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Activision Blizzard's Latest Gamble

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Activision Blizzard's (Nasdaq: ATVI  ) latest attempt to revive its stagnant World of Warcraft franchise is enlisting panda warriors to join the multiplayer online-gaming experience. Really?

Mists of Pandaria -- the platform's new expansion pack that hits the market tomorrow -- makes no bones about introducing the ability to play as a battling panda. The game will still have plenty of the fierce creatures and engaging levels that die-hard gamers have enjoyed, but there have to be plenty of gamers wondering what the world's largest video game publisher is doing putting martial-arts-savvy pandas front and center.

After all, doesn't Mists of Pandaria seem more like a Kung Fu Panda sequel out of DreamWorks Animation (NYSE: DWA  ) than a World of Warcraft expansion pack? If one didn't know any better it would seem as if Activision Blizzard is trying to woo younger gamers to the franchise by appealing to groundwork that DreamWorks Animation has done with its Jack Black-fueled animated feature film series.

Then again, it's not as if you can blame Activision for taking a gamble. The franchise peaked with 12 million gamers two years ago, but it has gone on to shed a quarter of its users.

Activision has responded by making the first 20 levels "free to play" to hook new gamers. It gave away copies of Diablo III to get players to extend their subscriptions. Why not bring in fighting pandas, especially since so many of its gamers these days are in China courtesy of its licensing arrangement through (Nasdaq: NTES  ) ?

Investors feared that World of Warcraft would get some serious competition late last year when Electronic Arts (Nasdaq: EA  ) rolled out Star Wars: The Old Republic, but both franchises are struggling these days.

Are consumers tiring of these rich virtual worlds, or are they simply losing mainstream gamers to the simplistic charms of social and casual games supplied by Zynga (Nasdaq: ZNGA  ) ?

Activision won't have time to lick its wounds if Mists of Pandaria fails to breathe renewed interest into its flagship franchise. It should bounce back in November when Call of Duty: Black Ops II arrives. That's what you would call reinforcements, as unlike World of Warcraft, Activision continues to set records with every annual installment in the Call of Duty franchise.

For now, sit back and see whether Activision Blizzard's gutsy gamble with panda warriors pays off.

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Motley Fool newsletter services have recommended buying shares of DreamWorks Animation,, and Activision Blizzard. Motley Fool newsletter services have recommended creating a synthetic long position in Activision Blizzard. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Read/Post Comments (6) | Recommend This Article (5)

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  • Report this Comment On September 24, 2012, at 2:32 PM, TMFDukenewkirk wrote:

    Hey Rick, I'd be absolutely floored if you could find me one 'rich virtual world' gamer who has forgone the addiction that is MMORPG for anything remotely Zynga-like. That would be like a professional golfer giving up his game for a career in miniature golf at carnivals.

    China came and went. Many signed up, way more were lost there soon after than had been the experience in any other market. China was tough from the get-go. First off they had to make modifications because of cultural issues. For example, skeletons are sacrilege, so they had to be covered up, first strike. Corpses had to be converted to tombs. Secondly, economic dynamics made the subscription model impossible. So what quickly became 12 million subs, just as quickly became much less. Any other defection for other games would be for the countless competitors' offerings in MMORPG as everyone has been trying to get a piece of WoW's enormous pie. While they've all been failing or at least miserably so if WoW was their benchmark, they've still chinked WoW's armor some.

    Pandas are no big issue either. One of the four main original characters on the Horde side is a bull/cow (called Taurens). Cows are no more macho than pandas. In fact, it's not panda we have for dinner 3 times a week in N.America. If I had to accept a curse and return as a cow or panda, hands down, I'm going panda.

    Bottom line, this is a WoW expansion, numbers 'will' go up, maybe not even as high as Spinal Tap's amplifier to 11, but they will go up.


    ATVI Ticker Guide

  • Report this Comment On September 24, 2012, at 2:42 PM, RMiller13 wrote:

    The reason Blizzard is rolling out fighting pandas is - if anything - in *spite* of Kung Fu Panda. If this article was better researched, you'd know the Pandaren existed in lore many, many years before this expansion was planned for. In years past the player-base has clamored for the Pandaren as a playable race (and Brewmaster as a class), but Blizzard repeatedly said it wasn't in the plans.

    The *real* takeaway here is not that Blizzard is reaching to new/young audiences with a panda-fueled cash grab, but rather that it's trying to draw back in the *old* player-base by pandering (if you'll allow the pun) to their whims of yesteryear. It's still a move made by a company who sees its flagship ailing, but it doesn't reek of desperation quite as much as you would have us believe.

  • Report this Comment On September 24, 2012, at 4:12 PM, TMFDukenewkirk wrote:

    Just a side note. My guess for why an obvious expansion for WoW into a massive market like India, full of tech savvy computer types, was never a real possibility, even more significantly than China, is again, cultural. The Taurens I mentioned above make a mockery of the Cow/Bull which is precisely what a Tauren looks like. The slaughtering of cows in game likely wouldn't sit well there.


  • Report this Comment On September 25, 2012, at 9:13 PM, RaulChapin wrote:

    Thank you Dukenewkirk, I understand the Panda thing a bit better now. I am long ATVI but I am playing it more like a solid dividend with some growth potential... Like a cashtauren if you will ;)

    As for playing WoW if anything I have stayed away from it because each time I play I am in there for no less than 4 hours and often 8... So will I quit my subscription? Not likely, at 15 bucks a month it would have to really enormously suck for me to cancel it... I pay more for cable... And there is only one show I watch :)

  • Report this Comment On September 25, 2012, at 9:15 PM, RaulChapin wrote:

    Rick, thank you as well, your article also helps me from getting over optimistic.

  • Report this Comment On October 08, 2012, at 4:57 PM, crca99 wrote:

    Thx, always, for helping me watch NTES for several years. Time to place those gains somewhere else, I think.

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