Activision Blizzard Inc.(ATVI) announced their latest offering from their most successful franchise in recent times, Call of Duty: Modern Warfare 3. The new game is scheduled to release on November 8 this year.
Following the suites of other Modern Warfare series, Call of Duty: Modern Warfare 3 is also a first person action game with renewed creative excellence. The sheer scale of brilliant gameplay will give its players a unique experience of enjoying the thrill of the epic action series. Modern Warfare 3 is set to enthrall its players with innovative and intense gameplay, graphical and cinematic excellence, and is loaded with the most advanced multiplayer levels.
The game is being developed by Infinity Ward and Sledgehammer Games.
Activision has been heavily backing its Call of Duty franchise, as the downloadable Call of Duty versions have more commercial potential than most of the standalone console games.
We believe that this announcement from Activision is to counter its nearest rival, Electronic Arts Inc.’s (ERTS) upcoming and much awaited title Battlefield 3, which is also scheduled to release in November 2011.
Additionally, during the quarter, Activision Publishing also plans to release Transformers: Dark of the Moon and Wipeout In The Zone.
Recently, Activision Blizzard posted better-than-expected quarterly results on the back of top-line growth. In the forthcoming quarters, we expect the company’s initiatives to expand in the high-margin digital business segment to pay rich dividends. Additionally, the title releases scheduled for the forthcoming quarter will prove beneficial for Activision.
However, Activision continues to face tough competition from Electronic Arts Inc. and Take-Two Interactive Software Inc. (TTWO), which will act as a headwind going forward.
Moreover, Activision does not have any exposure in the social gaming platform as compared to Electronic Arts, which may hurt its competitive position over the long term.
Therefore, although we maintain our long-term Neutral rating, we currently have a Zacks #2 Rank for Activision Blizzard Inc., which implies a Buy rating in the short term (1-3 months).
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