Is Activision becoming the Disney of the 21st Century?
World-leading video game developer Activision Blizzard is on a tear this year, and investors are responding as you might imagine: the company’s share price is up more than 68%, year to date. Dominion has long considered the video game sector to be an emerging force that will come to dominate the entertainment landscape – the sector is already bigger than the global box office and music industries combined. And according to some Wall Street analysts, Activision Blizzard is poised to remain top of the heap, becoming the 21st Century’s answer to The Walt Disney Company!
Activision Blizzard’s share price has been on a tear so far this year
Source: Yahoo Finance
Timothy O’Shea, an analyst with Jefferies, wrote in a note to clients: “with its stable of core franchises and a multitude of further growth opportunities, ATVI [Activision Blizzard] is building a Disney-type media business for the 21st Century, but with (much) higher operating margin. We see large opportunities around esports, ads, mobile games, full-game downloads, and consumer products. But for 2Q, the big beat was driven by in-game spending, the biggest opportunity of them all.”
O’Shea suspects Activision will be able to build an “NFLF-style” business through its Overwatch league (the company’s biggest move to date in the eSports space) that includes “broadcast rights, ads, and sponsorship.” He also notes that the company has managed to beat its earning per share guidance in 90% of the past 21 quarters.
As anyone who regularly reads this newsfeed will know, Dominion has been saying similar things about Activision Blizzard from the inception of its Ecommerce Fund. But we are no longer the only ones. Baird analyst Colin Sebastian also wrote about the company in a note to clients, saying:
“We remain encouraged by the company’s extensive portfolio of key franchises, and believe growth opportunities remain as new titles, growing eSports offerings, and improving monetization trends continue to generate upside potential.”
Dominion holds Activision Blizzard in its Global Trends Ecommerce Fund.
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