Activision Blizzard (ATVI, Financial) was one of the best performing stocks of 2015; however, the company has failed to replicate its success this year. Although Activision is down about 17% for the year, I think investors should use the pullback to load up on the stock.
It is very necessary to stick with the industry leaders. At present, it's clear that Activision Blizzard governs the rapidly growing video game industry. Recently the company reported that its Call of Duty franchise surpassed its sales record for the seventh consecutive year in 2015.
Some strategic rules of Activision are converting the company’s business into a robust, more appreciated enterprise. First, new console gaming products make it stress-free to purchase gaming content online. That aided the company’s digital revenue to reach 50% of sales, and since the profit is more in online sales, the margin should keep growing as gamers are rapidly shifting towards online channel.
Second, the company is about to close the books on its purchase of mobile gaming leader King Digital, which will turn the company into the largest game network globally at 500 million involved monthly gamers. Activision can now add Candy Crush to its extensive list of video game franchises.Â
Best-known franchise
Activision holds a leading position mainly due of its Call of Duty series. In 2015, the company’s latest game, Call of Duty: Black Ops 3, was the best-selling game. The whole franchise exceeded 250 million units sold from the date of launch until today worldwide with more than $15 billion in sales. Once again, Activision showed that the company does not have much competition in the first-person shooter game. The next series of Call of Duty will launch this year, and will certainly help the company to surge its positon in the gaming sector.
All in all, the company fortified its position last year. This will support Activision Blizzard to attract additional players and bolster its portfolio in order to lower the company’s dependance on one or two specific franchises.
Conclusion
Activision has established a leading position in the gaming industry and it is growing its mobile business as well. Growing digital platform should boost the company's margins and further increase its profits, making it a good long-term pick.
Disclosure: I don't hold a position in any of the stocks mentioned in the article.
