With Skylanders, Activision Blizzard, Inc. Has Changed Video Games Forever

Blending the physical and digital worlds has become a must-have for video game and toy makers.

Jun 26, 2014 at 7:13PM

If imitation is the sincerest form of flattery, then Activision Blizzard, Inc. (NASDAQ:ATVI) has an undisputed winner in Skylanders, the toy-driven video game it first introduced in 2011 and which has gone on to account for more than $2 billion in sales.

The latest copycat? Plastic brick maker LEGO, whose "LEGO Fusion" allows players to take snapshots of assembled structures from a smartphone or tablet for transporting into a digital LEGO world. Senior Tech Specialist Tim Beyers explains the implications in the following video.

Skylanders Activision Characters

Skylanders has been one of Activision's best new franchises. Credit: Activision Blizzard.

LEGO's effort follows on the heels of Nintendo announcing  customizable amiibos that affect the texture of the video game they're attached to. Walt Disney's Infinity has also won converts, ranking as NPD's 10th-best-selling game last year. The message? Blended worlds are now a must-have for every video game publisher.

You'd think the variety of copycats would diminish enthusiasm for Skylanders, but that may not be the case. Activision's licensing team recently struck a deal with General Mills (NYSE: GIS) for branded cereal and fruit snacks. A Skylanders-themed coloring book from Crayola is also in development, as are comic books and magazines based on the franchise.

Should investors buy into the enthusiasm for Skylanders and its growing legion of clones? Tim says it's worth considering. Activision trades about even with analysts' long-term estimates for profit growth, which suggests the stock is priced reasonably despite owning some of the industry's most durable franchises, including not only Skylanders, but also Call of Duty and World of Warcraft.

Now it's your turn to weigh in. Have you tried Skylanders? Please watch the video to get the full story, and then leave a comment to let us know your take, including whether you would buy, sell, or short Activision Blizzard stock at current prices.

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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Walt Disney at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends Activision Blizzard and Walt Disney. The Motley Fool owns shares of Activision Blizzard and Walt Disney. 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.

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