Activision Blizzard Inc. (ATVI) has released Rezurrection, its fourth downloadable content pack for its most successful franchise Call of Duty: Black Ops.
Rezurrection unleashes Zombies in a new “Moon” theme with four of the best Zombie levels, namely “Nacht der Untoten”, “Verruckt”, “Shi No Numa” and “Der Riese”. The all Zombie content pack is also loaded with enhanced sound track and the game boasts extreme new weapons and innovative gear with lots of zombies to be killed.
Call of Duty: Black Ops Rezurrection is available for Microsoft Corp.’s (MSFT) entertainment system Xbox 360.
Looking back, Activision’s content pack phenomenon started in February 2011 when it released the first content pack known as First Strike, which witnessed unprecedented success, generating a record 1.4 million downloads within 24 hours of its release. This was 21% more than the sales generated by the first content pack of Call of Duty: Modern Warfare 2.
The second content pack, Escalation, was released on May 3, 2011 and was also a huge success. Bolstered by the success of the previous content packs, Activision launched its third downloadable content pack, Annihilation on June 28, 2011.
All major publishers are moving toward the digitized version of games and Activision is no exception. Activision has recognized the digital medium to be a more futuristic revenue earner. In the forthcoming quarters, we expect the company to expand in the high-margin digital business segment.
Activision’s focus on the digital channel helped revenues in the last quarter. This is an encouraging trend, since digitized games tend to yield higher margins and are also more likely to grow at a faster rate than packaged versions. This business generated 61% of revenues, growing 13.4% on a year-over-year basis.
Additionally, the title releases scheduled in the forthcoming quarter will prove beneficial for Activision.
However, Activision continues to face tough competition from Electronic Arts Inc. (ERTS) and Take-Two Interactive Software Inc. (TTWO).
Moreover, Activision does not have a presence in the social and mobile gaming platforms, where Electronic Arts has made strategic acquisitions and partnerships, which may hurt its competitive position over the long term.
We maintain our Neutral rating over the long term (6-12 months). Currently, we have a Zacks #2 Rank for Activision Blizzard, which implies a Buy rating in the short term (1-3 months).
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