Next-Gen Gaming and Diablo 3
Sony recently announced its PS4 system and the processing power it would bring to the table, which includes 8 gigs of Ram and an 8 core processor. Sony and Blizzard are also teaming up to offer Diablo 3 on the PS4. This will be huge for Blizzard, as it enables it to reach a whole new market of one of its bestselling games. On top of that, it will also be able to sell DLC’s over the PS4 marketplace. Diablo 3 has sold over 10 million copies, and if it is on the PS4 that will at least add another 2 million. Nintendo recently released its Wii U system and now offers Call of Duty on its consoles, which will further increase COD sales as the Wii has very little to offer mature gamers. So far only 180,000 copies have been sold for the Wii U. I think this number will increase to at least 300,000 by the end of the COD cycle, as there is very little competition in the mature gaming space on the Wii U. Microsoft is also rumored to be in the works for a new Xbox system, which will come out this fall.
New consoles could help spur more game sales as developers are able to offer more content and better graphics/gameplay with the stronger processing power. EA’s Battlefield 4 is going to be a next-gen game, slated to come out in 2014. Already Battlefield 3 has large maps, immersive gameplay, and destructive landscape (you can tear down walls and buildings), and with more processing power I would expect the destruction to get better and the graphics to look almost life-like. Call of Duty is rumored to be making their next game with a destructible landscape, because of how popular it was in BF 3 and BF Bad Company 2. With the release of the new consoles, I would expect both Battlefield and Call of Duty to continue to sell very well as the gameplay experience gets better and the amount of things to do increases. One of the big bear cases against Activision is that Call of Duty will get stale and they will lose their cash cow. Console refreshes, especially one as big as this, will enable the Call of Duty franchise to last longer and allows Activision to use the profits to build out new franchises, such as Titan (the replacement for WOW rumored to come out in 2014) or Skylanders. Skylanders has made Activision over $1 billion in revenue and offers Activision Blizzard, Inc. (NASDAQ:ATVI) a new series to build out and is geared towards a younger audience. This will allow them to sell games like COD to mature players, and games like Skylanders to those whose parents won’t let them play COD yet.
Competition and Sales Figures
Activision does have some tough competition to contend with. Battlefield 3 has been a big success, both selling well and getting very good reviews. I would expect Battlefield 4 to clash head on with the Call of Duty release in 2014. It has sold 6.65 million units on the Xbox 360, 6.22 million on the PS3, and 2.33 million on the PC. Black Ops 2 has sold only 860,000 units on the PC, but dominates BF on the consoles. It sold 9.51 million on the PS3, 11.5 million on the Xbox 360, and 160,000 on the Wii U. Call of Duty is much more of a console game and will continue to dominate that space, but it should try and reach out to PC gamers, just as Blizzard reached out to console gamers with Diablo 3. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) pushed back the release of Grand Theft Auto 5 until September, which is around the time Activision announces the new Call of Duty game. There is a lot of pent up demand for GTA 5, which can be seen by the 17.9 million views the second official trailer has, and the 32.2 million views the first one has on YouTube.
