How Does Activision Blizzard’s Console Platform Games Revenue Compare With Its Competitors?

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Activision Blizzard’s (NASDAQ:ATVI) console platform games revenue could grow at a CAGR of 5.3% from $2.54 billion in 2018 to $2.96 billion in 2021, according to Trefis estimates. This growth will likely be driven by newer generation consoles, which, in turn, could drive the demand for games as well. New consoles could hit the market by the second half of 2020. The console is an important platform for Activision Blizzard, as it accounts for over one-third of the company’s total revenue. In this analysis, we compare Activision Blizzard’s growth in console platform vis-à-vis its primary competitors and provide an outlook of the future course of business. You can view our interactive dashboard analysis ~ How Does Activision Blizzard’s Console Platform Games Revenue Compare With Its Competitors? ~ for more details.  In addition, you can see more of our Information Technology data here.

Analyzing The Console Platform Games Revenue of Competitors (FY2015-FY2019)

  • Average Annual Growth
    • Electronic Arts: 3.0%
    • Take Two Interactive: 27.5%

Analyzing Activision Blizzard’s Growth Over The Last Five Years (2014-2018) And Expected Growth Over The Next Three Years

  • Activision Blizzard’s console platform games revenue has grown from $2.1 billion in 2014 to around $2.5 billion in 2018. This represents a 4.4% average annual growth in console revenues (2014-2018).
  • This can primarily be attributed to the success of its franchises, such as Call of Duty and World of Warcraft, among others.
  • Looking forward, console platform games revenue could grow at a CAGR of 5.3% from $2.54 billion in 2018 to $2.96 billion in 2021, according to Trefis estimates.
  • Newer generation consoles are expected to launch in the second half of 2020, and this should aid the demand for games as well.
  • Revenue growth will primarily be led by continued growth in some of the existing franchises, such as Call of Duty. Recently launched games, such as Sekiro: Shadows Die Twice saw strong demand and sold 2 million units in 10 days. The company also released Crash Team Racing Nitro-Fueled earlier this week, and it is yet to be seen how the demand shapes up.

Estimating Console Platform Games Revenue Contribution To Activision Blizzard’s Top Line

  • Activision Blizzard’s console platform games revenue accounted for close to half of the company’s total revenues in 2014 and 2015.
  • However, it declined to the mid-thirties percent since then, reflecting the impact of the King acquisition, which boosted the company’s mobile platform gaming revenues.
  • Looking forward, the figure will likely increase to the high-thirties percent, as the company could see lower PC & Other platform games sales, especially in the near term, with the World of Warcraft game not being scheduled for 2019.

Comparing Console Platform Games Revenue Forecast For Other Gaming Companies

  • For the next three years, we assume an average growth rate of:
    • 6.4% for Electronic Arts
    • 10.7% for Take Two Interactive
  • This compares with our base case growth rate of 3.7% for Activision Blizzard over the same number of years.

Forecasting Activision Blizzard’s Market Share

  • Combined console platform games revenue for Activision Blizzard, Electronic Arts, and Take Two Interactive grew at a CAGR of 5.0% from $6.30 billion in 2014 to $7.64 billion in 2018.
  • Activision Blizzard’s share has declined from 38% in 2015 to 33% in 2018, as Electronic Arts and Take Two Interactive saw faster sales growth.
  • Looking forward, this trend could continue with Activision’s share falling to 30%, as the other gaming companies see faster growth, aided by their new game launches.

 

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