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Activision Blizzard: Positioned To Capitalize On Gaming Trend

May 04, 2020 1:14 PM ETActivision Blizzard, Inc. (ATVI)8 Comments
Value Kicker profile picture
Value Kicker


  • The lockdown is leading to an increase in video game sales. Disruptions to the industry, including eSports likely to be minimal.
  • Activision is poised to capitalize on this situation due to its presence in eSports, strong franchises, and its availability on all platforms (PC, console, and mobile).
  • Valuation is a bit expensive but, due to the tailwinds, is still a long-term buy.

As I've mentioned in my previous article, the current pandemic has changed the way we work and play. Whether or not these changes will be long-lasting would depend on certain factors and remains to be seen. However, the pandemic has also accelerated previous trends that were already in motion. One such acceleration of a trend I see happening is in the realm of gaming and eSports. A company that is poised to do well due to this trend is Activision Blizzard (NASDAQ:ATVI).

Video games Sales

I've written about Activision Blizzard in the past, and I believe despite the quarantine, my thesis remains largely intact. The company is one of the world's largest video game companies with popular franchises in the PC, console, and mobile gaming markets. The company is largely made up of three divisions, Activision, Blizzard, and King. Given the lockdown, video games are more popular than ever, and Activision Blizzard is in a unique position to capitalize on this due to 1) its presence in eSports 2) its strong franchises, and 3) having games available on all platforms (PC, console, and mobile).

Investor Relations

eSports likely to continue its growth despite COVID-19

As I've mentioned in my previous article, eSports is growing in popularity and will largely continue to grow in polarity despite COVID-19. Activision, right now, owns two of the most popular e-Sports franchises, Call of Duty (or "CoD") and Overwatch. Call of Duty, which is right now in its "Modern Warfare" iteration, is unique among the major eSports franchises as it is the only one played on a console despite it being available for PC as well. In fact, Modern Warfare was revolutionary for allowing PC and console gamers to play cross-platform. Being console-enabled allows CoD to reach a larger market than a pure

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Value Kicker profile picture
Nine to 5 by day. Hobbyist stock trader by night. I got an MBA and a CFA ... so that should count for something. I only care about my own greedy interests and I love feeding trolls. Not your financial advisor. Information for entertainment purposes only. Diamond hands are forever.

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Comments (8)

tssai98 profile picture
Gaming sector has barely scratched the surface. There is AR/VR capabilities that is yet to be fully explored and the whole gaming league that's still at an early stage of penetration.
Gamer/Investor here, ATVI is definetely on the right track to capitalize on the esports trend, however the stock is not cheap. In addition to the price, all live events for their marquee title overwatch are canceled until COVID is under control. This can be a huge financial burden to the teams owners, some of the owners are wealthy (Kraft) some are unknowns (Washington Kastles??) anyways. I think they have the infrastructure down to a science to grow in the sports segment; the question still remains to this day if they have the know how to expand monthly active users for their franchises (Call of Duty, Overwatch, WoW).

This is their achilles heel at the moment, Fortnite may be a "casual" game but MAUs are steady, Activision's games decline on a yearly basis until the new release is issued. This will change when Overwatch 2 is released and it merges both Overwatch 1 and 2's player pools. A way to keep the community without the drawbacks of buying new releases.

The financial impact of COVID on Activision is reflected on their pro/ semi pro teams disbanding the past month due to lack of support both financial and covid related. Once Covid is controlled, I have a feeling those players will come back but the parent orgs may not.

Just my 2 cents.
mcbishan profile picture
I am an investor in EA and Activision. Spend most of the time playing COD mobile. I learn weaponary and game progression from my children who are also playing with their classmates. My sniping skills has improved and it is a good time filler while waiting for the right technicals to do buy/sell trade. Check my game play below.... https://youtu.be/QMdmb3fAlKQ
You know... I have a lot of shares and I was slightly concerned that we would have the same reaction as Netflix did after earnings. As in it was so hyped up and everyone expected them to beat, then eventually crashed because it had nowhere else to go.

The fact that I only see three comments on this stock the day before earnings makes me feel slightly better that maybe the trade isn’t overly crowded after all…
TheAppInvestor profile picture
And world of warcraft classic is a huge success, which has seen the population of servers go back to launch levels during COVID-19 (queues and server layering).

Still, sold all my ATVI on the way up and bought GLUU instead, on the basis of:
- much lower valuation
- Couple of long-tailed revenue games making the core of the revenue, with an interesting pipeline
- extremely easy-to-monitor/predictible revenue (mobile gaming -> inApp & advertising)

You might want to include the pure mobile play (e.g. Zynga) in further considerations too. The mobile gaming portion of the cake is getting bigger every year.
MMTech profile picture
Going to see great WoW subscriber numbers and this should be a nice earnings quarter for ATVI. To @User 879 below, I think you will see that this is now a generation whereby video games are the mainstream and spending will go up in this area even as others go down. People are stuck at home and need something to do. Still the early days of COVID19 but as far as earnings go for this quarter, I think you are going to see fireworks from increased sales & subscriptions of games while people are stuck @ home.
I love the enthusiasm around video game stocks. However, Video game companies have done historically very poorly during recessions when people cut discretionary spending on non-essentials.
fabskxha profile picture
Things have changed in the last 7-8 years because they can keep the same game alive for years and get money from inexpensive item purchases. Plus the demographics is basically getting bigger each year and there are still some 15 years of pure demographic growth as older non gaming generations pass away and leave room to the 100% online generations. Only concern is valuation which is high. Valuation is pretty difficult for this pure ips companies anyway. How much would a call of duty franchise be worth if you had to liquida it?
I am holding for years but would not buy at current level.
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