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

First, it has to fend off an attack by Disney (DIS -0.68%) on its uber-profitable Skylanders franchise starting in August.
 
Next, Electronic Arts (EA -0.38%) 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.