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Videogame Stock Roundup: Activision’s New e-sports Facility, Destiny 2 for PC& Nintendo’s Deal in Focus

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Last week, we saw Activision Blizzard ATVI announcing its state-of-the art facility called Blizzard Arena Los Angeles at Burbank Studios. Also, it announced Destiny 2 for PlayStation4 (PS4) and Xbox One. A PC version was also announced, a first for the Destiny franchise and will be out on Oct 24. Meanwhile, Nintendo NTDOY collaborated with Western Digital WDC to make memory chips for Switch.

Recap of the Developments

1. Activision Blizzard’s Blizzard Entertainment has set up Blizzard Arena Los Angeles, a state-of-the-art facility for e-sports events at Burbank studios. It will also have a retail store that will stock up merchandise related to competitions.

The facility will be spread over 50,000 square feet area and will have a seating capacity for 450 people, per sources.


The company will be hosting its Overwatch Contenders Season One Playoffs event over Oct 7- Oct 8 weekend. On Oct 13, the company will host the $250,000 prize Hearthstone Championship Tour (Summer Championship).

Currently, the company carries a Zacks Rank #1 (Strong Buy). Shares of Activision have registered impressive growth in the past one year. The stock generated a return of 82.3% compared with the industry’s gain of 49.6%.

2. Activision released the much awaited online multiplayer game Destiny 2 on Sony’s SNE PS4 and Microsoft’s MSFT Xbox One consoles. The game is available at a retail price of $59.99.

The PC-version of Destiny 2 is set to release on Oct 24. This is the first non-blizzard game that will be launched for PCs through Blizzard's PC gaming platform, Battle.net.

Destiny — the first title under Activision-Bungie’s 10-year deal — developed by Bungie of Halo fame and published by Activision was released on Sep 9, 2014. Reportedly, it achieved over $500 million in pre-order and first day sales. Moreover, in the first month, the game sold 6.3 million units, which generated $47.5 million in revenues. However, the series never had a PC version.

With the launch of Destiny 2 on PCs, the company will be able to cater to a broader audience. The title has already received positive feedback from most reviewers including IGN, GameSpot and Metacritic.

3. Nintendo and Western Digital partnered to launch Nintendo Switch-licensed microSDXC SanDisk memory cards with capacity of 64 GB and 128 GB.

Owing to the limited storage capacity, Nintendo Switch users are unable to enjoy the full gaming experience for certain games that require additional storage due to their large file formats (in the range of 50-100 GB). Games such as NBA 2K18 require the use of memory cards and Nintendo has many such games in the pipeline. Buying memory cards will help users to enjoy the full game versions. Per Nintendo, the memory cards will be available for sale next month.

Switch, priced at $300, combines the functionalities of both conventional consoles and handheld devices. Switch is designed to attract casual gamers who are increasingly using mobile. Switch has seen tremendous response.

As of Jun 30, 2017, Nintendo sold 4.7 million units and expects to reach 10 million units in the first year. Switch was released in March this year. Switch has vastly outperformed the company’s last console system Wii U. Only 5 million Wii U units were sold in its first year of release.

More recently, per media reports, Nintendo was ordered by a Texas court to pay $10 million to iLife Technologies for infringing the latter’s motion sensing technology. Nintendo was accused of using this technology in its Wii U console. It has appealed against the ruling.

The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We note that Nintendo has outperformed the industry year to date. The stock increased 57.6% compared with 49.6% gain recorded by the industry.

Performance

The following table shows the price movement of the major video game companies over the past five trading days as well as the last six months:

Company

Last 5 Days

Last 6 Months

ATVI

5.19%

36.97%

EA

1.71%

34.69%

GLUU

3.86%

86.17%

MSFT

2.09%

15.43%

NTES

2.9%

-5.81%

TTWO

5.14%

68.1%

ZNGA

1.93%

34.67%

Over the last five trading sessions, Activision Blizzard was up 5.2%, while Electronic Arts EA was up a mere1.7%.

Computer and Technology Sector 5YR % Return

Computer and Technology Sector 5YR % Return

In the last six-month period, Glu Mobile GLUU surged the most 86.2%. Glu Mobile’s roster of games, especially celebrity titles, is one of its biggest positives. Evergreen titles like Cooking Dash, Racing Rivals and Kim Kardashian: Hollywood continue to be a big contributor to revenues.

Glu's acquisition of US developer Crowdstar in November 2016 has also been a big positive. Crowdstar’s game Design Home recently hit the 1 million daily active user mark. Glu Mobile signed a multi-year licensing agreement with WWE to develop a mobile game that will be released in 2018.

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