Unlike many of its peers, Activision Blizzard (NASDAQ:ATVI) did not hold a formal press conference at E3 this year. Yet the event was still crucial for Activision and its shareholders, as several upcoming games were detailed extensively. Let's take a look at some key takeaways for Activision from the event.
Destiny is getting a semi-sequel
Destiny has become one of Activision's most important franchises, and it should remain so for at least the next decade. Activision entered a 10-year publishing deal with the game's creator, Bungie, after it split from Microsoft and abandoned the Halo franchise to 343 Industries.
Destiny is something of a controversial title. The game was largely panned by critics upon release but still generated considerable buzz and significant sales, particularly for an entry in an entirely new series.
Historically, successful video game franchises often take many years to build, garnering increased attention and millions of sales only after several successive sequels. Activision has declined to offer up exact sales figures for the game but has said Destiny is the best-selling new video game franchise of all time and that its debut was among the top 10 video game launches in U.S. history. In November, Activision said Destiny had generated more than $500 million in adjusted revenue. In May, it upped the figure to nearly $1 billion, but obfuscated it by combining the numbers with Hearthstone, the company's other emerging franchise.
Nevertheless, Destiny-related revenue should grow even if the game fails to attract additional players. To date, Destiny has already received two major expansion packs -- The Dark Below and House of Wolves -- and it will get an enormous one this fall.
At E3 2015, Activision unveiled Destiny: The Taken King, which is slated to go on sale in September. It does not amount to a full sequel, but at $40 it is quite close. Combined with the other expansions, a single Destiny player could spend as much as $140 on the game by year-end. This steady stream of extra digital content is core to the Destiny model, and investors should keep a close eye on the engagement figures Activision's management releases in future quarters. If engagement remains high, Destiny could ultimately generate hundreds of dollars per player in additional digital sales over its lifetime.
Call of Duty is switching sides
Activision's other shooter series, Call of Duty, is getting another installment in 2015. Treyarch, the game's studio, has been working on Call of Duty: Black Ops III for the last three years, and Activision plans to release the game in November.
Call of Duty remains one of the largest franchises in entertainment, and its annual installments regularly tops the video game charts. The last release, Call of Duty: Advanced Warfare, was the best-selling video game in the U.S. last year, according to research firm NPD.
Black Ops III could sustain the trend. At E3, Activision showcased the game and also announced a change in its digital distribution. Previously, owners of Microsoft Xbox consoles got exclusive access to Call of Duty add-on content before owners of rival systems. But this year, owners of the Sony PlayStation will get the DLC first. Not a game-changer, but it could provide a slight upside for the company as the PlayStation 4 has outsold the Xbox One.
A new twist on Guitar Hero and Skylanders
Lastly, Activision showed off the next version of Skylanders and brought back its once-dominant Guitar Hero series.
Skylanders: SuperChargers brings a slight twist to the popular toys-to-life game. This year, players will be able to purchase vehicles in addition to characters, using them in races and other segments. In February, Activision announced that the Skylanders' series had generated more than $3 billion in revenue and that it remains the top console title for kids. The competition has intensified, however, with Disney Infinity posing a threat.
Guitar Hero Live is due to launch this fall. The series was an undeniable cultural hit -- in fiscal 2008, Activision revenue rose more than 90%, driven by the success of Guitar Hero III -- but interest rapidly plummeted, and Activision has not released a new Guitar Hero game since 2010. Live is quite different from its predecessors, with a redesigned guitar controller and the backing of an Internet-based music network. If Activision can reignite demand, it could provide strong upside, but it is possible that the Guitar Hero craze is truly over.