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Activision Blizzard, Inc. (ATVI): What Happened?

Therefore, the barrier of entry caused by hardware will be off set. The problem with this approach is that data packages limit the amount of data that can be accessed at 4G LTE speeds. For example, AT&T puts a 2GB memory limit, meaning that Sony Corporation (ADR) (NYSE:SNE)’s attempt at using the cloud could be thwarted by the limitations of cellular networks.

In the near future, it could very well be possible for hard-core gaming to be able to compete with soft-core gaming in the mobile space. Assuming that is the case, Zynga Inc (NASDAQ:ZNGA) could be in trouble.

Zynga Inc (NASDAQ:ZNGA) has been relying heavily upon both the Google and Apple app stores for incremental revenue growth. In fact, Google’s app store currently has 70% of the global mobile market, implying that hundreds of millions of mobile users will be shopping for online content through application stores over the next decade.

This business model could be under attack by Sony if Sony can play its cards right, and assuming cellular internet technologies are able to catch up to the needs of the market. This could put a dent in casual gaming on mobile devices, but for now mobile gaming will be dominated by mid and soft-core titles.

Conclusion

Activision Blizzard, Inc. (NASDAQ:ATVI) will experience a decline in profitability for the full year based on its weak outlook. The reason has to do with the console refresh cycle that will increase development related costs for the next generation games. It could be a tough year to invest into Activision Blizzard, Inc. (NASDAQ:ATVI) as the company’s transition to next-generation consoles will hurt profitability.

The article Activision Blizzard Hurt by Console Refresh originally appeared on Fool.com is written by Alexander Cho.

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