3 Video Games That Will Make or Break Activision’s Year

Activision Blizzard (NASDAQ: ATVI  ) booked $4.6 billion in revenue last year. That was slightly lower than 2012's result, but still easily enough to keep Activision the world's largest video game publisher.

A major portion of those sales came from just three franchises: Call of Duty, Sklyanders, and World of Warcraft. And the financial impact was even more concentrated with regard to profit. As Activision noted in its annual report, those three brands were responsible for "significantly higher" than 80% of the company's 2013 earnings. 

Given how critical a few franchises can be to Activision's results, it's important for investors to keep tabs on its major titles. With that in mind, let's look at the prospects for Destiny, Skylanders: Trap Team, and Call of Duty: Advanced Warfare, which together will mean the difference between a good year and a great one for Activision Blizzard.

Destiny: Scheduled for release on Sept. 9

Source: Bungie.

From developer Bungie, of Halo fame, Destiny boasts all the ingredients of a massive blockbuster. It has collected heaps of critical praise, is selling pre-orders at a record pace, and will have the support of a huge marketing budget starting next month. When Activision's management says Destiny should be the biggest launch of a new property in video game history, that's not just marketing spin. 

Still, a record release won't be enough to make Activision a worthwhile investment. After all, Take-Two Interactive (NASDAQ: TTWO  ) scorched even the most optimistic forecasts with last year's Grand Theft Auto V, but the stock hardly budged as investors worried about what comes next. That's why Activision has a decade worth of Destiny-related content planned for the franchise, which will be where the real payoff comes from.

Skylanders: Trap Team: Oct. 5

Source: Activision Blizzard.

Next up is the fourth installment in the Skylanders franchise due out in early October. Trap Team follows SWAP Force, which last year pushed the Skylanders brand past $2 billion in toy and game sales since it was launched in 2011. However, competition has been growing along with those profits. Disney (NYSE: DIS  ) joined the market last year with Infinity, a title whose toy components include some of the House of Mouse's most recognized characters. Infinity has been a success for Disney, helping its video game business return to profitability. And the entertainment giant plans to push that advantage even further this year by adding popular Marvel figures, including characters from Guardians of the Galaxy, into its sequel due out around the same time that Trap Team is released. Even in a growing market, Activision will have a fight on its hands in the children's gaming category this year.  

Call of Duty: Advanced Warfare: Nov. 4

Source: Activision Blizzard.

On the other hand, the competitive landscape for Call of Duty looks much better. Thanks to Electronic Arts' (NASDAQ: EA  ) punting Battlefield Hardline into 2015, the first-person shooter category is Activision's to lose this holiday season. 

But Advanced Warfare has more going for it than just an attractive release window. It is the first title in the franchise to benefit from a three-year, rather than a two-year, development cycle. Ideally, that has given developer Sledgehammer plenty of time to polish the product, while allowing it take a few risks on innovative game play. Usually a lock as a top-selling game each year, Call of Duty has a good shot at the No. 1 or 2 slots in 2014.

Foolish final thoughts
One risk to watch out for is whether Activision will fall victim to its own success. Having two massive titles launched in the same quarter might make Advanced Warfare the biggest competition for Destiny, and vice versa. Sure, the two titles won't appeal to the exact same types of gamers. But it will be interesting to see if the industry can profitably support two blockbusters of their size.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Read/Post Comments (1) | Recommend This Article (9)

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 Report this Comment icon found on every comment.

  • Report this Comment On August 16, 2014, at 10:41 PM, bendriver wrote:

    I could care less about CoD and that Icelanders game...The only promising game would be Destiny. I would much rather have a Game of Thrones game that plays similar to Elder Scrolls or maybe a cross between Elder Scrolls and WoW...And have features that allows players to custom build their own castles and stuff...

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3070888, ~/Articles/ArticleHandler.aspx, 12/20/2014 6:10:45 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement