Call of Duty Performs Twice as Well as Halo

So far, the new Call of Duty is twice the game as Halo 4.

Activision Blizzard (NASDAQ: ATVI  ) said Black Ops II, the latest in its Call of Duty series, booked $500 million in first-day sales worldwide. Halo 4's $220 million first-day haul for publisher Microsoft (NASDAQ: MSFT  ) looks small by comparison.

To be fair, Halo 4 was only released to Xbox owners, while Black Ops II was released to every major console, including the Xbox, Sony's (NYSE: SNE  ) PlayStation 3, and Nintendo's (NASDAQOTH: NTDOY  ) new Wii U console. Both games also broke records for their respective franchises.

Color me unsurprised: video game releases are now routinely bigger than Hollywood's biggest bows. Take Marvel's The Avengers, which, according to Box Office Mojo, earned a combined $392.5 million during its opening weekends here and overseas for studio parent Walt Disney (NYSE: DIS  ) , resulting in one of the biggest box offices of all time. Black Ops II earned at least $100 million more than that on day one, big enough to support billions in future revenue via successive releases or even a movie franchise of its own.

Think about it. We've already seen Hasbro (NASDAQ: HAS  ) transform well-known toys into movie characters, while Disney has already earned a tidy sum on the video game themed animated feature Wreck-It Ralph. Video games are big money.

So why is Activision only trading 5% higher on this market victory for Call of Duty: Black Ops II? Why isn't the stock selling at a premium to Disney? Both companies trade for close to 15 times trailing earnings.

The answer, I think, is that stability is more valuable than a short-term win. Disney is well-diversified, blessed with great brands, and poised to take advantage of known catalysts. Activision may be a good business, but Disney is a Tier 1 stock.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.


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10/24/2014 3:59 PM
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