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Good time to get into Activision Blizzard

|Includes: ATVI, Electronic Arts Inc. (EA), GME

Modern Warfare 2 was released on Nov. 10, 2009 to great fanfare and brought in $300 million in total revenue on the first day of release in the U.S. and U.K.  The stock however, haven't done much since then, trading roughly ~$11.  That's a pretty good price to get in considering the popularity of Activision Blizzard (NASDAQ:ATVI) 's games on the market right now.   Think Tony Hawk Ride, Modern Warfare 2, Guitar Hero 5.  On the PC, there is World of Warcraft, where Activision make 40% of their revenue and the world's most popular MMORPG.  This year is going to be a great year for Activision too, with the pending release of Starcraft II and a new add on pack to World of Warcraft, Cataclysm.  Both highly anticipated and destined to be mega hits. (Has Blizzard ever created any bad games?)

The reason why Activision is trading at a bargain price is because Electronic Arts (NASDAQ:ERTS) and GameStop (NYSE:GME) have been poo pooing on the gaming industry for the past year by lowering their guidance and proclaiming that gamers are not buying games!!  That's simply not true.  Their problems are reflections of their business execution rather than an indication of the gaming industry as a whole.  Retailers like Walmart, Best Buy, and Amazon have steadily taken shares away from GameStop while Electronic Arts just haven't been able to create any blockbuster games that people want.  Activision's stock price unfairly suffered as a result.

At the end of the day, the dynamics of the gaming industry really boils down to one simple undisputed law which many bright minded investors and analysts failed to take into account.  That is....

As a gamer, thou shall buy Starcraft II when it comes out

That's really all that can be said about gaming.  If I were to lose my job tomorrow and become homeless, I'll still scourge trashcans to pick up enough plastic bottles so I can go out and buy a copy of Starcraft II.



Disclosure: long ATVI