How Activision Is Winning the Video Game Wars

Although rivals in the streaming space including Microsoft (MSFT) and Apple (AAPL) have been gaining traction, Activision Blizzard (ATVI) maintains its strong position, having gained about 37% since its lows in February of this year (by comparison, the S&P 500 has gained about 19% this year). In fact, ATVI stock could be poised to capture even more gains in the near future, as investors look forward to the release of new traditional video games which have been highly acclaimed by critics. According to a report by Barron's, a recent Piper Jaffray survey of more than 500 gamers found that Activision Blizzard's new Call of Duty: Modern Warfare title was the most highly-anticipated single video game. ATVI investors are betting that the popularity of this and other upcoming titles will continue to bolster the stock.

Several Hotly-Anticipated Titles

Piper Jaffray analyst Michael Olson cited Activision's recent launch of World of Warcraft Classic as the start of a period of "the next 4 to 5 quarters" in which the company is slated to release several popular new or updated games. Another recent Barron's report points to the announcement of the Nintendo Switch port for the Overwatch title, set to launch on October 15, as a likely boon for Activision. Stephens analyst Jeff Cohen pointed to "Activision's commitment to reinvigorating core franchises through an increasing pace of content updates" as a marker of the company's recent and ongoing success.

Per popular gaming news site Kotaku, World of Warcraft Classic has seen impressive levels of success in the first weeks after its release; the site claimed that "everybody's going bonkers" for the rerelease of a 15-year-old game, per Barron's. World of Warcraft charges a monthly subscription of $15 in a highly profitable business model. With an anticipated boost of many hundreds of thousands of subscribers for several quarters, the new version of the game could significantly bolster Activision's earnings.

What's Next?

Though ATVI has already made big gains since its lows earlier this year, and in spite of the prospect of popular new games on the horizon, the company nonetheless faces challenges going forward. Ongoing threats to the market more broadly, including trade wars, uncertainty about interest rates, and the prospect of a looming recession could all dampen ATVI's gains. Further, competitors are also constantly fighting for gamers' interest; Apple recently announced the launch of its Arcade subscription video game service, for instance, while competitors including EA and Take-Two all have upcoming releases that are poised to capture gamer attention as well.