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Analyst Sees Encouraging Diversification At Activision Blizzard
Analyst Sees Encouraging Diversification At Activision Blizzard
June 29, 2011 | By Kyle Orland

A new report from Sterne Agee analyst Arvind Bhatia sees encouraging signs that Activision Blizzard's 2011 lineup will make the company less reliant on its Call of Duty and World of Warcraft profit centers.

In the note to investors [PDF] Bhatia says he thinks the company's lineup "will look much more diversified over the next 12-24
months," which will lead to general expansion of the company's earnings in that period.

Bhatia specifically cites Spyro-based toy/game hybrid Skylanders as an exciting new property for the company, and one that "is
apparently testing very well with kids."

He also sees potential in "a new casual MMO" from the company, telling Gamasutra he was referring to the previously revealed project Titan from Blizzard, which he expects to hit some time in 2013.

Added on top of new Starcraft and World of Warcraft expansions, the long-awaited launch of Diablo III and Bungie's upcoming Activision project, the releases make for a pipeline that Bhatia thinks should alleviate investor fears about Activision Blizzard's over-reliance on a few major franchises.

This is important, Bhatia said, because EA's upcoming release of Battlefield 3 and Star Wars: The Old Republic may eat into the market shares for Call of Duty and World of Warcraft, respectively. Still, he saw no reason to downgrade the company's "Buy" rating for the stock.

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Alan Youngblood
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Well that's certainly necessary for ActiBlizz. Kotick has almost killed off CoD the way he did with Guitar Hero (super-saturated market causing devaluing of the product) and WoW is on the other side of the product life-cycle peak and supposedly bleeding customers. They really needed to diversify back when EA was doing that with Dead Space and Mirror's Edge. EA is about due for another "let's try out new ideas" session soon too.

Pricing wise, I can't entirely argue with Kotick and ActiBlizz, but what I will argue for is management. Kotick kills game markets by over-saturating them and then laying off all the developers, it's like strip-mining.

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Bob Stevens
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There's no evidence that the COD series is in decline. I believe it's been stated that Black Ops outsold MW2, and at 20 weeks out MW3 has 380k preorders or thereabouts compared to black ops 150k at that time. Also MW3 is nearly doubling BF3's preorders despite BF3 being available for preorder for significantly longer. These are vgchartz numbers so take them with a grain of salt.

I only mention this to make the ridiculous suggestion that people base their opinions about the business models of companies on things like facts (or in vgchartz's case, approximations of facts) rather than assumptions or a total lack of research.

Guy Costantini
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I think that the WoW experience will simply evolve. It will be interesting to see what Titan does to the WOW IP. That game (WOW) has so much polish it will be a profit center for a very long time. Costs to host will drop further into near nothing, developing countries with better net access will be targeted next (already happening) and will fill the subscriptions that people moving to next gen are leaving behind.

I wonder what it will take for the story to keep going, there does not seem to be a lot left to tell unless new characters that are compelling and interesting are introduced.