A Solid Bet in Button-Mashing
Taylor is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As other videogame publishers post losses and struggle to find success with gimmicks, there’s one company that stands out -- Activision Blizzard (NASDAQ: ATVI).
Overall, the videogame industry has seen a recent downturn. Electronic Arts (NASDAQ: EA), which makes the popular Madden NFL games and The Sims, forecast lower revenues for the coming year, which inevitably sent the value of its shares down.
Likewise, Sony (NYSE: SNE), maker of the Playstation, failed to spark a turnaround in its revenues with the Vita, its newest portable gaming system. At $250, the Vita likely proved to be far too expensive in an era when people are already dishing out plenty of cash for smartphones and apps.
So what is setting Activision Blizzard apart from the competition? Well, like Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG), ATVI simply does its job very well. Despite reporting a decline in net income in early May, the company still beat out Wall Street and its own expectations. It makes notoriously good video games, which draw in millions of people again and again.
In short, Activision Blizzard, like Apple and Google, has created a set of products so powerful and successful that only moves on its part -- smart or blunderous -- will have them walking off the podium. Such is the fate of the standard bearer.
What company is going to kill the iPhone? Apple will be that company. There’s a reason the phone’s name hasn’t changed since its genesis. With a product Apple and its customers know is quality, it doesn’t need devices named after cosmic phenomena or fuel additives.
What company is going to replace Google Earth? Well, the next company to compile a collection of better satellite photos, present them in a more intuitive user interface, then give it away for FREE.
I think you may be getting my point by now. When Activision Blizzard's World of Warcraft, the most popular massive-multiplayer role-playing game ever, was coming off its zenith, people began to wonder, “What will kill World of Warcraft?” Ask Curt Schilling, the MLB pitcher-turned game developer whose highly subsidized company 38 Studios has now filed for bankruptcy protection. His role-playing game “Kingdoms of Amalur: Reckoning” was greatly anticipated and publicized, but getting gamers to ditch years of grinding in World of Warcraft to try something new takes more than hype and at this point, only a severe failure on ATVI's part will allow that to happen.
World of Warcraft was so beloved that its monthly subscriptions shielded Blizzard Activision from the worst of the recession. Think about that -- when people were struggling to pay their utilities, millions of others were choosing to pay to play a game. Water, food, shelter and World of Warcraft (bathroom breaks optional).
Well, Activision Blizzard itself has taken the best shot at WoW with its release of Diablo III, which became the fastest selling PC title ever. “Ever” means that since the dawn of the computer, the global masses have never turned out in such force for a piece of software as they did for Diablo III. Furthermore, Amazon.com said Diablo III was its most preordered game ever.
For reference, Diablo (the first) was released in 1996, and its sequel Diablo II was released in 2000, which is still updated and maintained. And WoW is here to stay, with its fourth expansion yet to be released.
Among Blizzard’s (it used to be separate from Activision) other games are more impressive tidbits. Starcraft, a real-time strategy game, became South Korea’s national sport after its release in 1998. Top players are highly paid celebrities and date movie stars. The game is so balanced that it has been used by researchers to experiment with artificial intelligence. When Starcraft II was released, it shook things up for a bit then settled into its new role as the most popular game in its genre. Blizzard was just making a game to its standards, but it was so good that it sparked an ongoing global sensation.
And let’s not leave out the first-person shooter franchise that is Call of Duty, which has its own set of records and blockbuster sales with every release.
As long as Activision Blizzard, as two parts of a whole, keeps making games in the genres it dominates, millions of gamers will keep coming back with open wallets.
Taylorian has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.
