Activision-Blizzard (NASDAQ:ATVI) was a top performer in 2015 -- shares have nearly doubled since the beginning of the year. Led by the success of some of its key franchises, including Destiny, Hearthstone, and Call of Duty, and its acquisition of mobile game giant King Digital (NYSE:KING.DL), Activision has turned in a steady stream of strong earnings reports.
Will 2016 prove to be just as successful? As a video game publisher, its results are driven by the success of its games, and the company has many in store for next year.
Shooters remain vital
Once again, Activision enjoyed the largest entertainment launch of the year (though it may soon be overtaken by Star Wars: The Force Awakens). The latest Call of Duty installment, Call of Duty: Black Ops III, generated more than $550 million in sales in its opening weekend, besting summer blockbuster Jurassic World in the process.
Call of Duty will remain important to Activision shareholders in 2016. Although its successor has yet to be formally unveiled, it will come from Activision's Infinity Ward studio, the creators of 2013's installment, Call of Duty: Ghosts. Ghosts wasn't well-received by critics, but the same may not be true for next year's title. In 2014, Activision announced that it was moving to a three-year development cycle for its Call of Duty games (up from two years). That extra time should, at least in theory, result in a better product. Next year's installment will be the first title from Infinity Ward under the new three-year timetable.
At the same time, Activison will continue to monetize the success of Black Ops III in 2016 -- the company recently updated the game, adding micro transactions. For a small fee, players can purchase weapons and outfits using real money.
The same is true for Destiny. Earlier this month, developer Bungie rolled out an update that grants players the ability to boost the level of their characters for $30. That won't matter much if players lose interest, but that doesn't appear to be the case. Despite making its retail debut more than a year ago, Destiny players remain engaged with the title, playing for an average of three hours per day. That interest has likely been generated by a steady stream of digital expansions, including September's The Taken King. The company has promised to release more Destiny content next year, though it has not announced anything in particular.
Overwatch could be Activision's most interesting 2016 title. Developed by Blizzard, Overwatch is a team-based first-person shooter, though it seems to cross traditional genre boundaries. The company began testing Overwatch in a closed beta last October, and plans to release it in the first half of next year. Impressions from the beta have been generally favorable -- gaming-focused publication Kotaku described it as "awesome".
Legion could revive World of Warcraft
Activision's massively multiplayer online RPG, World of Warcraft, is still going strong more than a decade after its initial debut. Yet in recent years, its base of subscribers has contracted significantly. Last quarter, World of Warcraft had just 5.5 million subscribers, down from a peak of around 12 million in 2010.
It might never return to those lofty heights, but World of Warcraft has a chance to bounce back next year. Legion, the game's latest expansion, will make its debut around next September. It adds a new character class, the Demon Hunter, to the game, and significant additional content. The game's last expansion, 2014's Warlords of Draenor, helped push its total subscriber base above 10 million, after finishing 2013 with fewer than 8 million.
Activision will not release World of Warcraft subscriber figures going forward, which could make Legion's impact difficult to discern, but it may offer up other metrics.
More mobile titles
Activision should close its acquisition of King Digital early next year, which will give it a portfolio of many of the most popular mobile titles. King has several major franchises (including Candy Crush, Farm Heroes, Pet Rescue, and Bubble Witch), and intends to release sequels for at least three of these established franchises next year.
Most of King's games are casual games -- relatively simple titles that can be enjoyed by nearly anyone -- but King is also working on what it terms "mid-core" titles, the first of which will be launched in 2016. These games should be more complex than its standard titles, and appeal to a different demographic.
Activision's own mobile title, Hearthstone, should see some additional content. The game made its debut early in 2014, and has since been supplemented with several expansions and single-player adventures, three of which were released last year. Last month, Activison announced that Hearthstone's 2016 World Championship event would be held in the fall, and award a prize pool totaling $1 million.
A new entry in the Skylanders series is a near certainty, as Activision has released new installments annually since 2011. But the company intends to expand the series with a new initiative next year. Skylanders Battlecast will be a competitive card game for Android and iOS devices, one that will allow players to purchase real physical cards they can use in -game.
Overall, 2016 is shaping up to be the biggest year in the company's history.