As the world's greatest distributer, Activision (ATVI, Financial) had the most to lose this year. Its two greatest games, Call of Duty and World of Warcraft, were limping into their second decade. Also even the new Skylanders brand looked powerless against assault from a Marvel-fueled Disney game.
Yet Activision cruised through its difficulties in 2014. The current year's World of Warcraft development was a hit, beating the 2012 portion and sending endorser numbers once again over 10 million players. With that achievement, investors can rely on WOW to keep on kicking in benefits for quite a long time to come. Notwithstanding the close record results Activision will post in 2014, the world's greatest feature game distributer isn't resting. Rather, the company wants to shake up its content portfolio in a huge manner. Indeed, the methodology depends on draining created games like Call of Duty and World of Warcraft. However it additionally includes venturing into new geologies, new stages, and new plans of action.
For Activision that implies handling developing markets with its Call of Duty Online game, which will be launched in China in the first quarter. The publisher additionally has some huge new contenders in the free to-play model, including Heroes of the Storm and an alternate development for its Hearthstone digital card game.
How did it happen?
Activision arrived at that point with assistance from a few wins over its portfolio in the second from last quarter. Initially, turning around the earlier quarter's losses, World of Warcraft picked up 600,000 players, which helped push membership revenue 16% higher. Second, paid additional content from mainstream games, for example, Hearthstone and Call of Duty helped the business bloom. Also, there was this measurement that administration gave in its quarterly phone call: Almost 20% of console gamers who acquired Destiny did so through a digital download.
What will drive Growth?
The latest version of the Call of Duty franchise is expected to drive Activision’s growth in the coming months. Advanced Warfare was the first title in the Call of Duty franchise to profit from a three year, instead of two year, advancement cycle. Also that additional clean doubtlessly helped the game log such a solid launch.
Actually, Advanced Warfare has seen larger amounts of gamer engagement contrasted with a year ago, as per Activision. Investors can expect future titles in the establishment to appreciate the same, updated three year plan, which leaves a lot of space for exploration of new game play and story headings.
In the interim, digital revenue will give a greater lift to Advanced Warfare than with any earlier Call of Duty title. The game is now the greatest in console history as far as digital sales. Since developer Sledgehammer Games had such a great amount of time to develop the game, it now has less burden to quickly move into creating an alternate portion. Advanced Warfare ought to get a support from a few rounds of major digital content releases in 2015. These downloadable deals ought to push Activision's profitability higher as they convey the most noteworthy margins of anything the distributer offers. The company likewise anticipates that revenue in the not so distant future will about match 2012's record high.
Conclusion
Activision expects to meet the figures of 2012, which was the best year for the company and with the success of its titles, it is quite possible. The massive success of Activision isn’t reflected in the company’s share price as the stock is up only 20% YTD. Given the headwinds it had in 2013, the company has performed remarkably and is still underpriced. Hence, I think investors should consider adding Activision to their portfolios.
