Activision Blizzard (NASDAQ: ATVI) is facing three major challenges this year.

First, it has to fend off an attack by Disney (NYSE:DIS) on its uber-profitable Skylanders franchise starting in August.
 
Next, Electronic Arts (NASDAQ:EA) is going head-to-head against Activision's Call of Duty franchise in the fall.
 
And third, casual and free-to-play games are finally succeeding in pulling loads of subscribers away from Activision's cash cow, World of Warcraft. 
 
In the video below, Fool contributor Demitrios Kalogeropoulos discusses how the company plans to meet these challenges to its biggest franchises. Activision should see profits dip as the company ramps up marketing and sales spending to support new game launches in this competitive environment, he says. But Activision is still in a strong position as the move to next-generation consoles begins. And that should serve the company well through what's sure to be a difficult year.

Fool contributor Demitrios Kalogeropoulos owns shares of Walt Disney and Activision Blizzard. Erin Miller owns shares of Walt Disney. The Motley Fool recommends Activision Blizzard and Walt Disney. The Motley Fool owns shares of Activision Blizzard, Microsoft, 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.