Blizzard is the key to Activision’s growth
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Blizzard is the key to Activision’s growth

Activision Blizzard’s Blizzard unit is the key to the company’s future growth. It’s producing high-demand titles and is heavily exposed to the growing eSports sector through its Overwatch game and the company’s associated eSports league. Blizzard’s user base is expanding rapidly, more than making up for Activision’s relative slowdown in new users – that will likely continue to be the case, and Blizzard’s relevance will only continue to grow alongside it.

Activision Blizzard’s share price has risen by 80% so far this year

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SOURCE: Yahoo Finance

Activision Blizzard’s overall revenue is expected to grow at a compound annual growth rate (CAGR) of 7.9% over the next five years. However, Blizzard is on course to outpace this growth, with a CAGR of 15%. This growth will be driven by new users, tempted onto Blizzard’s titles through widespread adoption of eSports and other digital platforms. Right now, Blizzard is worth about 40% of the company’s revenue – but that could grow to more than half in the next five years.

Blizzard’s biggest risk is also a blueprint for its further success: the unit’s most successful game, World of Warcraft, is coming towards the end of its lifecycle. This game is a stalwart of Blizzard’s creative properties: it debuted in 2004, and blazed a trail for what would become MMORPGs (Massively Multiplayer Online Role Playing Games). It peaked in 2010, with an enormous user base of 12 million subscriptions. And by the beginning of 2014, 100 million accounts had been created.

World of Warcraft, though users are now dropping off (they remain in the millions), remains a powerful example of how to do video games right. It garnered review scores of 90%+ from all the major reviewers, was met with popular acclaim, and has been the subject of numerous expansions over its 13 years-to-date lifecycle. Blizzard needs similar properties to continue to outperform – and with Overwatch growing fast and a number of other titles in the pipeline, there’s every indication it will get them.


Disclosure

Dominion holds Activision Blizzard in its Global Trends Ecommerce Fund.


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