How Activision’s “Destiny” Could Disappoint

Even the biggest intellectual property launch in history carries some big risks.

Jul 13, 2014 at 4:00PM

Activision Blizzard's (NASDAQ:ATVI) Destiny is going to be big. After all, the title racked up 75 awards at last year's Gamescom, including Best in Show. Based on pre-orders for the game, Activision is expecting the release to count as one of the biggest launches of a new intellectual property in history. At the very least, it will quickly join World of Warcraft and Call of Duty as one of the publisher's rare billion-dollar franchises.


Source: Bungie.

But even a title that's sure to sell millions of copies could disappoint, as any new game launch comes with some hefty risks.

In the video below, Fool contributor Demitrios Kalogeropoulos highlights two of those potential letdowns that could disappoint investors. The main one, he says, is technical difficulties with the launch. Sure, developer Bungie boasts a stellar track record and has been crafting Destiny for years, which should mean the game has plenty of polish. But multiplayer functionality heightens the risk for swamped servers and sluggish gameplay. Just ask Electronic Arts (NASDAQ:EA), which had to apologize to gamers after last year's botched rollout of SimCity.

Another worry for investors is costs. After spending heavily on development, Activision is planning a further massive investment in marketing for Destiny's launch. That makes sense given that the publisher has plans for the franchise that stretch out over a decade. But most of those costs will hit Activision's results in the third quarter, while sales benefits won't start boosting the top line until future quarters -- so investors will have to be patient.

Watch the video below for Demitrios' full take.

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Demitrios Kalogeropoulos owns shares of Activision Blizzard. The Motley Fool recommends Activision Blizzard. The Motley Fool owns shares of Activision Blizzard. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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