2B, implying a 3% revenue decline year-on-year) does not make any sense and that a strong beat is likely.
Why 2015 Could Be A Great Year For Activision Blizzard
- Activision Blizzard has several sources of revenue as a result of its well-diversified product portfolio.
- The company has launched new promising franchises able to protect its future in the video-game industry.
- Its top two franchises could continue to enjoy large benefits in the next few years thanks to their well-established brands and competitive advantages.
- ATVI leads video game sales with Advanced Warfare in November.
- AW still down 49% compared to MW3, marking the third straight year of declining YOY sales for Call of Duty titles.
- Weak November figures lead to some downgrades on company prospects by investors.
- ATVI's World of Warcraft celebrated its 10th anniversary in November, as game shows signs of life following successful Draenor release.
- Still commands 34% market share, but facing stiff MMORPG competition thanks to alternative pay models.
- Some areas that might need fixing: subscription-based pay model, greater emphasis on casual gamers.
- Activision has reported revenues of $753 million as compared to the $691 million in revenue generated in the same period last year, beating the expectation of analysts.
- EPS grew by more than 10 cents as the company saw sales driven by the launch of the new and current gaming franchises.
- MMORPG is experiencing tough competition. However, FPS games remain a safe haven for the company. FPS expansion in China is planned with the launch of the Call of Duty community.
- The new releases as well as releases under old titles prove that Activision not only plans to maintain its control on the market but hopefully expand its consumer base.
- Stock highly likely to perform well in the coming months on the back of better results for the upcoming holiday season and new releases driving sales.
Activision First-Read: Call Of Duty And World Of Warcraft
- ATVI released its CoD and WoW initial sales commentary suggesting positive y/y growth.
- GTA V sales and Battlefield expansion in March'15 could trigger upside.
- I remain a buyer of ATVI.
- ATVI impressed on earnings, owing largely to strong future expansion predictions.
- It may be the first US video game company to solve the $8B riddle of the Chinese PC gaming market.
- Warcraft set to post two straight quarters of subscription growth, thanks to Draenor expansion.
Activision Q3 2014 Review: Solid Results On Destiny; Call Of Duty To Drive Q4WestEnd511 • Nov. 12, 2014
- ATVI reported a solid beat on both EPS and EBITDA.
- Destiny and WoW continue to attract subs.
- Q4 pipeline looks promising. I reiterate my bullish view.
Activison Blizzard Returns Year After Year For Gamers And Investors
- ATVI has been paying and increasing dividend payments since 2011.
- ATVI's total return for investors has outpaced its industry by a comfortable margin.
- The diversity of its franchises adds a margin of safety for the company in terms of sales and investors in terms of earnings.
- ATVI continues to beat earnings estimates set by analysts.
- ATVI has a plan and is making great strides in expanding to different sources of revenues.
- Activision Blizzard reported solid third quarter results along with an increased full year guidance.
- Fourth quarter guidance may prove to be conservative.
- Activision faces easy comps in the first half of 2015.
- ATVI beats again on earnings thanks to the success of Destiny, Hearthstone, and Warcraft.
- Warcraft's subscription boost is positive indicator as Warlords of Draenor expansion looms.
- Revenue, profit beat lead to increased year-end estimates to $4.8 billion in revenue.
Update: Activision Earnings - The Q4 Guidance Offers Major Upside Once Again
- Strong Q3 results. “World of Warcraft” subscribers unexpectedly increase.
- Activision raises its FY outlook but fails to impress, notably at the top-line level with a $4.8B guide while I expected a more aggressive upgrade ($4.9-5.0B).
- The Q4 guidance does not make any sense as it points to a 3% revenue decline Y/Y. Activision is managing consensus expectations in order to deliver a strong beat again.
Here's The Blockbuster Game Activision Blizzard Is Banking On
- Activision Blizzard is set to report third quarter earnings on Tuesday, November 4 after the market closes.
- So far this has been a great earnings season for the large video game producers.
- Analysts on Estimize and Wall Street are both expecting a huge uptick in Activision Blizzard's 3rd fiscal quarter, although the Estimize community is significantly more bullish on the bottom line than the Street is.
Activision: Fiscal Year Guidance Likely To Be Upgraded On Nov. 4
- Q3 (due Nov. 4) will be strong but this is already priced in.
- The focus will be on Q4 / FY guidance.
- Consensus expects 3% top-line growth in Q4. Such a weak revenue growth in the holiday season does not make sense.
- I believe that Activision could guide for double digit revenue growth in Q4.
Activision: A Likely Winner Of The Holiday Season, Recent Dip A Buying Opportunity
- The competitive environment will be pretty soft in the crucial holiday season and, in my view, Activision will have the strongest lineup.
- The Street's expectation of 5% revenue growth in Q4 appears overly conservative.
- The recent concerns are overdone; the sell-off is a buying opportunity.
With Cameras Rolling, Worlds Inc. Battles Activision Blizzard October 3
- Camera's In the Court Room to "STREAM" patent infringement Markman Hearing.
- 3-D Online Multi-Player Patent Holder Worlds Inc won't feel the pinch of trial costs all the way to the US Supreme Court; courtesy of Susman Godfrey.
- Investors get unfiltered video access of key legal events In Worlds v. Activision Blizzard.
Why Investors Should Worry About Titan's Cancellation
- Supposedly "World of Warcraft's" successor, ATVI's "Titan" has officially been cancelled.
- Ends 4 years, $140 million of investment and development for a game that wasn't "fun".
- Results in another setback in what was supposed to be the "biggest second half ever".
Sep. 10, 2014, 11:00 AM
- After going on sale at more than 11,000 midnight openings around the world yesterday, Activision (ATVI -1.6%) says its new shooter title, Destiny, generated $500M in revenue in its first day.
- At $60 a copy, it was the most pre-ordered game in history that wasn’t a sequel, says Cowen Research analyst Doug Creutz. Destiny is expected to draw 10M players on its first day, following the record 4.6M that tested the beta release in July.
- Activision is spending as much as $500M to develop and market Destiny, resulting in it being one of the most expensive games ever to hit the industry.
Sep. 9, 2014, 7:52 AM
- A channel check from Cowen Research analyst Doug Creutz indicates video game console/handheld software sales fell 10% Y/Y in August.
- The monthly tally would look even worse if not for the positive comp delivered by this year's Madden NFL game.
- Related stocks GameStop (NYSE:GME), Electronic Arts (NASDAQ:EA), Take-Two Interactive (NASDAQ:TTWO), and Activision Blizzard (NASDAQ:ATVI).
Aug. 29, 2014, 11:29 AM
- Take-Two (TTWO +4.1%) president Karl Slatoff says his company is weighing the pros and cons of bringing Grand Theft Auto to the big screen. He adds Take-Two doesn't think a weak box office showing would hurt the GTA game franchise.
- Dan Houser, the co-founder of GTA developer Rockstar Games, also appears open to doing a GTA movie. However, he insists Rockstar would want to make the film on its own.
- Benchmark's Mike Hickey thinks a GTA film makes sense, and that it could compel Activision (ATVI +0.3%), rumored to be hatching plans for its own movie studio, to acquire Take-Two.
- Hickey calls an Activision/Take-Two deal a "no-brainer," given Take-Two's developer talent, IP, and low valuation. He notes Activision can lower its business volatility by staggering Rockstar, Bungie, and Blizzard releases, and that Take-Two could help offset World of Warcraft's ongoing decline and Skylanders competition from Disney.
Aug. 12, 2014, 1:56 PM
- Activision (ATVI -0.1%) plans to offer the upcoming Skylanders: Trap Team on the iPad and Android tablets. Like console-based Skylanders games, the tablet versions of Trap Team will interact with Bluetooth-enabled "portals" that allow action figures placed on them to appear on screen.
- A Trap Team tablet starter kit will feature a portal, two action figures, a Bluetooth controller, and a stand, among other things. Like its console counterparts, it will retail for $74.99 when it goes on sale in October.
- The Skylanders franchise remains a cash cow for Activision: The company noted in its Q2 report Skylanders: Swap Force was the #2 console/handheld game in North America and Europe in 1H14, and that it also "outsold the #1 action figure line."
- Mobile, on the other hand, has been a weak spot for Activision: The company's mobile/other revenue fell 34% Y/Y in Q2 to just $59M.
Aug. 5, 2014, 5:55 PM
- Activision (NASDAQ:ATVI) expects Q3 revenue of $975M and EPS of $0.11 vs. a consensus of $893.3M and $0.13. Full-year guidance (a little harder to project) is for revenue of $4.7B and EPS of $1.29, slightly below a consensus of $4.71B and $1.31.
- Revenue from digital channels grew 26% Y/Y in Q2 to $481M, overshadowing a 41% drop in retail channel revenue to $111MM. Distribution channel revenue grew 78% to $66M.
- Console revenue fell 18% Y/Y to $201M, but PC revenue rose 201% to $131M (boosted by Diablo III). Online rose 4% to $201M. Mobile/other remains a soft spot, declining 34% to $59M; EA had $120M in calendar Q2 mobile revenue.
- The World of Warcraft sub base fell by 800K Q/Q to 6.8M; the decline was "disproportionately concentrated in the East." That could be a negative for Chinese WoW partner NetEase (NASDAQ:NTES).
- GAAP costs/expenses +6% to $660M. Activision notes Call of Duty: Ghosts remains the top-selling game on next-gen console in North America and Europe combined.
- Q2 results, PR
Aug. 5, 2014, 4:14 PM| Comment!
Aug. 4, 2014, 5:35 PM
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Jul. 18, 2014, 2:07 PM
- After rising 57% Y/Y in May due to new game launches, U.S. retail physical game sales fell 3% in June to $286.8M, per NPD. But with June 2013 having a stronger launch title lineup, that figure was better than expected. Sales were also still up over 4% from a May level of $274M.
- Ubisoft's (OTCPK:UBSFY) Watch Dogs was the top-selling title for the second month in a row. Electronic Arts' (EA +3.1%) UFC (launched on June 3) was #4, and FIFA 14 (receiving a World Cup boost) was #5. Titanfall (#8 in May) fell out of the top-10.
- Activision's (ATVI +1.2%) Call of Duty: Ghosts rose 2 spots to #8. But The Amazing Spider-Man 2 (#6 in May) dropped out of the top-10.
- Take-Two's (TTWO +4.1%) NBA 2K14 (boosted by playoff interest) rose a spot to #6, and GTA V came in at #10. Nintendo's (OTCPK:NTDOY) Mario Kart 8 and Tomodachi Life were respectively #2 and #9.
- With the help of Microsoft's cheaper Xbox One package, hardware sales rose 106% Y/Y to $292.7M. Together with the software numbers, that's providing a lift to GameStop (GME +4.4%).
- EA reports on July 22, while Activision and Take-Two both report on August 5.
Jul. 3, 2014, 4:02 PM
- Rob Pardo, the chief creative officer for Activision's (ATVI +0.9%) Blizzard Entertainment unit, is leaving the company following a 17-year stint.
- Pardo was previously the lead designer for Activision's World of Warcraft cash cow and Warcraft III, as well as multiple expansion packs. He suggests in a blog post he'll eventually turn up elsewhere in the gaming industry.
- Blizzard accounted for 60% of Activision's Q1 revenue. In addition to Warcraft, the division is responsible for the StarCraft and Diablo franchises.
Jun. 17, 2014, 1:59 PM
- Thanks to new game launches, U.S. retail physical game sales (just a subset of total game sales) rose 57% Y/Y in May to $274M, says NPD. That represents a big turnaround from April's 10% drop, and March's 27% decline.
- Ubisoft's (UBSFY) Watch Dogs, which sold 4M units worldwide in its first week, was the top-selling title. After holding the top spot the last two months, Electronic Arts' (EA +2.9%) Titanfall fell to #8.
- Activision's (ATVI +1.7%) The Amazing Spider-Man 2 was #6, up two spots from April, and Call of Duty: Ghosts was #10 (down from #2). Take-Two's (TTWO +3.6%) NBA 2K14 was #7 (down from #3).
- EA and Activision are making fresh 52-week highs. Take-Two isn't far removed from its 52-week high of $22.41.
May. 22, 2014, 12:10 PM
- Vivendi (VIVHY) will receive net proceeds of ~$850M by selling 41.5M Activision (ATVI -1.1%) shares (a 5.8% stake) at $20.70. The price is modestly below Activision's Wednesday close of $20.87.
- The sale is part of a broader cash-raising effort by Vivendi. Last month, the conglomerate agreed to sell French mobile carrier SFR for over $23B.
May. 21, 2014, 4:58 PM
May. 21, 2014, 4:23 PM| Comment!
May. 16, 2014, 2:43 PM
- Though available only on the Xbox One/360 and PCs for now, Electronic Arts' (EA +2.1%) Titanfall was the bestselling game in U.S. physical retail channels for the second month in a row, per NPD's April numbers. Strong Titanfall sales have already fueled EA's big calendar Q1 beat.
- Activision's (ATVI +0.7%) Call of Duty: Ghosts rebounded to #2 on NPD's list after coming in at #4 in March. Another Activision title, The Amazing Spider-Man 2, landed at #8.
- Take-Two's (TTWO +0.9%) NBA 2K14 rose to #3 from #7 as the playoffs arrived. Grand Theft Auto V came in at #9.
- Total physical retail game sales fell 10% Y/Y, as gamers direct more spending towards next-gen consoles (hardware sales rose 76%) and digital channels. But the figure represents an improvement from March's 27% decline.
- One encouraging piece of data for the next-gen console cycle: NPD states PS4/Xbox One game sales are up 40% relative to PS3/Xbox 360 sales over their first 6 months of availability.
- Game developers are ticking higher a couple days after selling off in response to Take-Two's soft calendar Q2 guidance, as is GameStop (GME +0.5%).
May. 15, 2014, 4:39 PM
- After cutting its Yahoo (YHOO) stake in half to 8M shares in Q4, Dan Loeb's Third Point LLC fully liquidated its position in Q1. (13F).
- Loeb, whose fund once owned 60M Yahoo shares, resigned from the company's board last July as part of a deal to sell back 40M shares to the company. His decision to exit Yahoo comes ahead of Alibaba's much-anticipated IPO.
- Loeb also liquidated the 10M-share BlackBerry (BBRY) position he established in Q4. BBRY -1.6% AH.
- A 4M-share position in Activision (ATVI) and a 1M-share position in NXP (NXPI) were also unloaded. A 2M-share position was taken in Avago (AVGO), as was a 2.55M-share position in Citrix (CTXS) and a 1.6M-share position in Brazilian carrier TIM Participacoes (TSU).
May. 6, 2014, 5:38 PM
- Activision (ATVI) has hiked its 2014 revenue guidance by $75M to $4.675B (consensus is at $4.65B), and its EPS guidance by a penny to $1.27 (consensus is already at $1.29).
- Digital channel revenue (68% of total) rose 23% Y/Y in Q1 to $527M; retail channel revenue fell 47% to $172M; distribution revenue rose 43% to $73M.
- Console revenue fell 40% Y/Y to $150M, but PC revenue rose 98% to $239M (strong Diablo III sales). Online revenue (inc. World of Warcraft and Call of Duty Elite) was flat at $227M, and mobile/other revenue fell 47% to $83M (lower Skylanders toy sales?).
- Asia-Pac sales soared 67% Y/Y to $105M, and helped drive the EPS beat. North America -22% to $330M, Europe +6% to $337M.
- The company lost 200K World of Warcraft subs; the base now stands at 7.6M. Diablo III was the top-selling PC title on a dollar basis in North America and Europe. R&D spend +14% to $143M, sales/marketing spend -3% to $104M.
- Shares have pared their gains: ATVI +1.5% AH. Q1 results, PR.
ATVI vs. ETF Alternatives
Activision Blizzard Inc is an online, personal computer, video game console, tablet, handheld, and mobile game publisher. It has three operating segments: - Activision Publishing, Inc., Blizzard Entertainment, Inc. and Activision Blizzard Distribution.
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