2020 was a good year for companies that specialized in blasting digital entertainment into people's homes. Streaming video stocks like Roku and Netflix trounced the market as they added millions of new customers during the pandemic. Walt Disney even managed to outpace the S&P 500 as investors focused on the success of its video platform while its theme parks and film studios suffered.

Activision Blizzard (NASDAQ:ATVI) stock wasn't left out of that digital-content rally. But Wall Street could still be underappreciating its growth potential in 2021 and beyond. Yes, the video game publisher benefited from record audience size and ballooning time spent on its titles. But Activision's business improved other ways that suggest this business is just now hitting its stride.

Let's take a look at why you might want to make a bold bet on Activision stock right now.

Two kids playing console games.

Image source: Getty Images.

Not simply growth

It's no big surprise that the owner of some of the biggest video game franchises on the planet boosted sales at a time when most other entertainment spending dried up. Indeed, Activision gained 100 million new active users across brands like Call of Duty and World of Warcraft during peak COVID-19 shutdowns in the early summer months.

That surge isn't particularly impressive on its own. As Netflix CEO Reed Hastings said recently, the streamer's pandemic boost was mainly about short-term demand spikes. "We try not to get overly focused on the COVID effects," he said, "because they're very one-time in nature."

Activision isn't simply improving engagement, though. It expanded into new monetization strategies and platforms in 2020 by establishing Call of Duty on mobile gaming and using its hit free-to-play Warzone title as a valuable funnel into the premium CoD ecosystem. Those wins helped the brand attract triple the usual audience size in Q3 despite relaxed social distancing efforts around the world. As economies reopened, players through late September were still dedicating seven times their normal average hourly commitment per day.

Plenty of ammunition

The leading video game publisher has some formidable assets available as it seeks to capitalize on its larger audience base in 2021 and beyond. The massive gamer footprint suggests the newest Call of Duty release will smash entertainment records for the company in Q4, as a start. Look for confirmation of an unusually strong release when Activision announces its quarterly results in early February.

The company couldn't have found a better timing for its decision to refocus on development, either. By pouring resources into content starting in late 2019, Activision entered the pandemic period armed with a flood of new releases right when gamers were most receptive.

That advantage goes double for the year ahead. CEO Bobby Kotick, while raising the company's 2020 outlook last quarter, said that the intellectual property pipeline has "never been stronger" heading into the new fiscal year.

Worth the risks

There's always the possibility that a few of these game releases will flop or hit costly development delays. Activision's stock rally could also be threatened by an economic downturn or a shift away from digital entertainment in the post-COVID-19 world.

Yet the company demonstrated in 2020 that it is more of an entertainment platform than a video game stock. And management has a proven knack for finding ways to sustainably boost the value of that platform, whether its through esports, advertising, licensing, or extending into new genres. Its that flexibility that should have investors feeling most bullish about Activision's business in the next year, even following this past year's unusual growth spike.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.