Activision Blizzard, Inc. (ATVI): This Company Will Save the Video Game Industry

The success of Zynga Inc (NASDAQ:ZNGA)’s games, and the money they were making, convinced Zynga to offer an IPO that, at its height, rose 50% in share price in the spring of 2012, but an over-reliance on core titles and the smartphone revolution doomed Facebook and Zynga’s combined stranglehold on the market, and both companies’ IPO’s (though Facebook’s came out after the Zynga bounce ended).

Facebook has since been able to bounce back in gaming with the success of King’s Candy Crush Saga, resulting in $2.9 billion of revenue over the last two quarters ($2.5 billion from advertising and by allowing game developers to tap into Facebook’s ecosystem to gain players).

Zynga, though, has fallen by the wayside due to the staleness of their products as well as a lack of new development, which was a problem that Activision has been able to avoid for the entire Zynga dynasty, however short that turned out to be.

Skylanders is going sky-high

The smartphone market though was strong, and cloud gaming was the new thing rather than console gaming, but Activision stepped to the plate yet again with Skylanders, a revolutionary franchise with a third edition set to be released this fall.

As video game playing dropped 5% this year thanks to smartphone gaming’s popularity, Activision Blizzard, Inc. (NASDAQ:ATVI) may help turn it around for the industry. With the new Skylanders, players buy $8 toy figures to be placed on the games specially designed pad that puts that very character (and all the stats you gave it over time) into the game as a controllable character. These toys can be put on any pad, which uses radio frequency technology to wirelessly get into the game, making the toys tradable and shareable.

Since the franchise’s release in 2011, the toys gained a cult following and a thriving black market for the best ones (up to $2,400 on eBay for top figures). It takes the old time fun of trading card games and makes it applicable for the new generation of social gaming, creating a franchise that has established Activision Blizzard, Inc. (NASDAQ:ATVI) as a dominant player in the industry, as well as being a trendsetter for a challenged market looking to re-assert its dominance.

The Walt Disney Company (NYSE:DIS) has released an offering like Skylanders as well called Disney Infinity, which takes the idea of placing a toy character on a mat and inserting that character into the game as well, except with various characters from The Walt Disney Company (NYSE:DIS) movies like Jack Sparrow and Mr. Incredible. However, it is different because it is designed to target casual gamers and younger audiences with their families, given the cartoony nature of the game, which even the creators admit is not “photo-realism.”