When it comes to the entertainment industry, Hollywood these days is dwarfed by the video game sector, so the release of a much-awaited new title is big news for players and investors alike. In this segment from MarketFoolery, host Mac Greer and analyst Aaron Bush discuss the latest news in gaming.
The early reviews are in for Activision Blizzard's (NASDAQ:ATVI) Call of Duty: Black Ops 4, and they are incredibly positive. Like Fortnite Battle Royale, it's a multiplayer, last-avatar-standing affair. Unlike Fortnite, it's not a free-to-play game, and if gamers are as enthusiastic as the reviewers, it's going to make a mint for its publisher. The duo dig into the details that matter most for investors.
A full transcript follows the video.
This video was recorded on Sept. 12, 2018.
Mac Greer: Aaron, let's begin with the latest battle royale in the world of video games. Shares of Activision Blizzard up 7% on Tuesday and up 2% more at the time of our taping. Aaron, this all comes on the heels of positive reviews for Activision's new game, Call of Duty Black Ops 4. In fact, reviews are so positive that I'm seeing it being called a Fortnite killer. That may be overstatement. We should add, for those who may not follow the video game space, Fortnite is a craze. It's a video game with a rabid following. The game is free, they make all their money from in-app purchases, in-game purchases. Call of Duty is not free. A different business model here, Aaron. What they have in common is this battle royale mode, where the goal is to be the last man standing. What do you think of the latest Call of Duty here?
Aaron Bush: I mean, I think it's pretty exciting. This whole craze started with PUBG about a year ago. It's all happened really quickly. It's suddenly become a multibillion-dollar gaming business. All of the big publishers are out there wanting a piece of it. EA is going to attack it with Battlefield and Activision is doing it right now with Call of Duty. I think there was a lot of skepticism around whether or not they would be able to pull this off. It's really awesome to see that the battle royale mode is really positive. Obviously, this franchise has been around for 15 years. This is a way to really refresh the Call of Duty image. Really pulling the best of Call of Duty, which is all the shooting mechanics. Activision is a huge company, so they'll be able to cut out glitches and that type of thing really quickly.
I think that this is a really positive sign for them. And because it's purely digital, not only will they be able just to sell the $60 game, but there'll be opportunities just like in Fortnite and those other games for add-on purchases of skins, and all sorts of other things, probably.
Greer: Let's talk about the implications for investors. Fortnite is owned by Epic Games, which is private, but Tencent, which is public, has a 40% stake in Epic. Tencent would be one way, if you're an investor, that you could play the Fortnite craze. When you look at this latest battle royale game, Call of Duty from Activision, what do you think it means for investors both in Activision, or investors in a Tencent or other investors in video game companies?
Bush: Competition isn't great for Fortnite, for PUBG. I think it's attacking a bit of a different audience. This battle royale game with Call of Duty is really finding a way to get those Call of Duty players more entrenched. It's not really attacking Fortnite, although Fortnite's been so huge, I'm sure some of those players will come over and check it out. I'm not too concerned from a Tencent angle on this.
I think what I really like about this for Activision is the fact that this is a 15-year-old franchise, and Activision is proving that even 15 years later, they can still make it great. What that tells me is that in five or 10 years from now, battle royale might not be the fad anymore, but Call of Duty could still be there in whatever mode of gaming is most exciting at the time. Just seeing that makes me feel good about where Call of Duty is now and where it could go in the future.
Greer: You have me thinking that if I want to resurrect an old franchise, like a Ms. Pac Man, is the key battle royale? Just make it battle royale mode?
Bush: That's the way it seems right now. Give it six months and probably something else will be the craze. But, yeah, I could see Ms. Pac Man Battle Royale, drop 100 Ms. Pac Man's on an island and see which one is the last standing.
Greer: I like it.