Wedbush Securities analyst Michael Pachter was one of the speakers in the Game Monetization Summit which concluded yesterday. In his speech Pachter made several pretty bold predictions involving the future of Activision Blizzard, Inc. (NASDAQ:ATVI), as well as their current performance.
Pachter predicted that ATVI will be looking into a buyout of Take Two Interactive (NASDAQ:TTWO) in an effort to gobble up their attractive Grand Theft Auto franchise. He ruled out an acquisition of THQ, Inc. (NASDAQ:THQI), writing them off as “not investable”. Part of Pachter's forecast was also an aggressive monetization on part of Activision of Bungie's new game under their four-title contract, with the multiplayer aspect of the game being paid. The justification he had for this prediction was that “they're greedy pigs. And they're bold.”
The Wedbush analyst criticized Activision for 'training' their audience to pay $60 for a Call of Duty title, which they can then play all year until the next installment. At the same time, World of Warcraft players have to shell out about $180 for a year's subscription, so it would seem WoW does monetization better. Mr. Pachter seems to have failed to take into account the 4 servings of DLC that Call of Duty players have been getting for three years now, which rack up the game's price to $120 and which are practically a must-buy for anyone who puts a lot of time into the game.[banner]
While we all know ATVI likes to boast about sales and even though Call of Duty: Black Ops 2 did indeed rake in $1 billion in half a month post release, Activision's stock price didn't exactly explode. ATVI is still over 5% down compared to its levels at the end of 2011. Console players reportedly logged fewer hours playing Black Ops 2 than the previous iteration of the franchise and player count is dropping like a rock on PC, with daily peaks of around 35 thousand, almost 50% down from the 64 thousand 10 days ago.
Black Ops 2 is plagued by lag compensation on the PC, with game-breaking discrepancies between player sync, captured on Youtube video and reported on virtually every forum connected with the game. Console players who use peer-to-peer matchmaking and game hosting report similar issues. While Activision put up a supposed troubleshooting guide for lag on consoles, the company may want to start thinking about how they are going to sell their DLC for another $60 to people who are quitting the game.
In yesterday's trading session ATVI closed 1% up, stopping at $11.36 per share at the bell.