Activision's COD: Warzone Beats Fortnite in Teen Preference

Activision Blizzard ATVI is benefiting from strong popularity of franchises like Call of Duty (COD), which is expected to boost in-games spending, thereby driving net bookings and top-line growth in the near term.

Call of Duty: Warzone has become the most played game among teens, with an increase from 33% in spring to 62% currently, per Piper Sandler’s Taking Stock with Teens survey, which draws its conclusions from 9,800 teen respondents in the United States.

Moreover, the free-to-play title has surpassed Epic Games’ Fortnite, which fell to 37% from 39% in the spring, and 53% in the spring of 2019.

Launched on Mar 10, Call of Duty: Warzone attracted more than 75 million players as of Aug 4. These numbers are likely to grow thanks to the coronavirus pandemic that has kept people confined to their homes.

According to data from the NDP Group, the video game industry shattered sales records in the second quarter, with Americans spending a whopping $11.6 billion on games. This marked the highest total second-quarter spending on gaming in U.S. history.

Activision Blizzard, Inc Price and Consensus

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Call of Duty: A Major Growth Driver

Activision’s popularity has been primarily driven by its well-known franchises, which will continue to fuel top-line growth. Call of Duty is one of the biggest growth drivers for the company. The game has been the top-selling console franchise for Activision in 10 of the last 11 years.

Call of Duty Mobile, launched in October 2019, continues to play an important part in driving user base. The game witnessed strong sequential growth in engagement and player investment, as well as monthly seasonal-content addition in second-quarter 2020. Developed in collaboration with Tencent’s TCEHY Timi Studios, the game surpassed 250 million downloads, globally, within a span of eight months, surpassing Fortnite and PUBG Mobile, per Sensor Tower data.

Further, Call of Duty in-game net bookings more than doubled sequentially and were almost five times higher year over year, creating a new quarterly record.

The latest title, Call of Duty: Modern Warfare sold more units than Call of Duty: Black Ops 4. Activision stated that it will make frequent content updates to Call of Duty and expand the franchise’s presence across platforms and geographies.

Franchise Strength to Fend Off Competition

Activision is stepping up investments in other popular franchises as well. The company expects to deploy more resources in its franchises, including Overwatch, King’s Candy Crush, Diablo and Hearthstone.

Moreover, the success of World of Warcraft Classic also indicates an expanding portfolio, which will benefit this Zacks Rank #2 (Buy) company’s top line in the long haul. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, Activision faces stiff competition from the likes of Take Two Interactive Software TTWO, Nintendo and Electronic Arts EA apart from Tencent and Epic Games.

Notably, Take Two’s Red Dead Redemption 2 and Borderlands 3 gained significant popularity. Moreover, Nintendo’s Animal Crossing: New Horizons gained substantial popularity within a short span of time.

Meanwhile, the latest release of Star Wars: Squadrons is expected to be a solid addition to EA’s strong portfolio of IPs, which include FIFA, Madden NFL, Need for Speed and Apex Legends. Notably, the company’s last Star Wars game, Star Wars Jedi: Fallen Order, was a huge success both critically and commercially.

Nevertheless, Activision’s strong portfolio of games is expected to boost its monthly active user base in the near term.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.