Activision Gets Bizarre

Michael Jackson isn't the only one willing to pay a fortune for bizarre things. Stock Advisor recommendation Activision (Nasdaq: ATVI  ) is buying video game developer Bizarre Creations. The company is best known for developing Microsoft's (Nasdaq: MSFT  ) Project Gotham Racing series, an Xbox franchise that has moved more than 4.5 million copies.

Bizarre is also responsible for franchises such as Formula 1, Fur Fighters, The Club, and the digitally delivered Xbox Live hit Geometry Wars.

Liverpool-based Bizarre has no problem dabbling in action games, though titles like Project Gotham Racing and Formula 1 have proven its true forte in a $1.4 billion racing game market. Buying Bizarre gives Activision the developer firepower to compete against Electronic Arts' (Nasdaq: ERTS  ) mighty Need for Speed and Burnout franchises.

This makes yet another beefy buy for Activision. The company acquired Guitar Hero publisher RedOctane last year in a timely purchase; the music rhythm genre has taken off, propelling Activision's results higher.

Konami (NYSE: KNM  ) may have ignited the timing-based music game craze with its Dance Dance Revolution, but Activision's Guitar Hero is the franchise that everyone is chasing these days. Activision is rolling out Guitar Hero III next month, just as Electronic Arts is teaming up with Viacom's (NYSE: VIA  ) Harmonix -- the original Guitar Hero developer -- to put out the competing Rock Band, which features an assortment of accompanying instruments.

(If you're not familiar with Rock Band or Guitar Hero III, look for it on your child's holiday wish list. I fear that my 13-year-old son will go arthritic, given all of the time he spends trying to beat "Jordan" on Expert mode.)

All of these deals are making Activision a more well-rounded company. It may not exactly be EA just yet, but who is? Activision's still a better company than it was a couple of years ago, when shareholders were hanging on for every licensed Spider-Man title. There's nothing wrong with licensing -- firms like THQ (Nasdaq: THQI  ) have carved out cozy livings that way. But the payoffs are better when your own property hits it out of the park.

So clear the streets. Activision is challenging Electronic Arts to a race.

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