- 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".
Fri, Jan. 16, 10:35 AM
- Activision's (ATVI +6.3%) Call of Duty: Advanced Warfare topped NPD's U.S. physical retail game sale rankings for the second month in a row in December. Destiny, which Activision hopes will be its third $1B+ franchise, was #9.
- In a PR, Activision says Advanced Warfare was the "top-selling console game of 2014 globally," and that Destiny was the #2 2014 U.S. console game in terms of revenue. Skylanders was the top kids video game franchise globally (inc. toys/accessories sales), with a 30% sales edge over its biggest rival (presumably Disney's Infinity).
- Electronic Arts' (EA - unchanged) Madden NFL 2015 rose a spot to #3, and FIFA 15 returned to the top-10 (at #10). Take-Two's (TTWO +1.8%) Grand Theft Auto V was at #2 for another month, continuing to get a lift from its next-gen console and PC launches. NBA 2K15 rose three spots to #5.
- NPD estimates total U.S. physical retail game sales fell 2% Y/Y to $1.25B. Hardware sales, facing tougher comps (given next-gen consoles launched in Nov. 2013), fell 4% to $1.31B, with the Xbox One outselling the PS4. Next-gen consoles are performing 65% better than prior-gen consoles had over their first 14 months. GameStop (GME +3%), just three days removed from reporting better-than-expected holiday sales, is reacting favorably to the numbers.
- Superdata Research estimates U.S. digital game spend rose 11% Y/Y in December to $1.2B. Mobile game sales (35% of 2014 sales) rose 17%, and digital console game sales (8% of 2014 sales) 10%.
- EA reports on Jan. 27, Take-Two on Feb. 3, and Activision on Feb. 5.
- Previously: NPD's November data
- Update (2:15PM): EA is now up 1.8%, aided by a 0.8% increase for the Nasdaq. Activision is now up 9.2%, Take-Two 4.2%, and GameStop 4.5%.
Fri, Jan. 16, 9:11 AM
Wed, Jan. 7, 8:08 AM| 7 Comments
Dec. 12, 2014, 10:39 AM
- Though Activision's (ATVI -1.5%) Call of Duty: Advanced Warfare was (as expected) #1 in NPD's November U.S. physical retail game sale rankings, Call of Duty franchise sales were down 27% Y/Y and Activision's total sales down 22%.
- That has led Piper to slash its Activision target by $3 to $24. "Strength in the Blizzard side of the business (WoW & HearthStone) should allow for an in-line Q4, but we are slightly lowering our estimates to now be in-line with company guidance."
- Take-Two (TTWO +3.3%), meanwhile, has rallied towards its 52-week high after Grand Theft Auto V (recently become available on the Xbox One, PS4, and PCs) ranked #2. NBA 2K15 was #8, down one spot from October. Borderlands: The Pre-Sequel fell out of the top-10.
- Electronic Arts' (EA +0.5%) Madden NFL 15 rose four spots to #4, but FIFA 15 fell out of the top-10. BofA/Merrill has hiked its targets (I, II) for both EA and Take-Two following NPD's numbers: It's optimistic EA can continue growing margins thanks to growing digital sales and cost controls, and argues Take-Two deserves a multiple similar to EA and Activision's.
- NPD estimates total U.S. physical game sales fell 2% Y/Y in November to $1.09B, a much smaller drop than October's 27%. With next-gen consoles having launched a year ago, hardware sales fell an estimated 23% to $1.01B, with the Xbox One (1.2M sales) outselling the PS4 following a $50 early-November price cut.
- Wedbush's Michael Pachter thinks game sales growth may have been positive after accounting for downloads and the frequent bundling of games with consoles. Meanwhile, Superdata Research estimates total digital game spend rose 23% Y/Y during the Thanksgiving period.
Nov. 20, 2014, 12:06 PM
- After announcing yesterday afternoon World of Warcraft: Warlords of Draenor had sold 3.3M+ copies following 24 hours of availability, Activision (NASDAQ:ATVI) announced today Call of Duty: Advanced Warfare (launched on Nov. 3) "is the biggest entertainment launch of the year, besting not only all other video games, but also the biggest movies, music and books launched in 2014."
- Activision adds Advanced Warfare is " the highest-selling digital launch in console history according to Xbox Live, PlayStation Network and internal Activision estimates," and that users played an estimated 370M+ online matches in the week following the game's release.
- Also: Activision says the company has settled a class-action suit related to last year's leveraged recap deal with Vivendi. "Various defendants" and insurance companies will pay $275M.
- Piper (Overweight) thinks the Warcraft and Call of Duty announcements suggest upside to Q4 estimates.
Nov. 19, 2014, 5:53 PM
- Activision (NASDAQ:ATVI) reports over 3.3M copies of World of Warcraft: Warlords of Draenor were sold following the first 24 hours of availability following yesterday's launch. As a result, the WoW subscriber base, which stood at 7.4M at the end of Q3, is back above 10M.
- Draenor, the fifth expansion for WoW, is sold through a $50 standard edition and a $70 deluxe edition. It launched yesterday in North America and Europe (among other places), and is launching today in China and Korea. NetEase (NASDAQ:NTES) remains Activision's Chinese WoW partner.
- While reviews have mostly been positive, initial Draenor users have complained about overtaxed servers. Activision/Blizzard is giving them five days of free subscription time to make up for it.
- ATVI +1.2% AH.
Nov. 14, 2014, 5:35 PM
- After coming in at #1 in NPD's September U.S. retail video game rankings (following a blockbuster Sep. 9 launch), Activision's (NASDAQ:ATVI) Destiny fell to #5 in October. Take-Two's (NASDAQ:TTWO) NBA 2K15, which launched on Oct. 7, took its place at the top.
- Borderlands: The Pre-Sequel, launched by Take-Two on Oct. 14, was #4. Skylanders Trap Team, which Activision released on Oct. 2, was #6.
- Electronic Arts' (NASDAQ:EA) FIFA 15 and Madden NFL 15 were #7 and #8, down from #3 and #2 in September. The Sims 4 fell out of the top-10, as did Activision's Diablo III: Reaper of Souls.
- Altogether, NPD estimates U.S. physical retail game sales fell 27% Y/Y to $350.3M. They were down 36% in September, thanks in part to tough comps caused by last year's GTA V launch. Xbox One/PS4 demand led console sales to rise 59% to $273.6M; Microsoft cut One prices by $50 early in November.
- The digital transition continues: SuperData Research estimates U.S. digital game spending rose 12% Y/Y in October to $957M.
- Activision's Call of Duty: Advanced Warfare launched on Nov. 3, and should be at or near the top of NPD's November rankings. Metacritic gives the game a score of 77/100.
- ATVI -1.2% in regular trading. TTWO +2.5%. EA +0.1%.
Nov. 11, 2014, 6:59 AM
Nov. 5, 2014, 9:16 AM
- Gainers: CRTO +19%. JIVE +17%. YOD +16%. TTPH +12%. IBIO +11%. AEZS +9%. EXEL +8%. CLNY +7%. ANR +7%. ROYT +7%. EOG +6%. PHMD +6%. NICE +6%. VPCO +6%. ATVI +5%. VG +5%. CTSH +5%. WLT +5%. MACK +5%.
- Losers: CHUY -24%. NUS -22%. FEYE -16%. ZU -14%. TRIP -13%. SSYS -8%. MEMP -7%. NG -6%. ANV -6%. ARIA -6%. AWAY -6%.
Nov. 4, 2014, 4:42 PM
- Though it beat Q3 estimates, Activision (NASDAQ:ATVI) is guiding for Q4 revenue of $2.2B and EPS of $0.86, below a consensus of $2.34B and $0.94.
- The World of Warcraft sub base rose by 600K Q/Q in Q3 to 7.4M, a reversal from Q2's 800K decline. Hearthstone registered users have topped 20M, and Destiny registered users 9.5M.
- 43% of revenue came from digital channels, 50% from retail channels, and 7% from distribution.
- 40% of revenue came from next-gen consoles, 24% of older consoles, 18% from online gaming/content, 8% from PC games, 7% from distribution, and 3% from mobile games and other sources. Online revenue rose 15% Y/Y to $209M; mobile/other revenue fell 36% to $35M.
- GAAP costs/expenses rose 20% Y/Y to $745M, thanks in part to a 53% increase in sales/marketing spend to $221M.
- Q3 results, PR
Nov. 4, 2014, 4:12 PM| 4 Comments
Nov. 3, 2014, 5:35 PM
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Oct. 31, 2014, 5:28 PM
- Sony (SNE +5.8%) sold 3.3M PlayStation 4 units in calendar Q3, up from 2.7M in Q2 and easily outpacing the 2.4M Xboxes sold by Microsoft in Q3. In addition, Sony reported its gaming unit posted a $195M profit, up from $43M in Q2 thanks to rising PS4 game royalties.
- VG Chartz estimates Sony has cumulatively sold 12.3M PS4 units since last fall, and Microsoft 6.1M Xbox One units. To boost sales, Microsoft recently slashed Xbox One prices by $50 - starting Nov. 2, the One sells for $349 without a Kinect, and $449 with one.
- Electronic Arts (EA +2.8%), Activision (ATVI +1.9%), and Take-Two (TTWO +4.7%) outperformed again today. All three game developers rallied yesterday after Take-Two posted a big FQ2 beat on the back of strong sales for Grand Theft Auto V, NBA 2K14, and Borderlands 2. EA jumped thanks to an FQ2 beat and strong EPS guidance the day before.
- GameStop (GME +1.5%) and PS4 CPU/GPU supplier AMD (AMD +1.8%) are likely also happy with Sony's PS4 sales figure.
Oct. 17, 2014, 1:55 PM
- With last year's Grand Theft Auto V (TTWO +0.3%) launch skewing comps, NPD estimates U.S. physical retail video game sales fell 36% Y/Y in September to $481.2M, a worse decline than August's 21% drop.
- The ongoing spending shift towards digital channels naturally contributed to the drop as well: SuperData Research estimates digital game spend rose 8.6% Y/Y in September to $873M.
- Hardware spend rose 136% Y/Y (up from August's 116%) thanks to next-gen console demand: NPD thinks PS4 sales nearly tripled from August levels with the help of Sony's (SNE +1.8%) Destiny bundle, and outpaced Xbox One sales yet again. GameStop (GME +2.7%) investors approve of the numbers.
- Electronic Arts (EA +4.5%) is rallying after Madden NFL 15, FIFA 15, NHL 15, and The Sims 4 respectively came in at #2, #3, #6, and #8 on NPD's top-10 list. Of the four games, only Madden was on the August list (#1 in its launch month). Battlefield 4 (#9 in August) fell out of the top-10.
- As expected, Activision's (ATVI -0.5%) Destiny was #1. But Diablo III: Reaper of Souls fell to #10 from #2, and Call of Duty: Ghosts (#5 in August) dropped out of the top-10. Activision, like Take-Two, is sitting out a market rally.
- EA reports on Oct. 28, Take-Two on Oct. 29, Sony on Oct. 31, and Activision on Nov. 4.
Oct. 14, 2014, 1:19 PM| Comment!
Sep. 23, 2014, 1:49 PM
- Following multiple delays, Activision's (ATVI -1.6%) Blizzard unit has pulled the plug on developing Titan, a next-gen MMORPG viewed as the successor to the World of Warcraft cash cow.
- Blizzard CEO Mike Morhaime: "We didn't find the fun ... We didn't find the passion. We talked about how we put it through a reevaluation period, and actually, what we reevaluated is whether that's the game we really wanted to be making. The answer is no."
- As it is, VentureBeat reported last year Activision had "decided to push the reset button" on Titan, and that the game wasn't set to launch before 2016 at the earliest. Blizzard SVP Chris Metzen says a "sense of inertia and obligation and identity that we hold in ourselves and the community may also hold toward us" compelled Blizzard to try and make a new MMORPG, before ultimately changing its mind.
- Metzen adds the popularity of smaller Blizzard releases such as Hearthstone and Heroes of the Storm contributed to its decision. "I think the lesson that comes around again is just making damn sure that the things we commit to do ... are coming from a place of focus and inspiration."
- Activision's move comes as the Warcraft base continues declining: It declined by 800K in Q2 to 6.8M. Meanwhile, first-person shooter Destiny, which Activision hopes will be its next billion-dollar franchise (joining Call of Duty and Skylanders), recently produced first-day sales of ~$500M.
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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