Video gaming giant Activision Blizzard (NASDAQ:ATVI) has announced a partnership with Disney (NYSE:DIS) to produce and distribute Wreck-It Ralph video game exclusively for Nintendo consoles — DS, 3DS and Wii. [1] The video game is a story extension to Wreck-It Ralph, an upcoming 3D animated comedy film produced by Walt Disney Animation Studios. We believe the move reflects Activision Blizzard’s efforts to revive its Nintendo console and handheld revenues and it can reap good benefits if the movie is well-received at the box-office. Activision competes with other game developers like Electronic Arts (NASDAQ:EA), Take-Two Interactive Software (NASDAQ:TTWO) and casual gaming mainstays such as Zynga (NASDAQ:ZNGA).
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Activision is trying hard to revive Nintendo revenues
Though Activision enjoys unmatched popularity on both Microsoft and Sony consoles through its Call of Duty franchise, the situation is strikingly different for Nintendo consoles. During the past two years, Activision’s Nintendo console revenues have declined by a steep 29% annually to reach $350 million in 2011 from $585 million in 2009. The scenario is equally bad in handhelds, with Activision’s handheld revenues slumping nearly 20% annually over the past two years.
While a gradual decline in casual and musical genre video games is the primary catalyst behind the decline in Activision’s Nintendo consoles and handheld revenues, a number of other factors such as a lack of major games on Wii and declining popularity of handheld devices, compared to alternative handheld platforms such as smartphones and tablets, have also contributed to the decline. However, since the launch of Skylanders: Spyro Adventures in October 2011, the company is trying hard to revive its Nintendo Wii and console revenues. Skylanders, which was initially developed only for Wii and later extended to other consoles, has been received exceptionally well.
We believe the latest move of partnering with Disney to produce Watch-It Ralph video game is also part of Activision’s efforts of reviving its Nintendo consoles and handheld sales. Watch-It Ralph is one of the most highly anticipated animated movies of 2012, and Activision is hoping to cash in on this opportunity. As the video game is a story extension to the movie, the success of Watch-It Ralph should help Activision tap some of the movie fans.
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Notes:- Activision collaborating with Disney to produce Wreck-It Ralph video game, Source: Activision Blizzard’s IR [↩]
