Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Activision Blizzard, Inc. (ATVI) Is Under Attack

Activision Blizzard, Inc. (Activision Blizzard, Inc. (NASDAQ:ATVI) is under attack.

Yes, the video-game company reported surprisingly strong sales and revenue for the first three months of the year. It even raised its full-year guidance on both counts. But shares still fell by more than 6% after management warned that the holiday season could be “more challenging than our earlier view.”

Activision Blizzard, Inc. (NASDAQ:ATVI) does have plenty to worry about. Starting in the fall, it will have to fend off major challenges against two of its tentpole franchises.

Infinite competition
The attack
: First up will be a huge fight with The Walt Disney Company (NYSE:DIS). The House of Mouse is cannonballing into the market that Activision Blizzard, Inc. (NASDAQ:ATVI) created with its Skylanders console franchise. Disney will launch its competing title, Infinity, in August, and the stakes couldn’t be higher. Helped along by toy sales that complement the gameplay, Skylanders has been the best-selling game in North America and Europe so far this year. The Walt Disney Company (NYSE:DIS) is aiming to grab some of that coin and is ready to turn the full force of its marketing machine to the task.

The defense: But Activision Blizzard, Inc. (NASDAQ:ATVI) isn’t standing still. The company has a new installment of the Skylanders franchise lined up with an innovative twist that allows gamers to customize their toys for more varied gameplay. And while Activision doesn’t have the deep catalog of characters that The Walt Disney Company (NYSE:DIS) boasts, it does have an established franchise and plenty of shelf space at retailers already locked in and ready for the fight.

Ghost in the machine
The attack
: Next up will be the holiday slugfest against Electronic Arts Inc. (NASDAQ:EA). Electronic Arts Inc. (NASDAQ:EA) is timing the release of Battlefield 4 to go head-to-head with Activision Blizzard, Inc. (NASDAQ:ATVI)’s Call of Duty launch this year. The previous installment of Battlefield sold a quick 10 million copies, so it should make for some very tough competition against Activision’s biggest brand.

The defense: Still, Activision is hoping that a fresh take on the Call of Duty franchise will keep it on top. Call of Duty: Ghosts takes the series in an entirely new direction, with new characters and an all-new story. And its launch will also be backed up by “one of the largest sales and marketing plans in the brand’s history.”

Next generation
Expect that trend to hold back profits for the company in general this year. All this extra competition means that Activision will have to spend much more on marketing to support its games. And that means it probably won’t repeat the record profitability it enjoyed last year.

However, Activision can’t afford to let rivals gain too much ground heading into the new console introductions from Sony and Microsoft Corporation (NASDAQ:MSFT). It has a dominant market position as this console cycle is coming to an end, but Activision Blizzard, Inc. (NASDAQ:ATVI) will have to fight to keep it that way through the next-generation releases.

The article Activision Blizzard Is Under Siege originally appeared on and is written by Demitrios Kalogeropoulos.

Fool contributor Demitrios Kalogeropoulos owns shares of Walt Disney (NYSE:DIS) and Activision Blizzard. The Motley Fool recommends Activision Blizzard and Walt Disney and owns shares of Activision Blizzard, Microsoft, and Walt Disney.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.