My video game addiction began with an elegantly wrapped box 16 years ago on Christmas morning of 1997. Little did I know that this box would have such a profound impact on my life (and social skills, or lack thereof). Beginning with Nintendo 64, and later Dreamcast, PlayStation 2, Nintendo Wii and currently PlayStation 3, it’s safe to say that video games have been a big part of my life. And this doesn’t solely pertain to consoles — Warcraft III and World of Warcraft, both played on PC, once dominated my life as well. It’s clear the company that has had the most significant presence in my life is undoubtedly Activision Blizzard, Inc. (NASDAQ:ATVI) .
Prior to merging 2008, the two companies were completely separate gaming entities. Blizzard represented the dark hole that is PC gaming, where I would submerge myself into the various worlds (Warcraft, Starcraft, and Diablo) for unhealthy periods of time. Activision, on the other hand, represented the more socially acceptable video games I would play when friends came over, including such franchises as Call of Duty, Guitar Hero, and Tony Hawk.
Fast-forward five years later, and this union has become one of the most dominant names in gaming. Its first-quarter earnings indicate a 21% growth in EPS ($0.33 in Q1 2012, $0.40 in Q1 2013) and a 13% increase in net revenue ($1.172 billion in Q1 2012, $1.324 billion in Q1 2013). Arguably the company’s most popular franchise, Call of Duty was featured twice among the 10 best-selling games of 2012, with Call of Duty: Black Ops 2 coming in at No. 1, and Call of Duty: Modern Warfare 3 at No. 8.
On the PC side of things, Activision Blizzard, Inc. (NASDAQ:ATVI) owns the online phenomena that is World of Warcraft, or WoW. Although the series has seen membership decrease over the years, this is to be expected with a game that is in its ninth year. Nonetheless, WoW still has 8.3 million subscribers, generating more than $100 million in revenue. Although subscriptions are slowly decreasing, Activision Blizzard has shown efforts to increase members with its most recent release of a WoW expansion pack, Mists of Pandaria, in September 2012, which sold a fairly impressive 2.7 million copies in its first week, aligning with the initial projections.
In terms of mobile presence, Activision Blizzard, Inc. (NASDAQ:ATVI) is actively pursuing the mobile platform in hopes of replicating the success that the company has seen in the console and PC space. The multiplatform franchise Skylanders, a video game that allows the gamer to purchase individual physical toys which can be linked to the virtual video game, can be played on PC, current-generation consoles, and iOS. Skylanders, the No. 1 franchise year to date in North America and Europe according to the Q1 2013 SEC filing, has earned revenue greater than $1 billion through 2012. Activision Blizzard has struck a deal with USAopoly to create a Skylanders-themed Monopoly game, one with Frito-Lay for a three-phase national promotion, and another with McDonald’s Corporation (NYSE:MCD), which launched a Happy Meal program in April earlier this year, and plans on extending the program to other countries throughout the year. If that wasn’t enough, Activision has also secured licensees in the following categories: publishing, apparel, back-to-school, game accessories, costumes, construction sets, bedding, and party goods, according to a recent press release.
