The Activision Vs. Electronic Arts Battle Continues

By Travis Hoium | More Articles
April 12, 2011 | Comments (7)

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The never-ending battle between Activision Blizzard (Nasdaq: ATVI ) and Electronic Arts (Nasdaq: ERTS ) is continuing, and this time EA is sending an offensive from its Battlefield series.

After watching Medal of Honor crash and burn last fall, executives are pinning hopes on Battlefield 3 to take down Activision's Call of Duty franchise. And the stakes have gotten awfully high after Black Ops generated $360 million of sales in its first 24 hours on the market.

Electronic Arts is countering with a $100 million ad campaign that looks a little like a desperation attempt to slay Goliath. And Activision is playing defense by keeping Call of Duty users entertained with new content packs until its next iteration is out.

Call of Duty: Black Ops has already added the First Strike content pack, which sold 1.4 million copies in 24 hours on Xbox LIVE, and yesterday Activision announced that the Escalation pack will hit Microsoft's (Nasdaq: MSFT ) Xbox LIVE on May 3.

EA has an uphill battle in trying to topple the fastest-selling video game of all time, and it's running start is more like a warm-up jog. Battlefield: Bad Company 2 sold 2.3 million units sold in March 2010, but that doesn't come even close to Call of Duty.

How big of a bet is this for EA? In the last 12 months, EA has spent $724 million on sales and marketing, and a $100 million bet on Battlefield 3 is not chump change. Not only does EA have to worry about Call of Duty, but also games like Take-Two Interactive's (Nasdaq: TTWO ) Red Dead Redemption, which will engage anyone who thinks war games are played out.

It's tough when your biggest rival has such a smashing success on its hands, but spending $100 million to topple a giant is a risky plan. Shareholders should cross their fingers that it pays off.

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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Microsoft is a Motley Fool Inside Value recommendation. Take-Two Interactive Software is a Motley Fool Rule Breakers pick. Activision Blizzard is a Motley Fool Stock Advisor recommendation. Motley Fool Options has recommended a synthetic long position on Activision Blizzard and a diagonal call position on Microsoft. The Fool owns shares of Activision Blizzard, Microsoft, and Take-Two Interactive Software. Motley Fool Alpha LLC owns shares of Activision Blizzard and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (7) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.

Report this Comment On April 12, 2011, at 3:28 PM, RG09 wrote:

Both have no debt and are sitting on tons of cash.
However, the current fact remains that ERTS is providing a better return than ATVI
Report this Comment On April 12, 2011, at 4:39 PM, angelcar wrote:

As an avid gamer and investor, I don't see how ERTS can catch up on ATVI with this strategy. I am a Battlefield fan, but I can't deny the behemoth Activision has in the Call of Duty franchise.
Call of Duty has been a franchise that has built up its fan base over time. It didn't happen overnight. Perhaps its success comes from the fact that it always included a great single player campaign to go along with the online facet. ERTS seems to think so as well, since they are finally adding a single-player campaign to BF3.
Nevertheless, ERTS has its work cut out for them on this franchise. CoD dominates today, and when you have a franchise that delivers consistently, the Davids in the field will have a very hard time toppling Goliath.
I'm still looking forward to BF3, but I'm not so hot on investing in ERTS, and that will certainly not change with the advent of this latest Battlefield offering.
Report this Comment On April 12, 2011, at 4:47 PM, etjester wrote:

"Not only does EA have to worry about Call of Duty, but also games like Take-Two Interactive's Red Dead Redemption, which will engage anyone who thinks war games are played out."
Why do they have to worry about RDR? That was released a year ago and Rockstar doesn't annualize its properties the way Activision does.
Report this Comment On April 12, 2011, at 7:09 PM, chilero wrote:

As an avid pc gamer, all of the positive buzz right now is around BF3. DICE is doing a tremendous job building that buzz as well.
BF3 is a sequel to BF2 not Bad Company 2. BF2 was far more popular among PC gamers than Bad Company 2.
From a technical standpoint BF3's game engine (Frostbite 2) is also far more advanced than, what is now, a recycled, old engine, that CoD has been using for a few years.
CoD has virtually no buzz happening around its next CoD game. They also lost the top talent that usually would have been developing this upcoming COD with the heads of Infinity Ward left.
While challenging CoD is certainly an extremely difficult task, BF3 is going to be their very best opportunity to launch that assault.
Report this Comment On April 15, 2011, at 11:36 AM, sept2749 wrote:

For a company with so much dough and content - why doesn't it move a bit - up! It's been so flat for the past years. I'm a patient guy but I'd like if my patience doesn't outlive me!
Report this Comment On April 19, 2011, at 1:04 AM, PudNZ wrote:

As a gamer i have bought 3 EA games this yeah ,1 THQ and in the last 2 years no activision products the last activision game i accepted was black ops as a gift,not even that now.
considering the proportion of there gross sales excluding WOW are pretty much black ops-Call of Duty , milking of there consumer base for over 24 months and not delivery anything new with black ops well at least as a company EA are aggressive and you may mock MOH BC2 ,Bulletstorm but they are little bit's out of a big cake that activision owes right now.
My guess in 3 years time that EA will again be leading the video game market ,given Activisions attitude and there excessive pricing ,it's only a guestion of time afterall.
Report this Comment On April 19, 2011, at 2:03 PM, OGamble wrote:

BF3 trailer does look amazing, so I'm sure it will be good but the Activision map pack is coming out in May so I don't think they will over take the COD series just yet. Kotick has a corner on this (http://www.crunchbase.com/person/robert-kotick)

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