Is Activision Blizzard, Inc. (ATVI) Destined for Greatness?

Activision Blizzard, Inc. (NASDAQ:ATVI) may have very strong customer loyalty, but it isn’t running short on challenges right now, either. Increasing competition from companies such as The Walt Disney Company (NYSE:DIS) and Electronic Arts Inc. (NASDAQ:EA) necessitate new games more often to keep customers’ attention. Besides fending off threats to Call of Duty from Electronic Arts Inc. (NASDAQ:EA)’s Battlefield and to Skylanders from The Walt Disney Company (NYSE:DIS)’s upcoming Infinity, it has to woo back casual gamers, especially in China, which has seen mass defections from WoW in the past year.

That game’s subscriber base plunged by 1.3 million users last quarter, pushing WoW down to its lowest subscriber level (though still far ahead of any competition) in over six years. To prevent further losses in China, Activision is making its first jump into free-to-play games through Hearthstone, which aims to extend the Warcraft brand into casual and smaller scale titles. Activision will be licensing the game to NetEase, Inc (ADR) (NASDAQ:NTES), which already operates WoW in China. Electronic Arts Inc. (NASDAQ:EA) already succumbed to the free-to-play MMO trend with Star Wars: The Old Republic, and rumors of WoW‘s impending switch will only intensify now that plunging subscriber numbers are meeting with news that Activision is testing real-money purchases in-game, a hallmark of other free-to-play titles. WoW remains a huge cash cow for Activision, and the loss of significant subscriber revenues continues to be a weight on potential future growth.

Putting the pieces together
Today, Activision Blizzard, Inc. (NASDAQ:ATVI) has many of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy — or to stay away from a stock that’s going nowhere.

The article Is Activision Blizzard Destined for Greatness? originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard, Apple, Google, NetEase.com, Netflix, and Walt Disney (NYSE:DIS) and owns shares of Activision Blizzard, Apple, Google, Netflix, and Walt Disney.

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