Activision Blizzard (NASDAQ:ATVI) is scheduled to announce its Q4 and fiscal year 2011 results on February 9.  We expect the phenomenal sales response for Call of Duty: Modern Warfare 3 (MW3) will drive Activision’s results this quarter. Call of Duty: MW3 was released on November 8 last year and the game clocked $1 billion sales in just 16 days after release, becoming the fastest selling entertainment product of all time. On the other hand, falling World of Warcraft (WoW) subs has been worrisome for the company since the past two quarters, and we will be keenly following any update in this regard. Activision Blizzard competes with other video game developers like Electronic Arts (NASDAQ:EA), Take-Two Interactive Software (NASDAQ:TTWO) and casual gaming mainstays such as Zynga (NASDAQ:ZNGA).
Call of Duty Remains Focus of Q4 Results
We expect Call of Duty to be the major driver in Activision Blizzard Q4 results as the retail sales of MW3 saw massive success negating any threat from rival EA’s Battlefield 3. On the other hand, in the digital space, the Call of Duty: Elite subscription service also found great liking among video game users, amassing 1 million paid members within six days of release. Both MW3 and Elite sales have been growing strong through the holiday season, and we expect the numbers to grow even further.
In addition to the sales of MW3 and Elite service, we will be keenly watching the company’s strategy on Call of Duty: MW3 digitally downloadable content (DLC).
Although Falling WoW Subs Remain A Concern
World of Warcraft is the biggest contributor to Activision Blizzard’s stock value, and according to Trefis, WoW-related sales contribute roughly 28% to Activision’s stock price. The impact of WoW to Activision can be realized by the fact that despite solid quarterly results in Q3, Activision’s stock price plummeted after the company disclosed that WoW subs declined to 10.3 million.
Additionally, this quarter marked the biggest threat to WoW till date, as EA released its much awaited MMO Star Wars: The Old Republic (SWTOR). Considering the importance of WoW to the company, we expect Activision to come out with some major update on WoW on February 9.Notes: