eResearch |The stock price for Activision Blizzard Inc. (NASDAQ: ATVI; LSE: 0H8X; DB:AIY) has fallen 45% to US$46.55 from a high of US$84.68 in October 2018, mainly due to decreasing Monthly Active Users (MAU) of 7% to 356 million in 2018 from 384 million in 2017. The Company’s MAU further decreased to 345 million in Q1/2019.
In 2015, Activision announced a US$5.8 billion acquisition in King Mobile, a game developer and publisher focused on mobile platforms, which had an MAU of 550 million in Q1/2015. Since closing of the deal in 2016, King Mobile’s MAU has fallen to 345 million, closing in on half of its high from 2015, which accounts for approximately 75% of Activision’s total current MAU.
In 2018, Activision focused on monetizing efforts for King Mobile through micro-transactions and advertisements, as the whole industry evolves from developing new renditions of existing games to having a single “live” game that periodically updates content and provides new avenues for enhanced game play at a small fee. The Company has grown revenue for King Mobile by over 30% to US$2 billion in 2018 from US$1.58 billion in 2016 when they closed its acquisition of the company. In contrast to the success in revenue for their new acquisition, their most profitable subsidiary, Activision Publishing (Call of Duty), reported a decrease in revenue of 6.4% to US$2.4 billion in 2018 from US$2.6 billion in 2017.
One bright spot for the Company is the success of eSports, in-game advertising and digital consumer products. In eSports, in Q1/2019, Activision launched the 2019 season for the Overwatch League with an expanded roster of 20 teams and viewership up more than 20% year-over-year. The Company’s new sponsors include Anheuser-Busch InBev, Coca-Cola and State Farm. Following the success of the Overwatch League, Activision started selling teams for their professional Call of Duty eSports league and has already sold 5 franchises in Atlanta, Dallas, New York, Paris and Toronto.
According to Newzoo, as of 2018, Activision is the fifth largest video game company in the world with US$7.5 billion in revenue, compared to main competitors, Electronic Arts Inc. (NASDAQ: EA; DB:ERT) at US$5.2 billion and Take-Two Interactive Software Inc. (NASDAQ: TTWO; LSE: 0LCX; DB:TKE), at US$2.5 billion. Tencent Holdings Ltd. (HKG: 0700; OTC: TCTZF; LSE: 0Z4S; DB: NNND) (Fortnight and PubG) is the market lead with US$19.7 billion in revenue. In 2018, Tencent’s Fortnite had an MAU of 78 million and PubG, 100 million.
Activision is expected to release Q2/2019 earnings on August 8, 2019 after market close. The Company recently removed the game Destiny from its operations and expects revenue to drop to US$6 billion in 2019 from US$7.5 billion in 2018.
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Activision Blizzard, Inc. (NASDAQ: ATVI; LSE: 0H8X; DB:AIY)
Headquartered in California, United States, Activision is a video game company with subsidiaries including Activision publishing, Blizzard entertainment, and King mobile. Activision is known for their diversified portfolio of games including Call of Duty and Overwatch on console, StarCraft and World of Warcraft on desktop, and Candy Crush Saga on mobile. ATVI currently trades at US$46.42 per share with a market capitalization of US$35.6 billion.
Electronic Arts Inc. (NASDAQ: EA; DB:ERT)
Headquartered in California, United States, Electronic Arts is a video game company best known for their EA Sports titles which include FIFA, Madden NFL, NHL, NBA Live, and UFC. EA currently trades at US$91.94 per share with a market capitalization of US$27.3 billion.
Take-Two Interactive Software, Inc. (NASDAW: TTWO; LSE: 0LCX; DB:TKE)
Headquartered in New York, United States, Take-Two is a video game company known for its two major publishing labels, Rockstar Games and 2k, which includes games Bioshock, Borderlands, Grand Theft Auto, NKBA 2k, and Red Dead Redemption. TTWO currently trades at US$115.40 per share with a market capitalization of US$13.0 billion.
Tencent Holdings Ltd (HKG:0700; OTC: TCTZF; LSE: 0Z4S; DB: NNND)
Headquartered in Shenzhen, China, Tencent is a multinational investing conglomerate focused on internet-related services and products. Tencent operates in the video game industry through its ownership of Riot Games and Epic Games, which hold game names such as League of Legends and Fortnite. HKG currently trades for HKD350.80 per share with a market capitalization of HKD3.34 trillion (US$ 427.7 billion).
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