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Activision Blizzard Ready To Rack Up Points From E-Sports

Video game publisher Activision Blizzard ( ATVI ) is taking steps to capitalize on the growing e-sports trend. On Thursday, Activision announced the launch of its e-sports broadcast network, as part of the recently acquired Major League Gaming platform. It also revealed new content and broadcast experiences, as well as a distribution partnership with Facebook ( FB ). “This marks an important step given Activision’s broader ambitions as a media/entertainment company, and is a natural evolution of the Major League Gaming assets acquired early this year,” Baird analyst Colin Sebastian said in a research report Thursday. “E-sports is still in its infancy (think fantasy football 20 years ago) and represents significant near- and long-term incremental monetization opportunities given Activision Blizzard’s portfolio of owned-IP.” Sebastian rates Activision stock as outperform, with a price target of 42. Activision stock rose 1% to 38.29 on the stock market today , more than 9% extended from a 34.76 buy point, touched April 13, out of a cup-with-handle base. The Santa Monica, Calif.-based company presented its Activision Blizzard Media Network plan for advertisers at the IAB Digital Content NewFronts 2016 conference in New York. ABMN will launch the new content and broadcast experiences during the MLG Anaheim Open, a two-day “Call of Duty: Black Ops 3” tournament beginning on June 10. It will be available for live streaming through Facebook. “E-sports could become a meaningful revenue and profit contributor to Activision within 2-3 years, as the company monetizes its IP (intellectual property) and product portfolio across alternative distribution channels,” Sebastian said. Baird predicts the e-sports industry will grow from $200 million last year to $1 billion in 2018 and $1.8 billion in 2020. “We see a significant opportunity with tournaments, advertising/sponsorship, broadcasting, and fantasy/wagering, contributing incrementally to game publisher revenues and earnings,” Sebastian said. Other companies pursuing e-sports initiatives include Time Warner ’s ( TWX ) Turner Sports and talent management agency WME-IMG, which have partnered on E-League, a “Counter-Strike: Global Offensive” league. On Wednesday, Turner and WME-IMG announced the first group of brands to join E-League as official marketing partners. They include Arby’s, Credit Karma and Buffalo Wild Wings ( BWLD ). The inaugural season of E-League starts on May 24. Meanwhile, Walt Disney ( DIS )-owned ESPN has teamed with Activision on “Heroes of the Dorm,” a tournament for the game “Heroes of the Storm.” RELATED: Disney’s Exit From Toys-To-Life Video Games Could Boost Activision

Disney’s Exit From Toys-To-Life Video Games Could Boost Activision

Walt Disney ‘s ( DIS ) decision to end its Infinity interactive toy and video game product line could provide a lift to rivals in the toys-to-life business, namely Activision Blizzard ( ATVI ) and Warner Bros. Interactive Entertainment, a unit of Time Warner ( TWX ). Disney announced Tuesday that it is getting out of the self-published video game business and canceling its Infinity game series. Disney took a $147 million charge to its fiscal-second-quarter results to close the division. Disney’s Infinity exit leaves Activision’s Skylanders, Warner’s Lego Dimensions and Nintendo ‘s ( NTDOY ) Amiibo in the toys-to-life games segment. The toys-to-life genre involves the use of figurines or action figures that are placed on a small platform to interact with on-screen play for game consoles. “Disney’s announcement that they are exiting the toys-to-life category in a production capacity creates some interesting opportunities,” Cowen analyst Doug Creutz said in a report Thursday. “First, we think it paves the way for a significant bounce back in Skylanders sales this year; second, we suspect the Disney IP (intellectual property) will eventually wind up as part of WB’s Lego Dimensions franchise.” Toys-to-life video game sales, excluding sales of stand-alone toys, peaked in 2013 with the launch of Infinity, Creutz said. The category declined 20% in 2014 and was flat in 2015, he said. Nintendo launched Amiibo toys in 2014, but it doesn’t have a stand-alone game like Infinity, Skylanders and Lego Dimensions. Amiibo toys are integrated into existing Nintendo games. “With Activision now the only player planning to launch a toys-to-life game in 2016 (there will be some Dimensions playsets but no new game), if the category remains flat, Skylanders could grow by as much as 300%,” Creutz said. “This would be a source of surprise upside to Activision’s guidance. “In any case, the elimination of a competitor can only be a positive for both Activision and WB’s profitability from the category.” Cowen rates Activision stock outperform, with a price target of 44. Activision stock was up a fraction, above 37, in afternoon trading on the stock market today . The shares broke out of a cup-with-handle base at a 34.76 buy point on April 13. Cowen rates Disney and Time Warner stocks as market perform. Disney stock was down a fraction Thursday afternoon, while Time Warner was down more than 1%. RELATED: EA Stock Soars Like ‘Star Wars’ Millennium Falcon After Q4 Beat .

EA Stock Soars Like ‘Star Wars’ Millennium Falcon After Q4 Beat

Electronic Arts ( EA ) stock rocketed higher on Wednesday, a day after the video game publisher reported better-than-expected March-quarter earnings, thanks to hot games like “Star Wars Battlefront.” EA stock was up 12%, near 72.50, in afternoon trading on the stock market today . The stock is at its loftiest point since touching an all-time intraday high of 76.92 on Oct. 29. The Redwood City, Calif.-based company said late Tuesday it earned 50 cents a share excluding items on sales of $924 million in its fiscal fourth quarter ended March 31. Analysts polled by Thomson Reuters had expected EA to earn 42 cents a share on sales of $889 million. On a year-over-year basis, adjusted EPS rose 28%, and revenue inched up 3%. “We grew non-GAAP net revenue, profitability and cash flow to record highs,” Chief Financial Officer Blake Jorgensen said in a statement . “Leveraging our great portfolio of brands and live services has enabled us to break records across our key financial metrics. We expect to drive strong revenue, earnings and cash flow growth into the future.” EA credited “Star Wars Battlefront” and sports games, such as “Madden NFL 16″ and “FIFA 16,” for its gains in Q4. For its current fiscal 2017, EA expects to earn $3.50 a share excluding items on sales of $4.9 billion. That compares with fiscal 2016 results of $3.14 EPS on sales of $4.57 billion. EA hopes to continue its strong performance with new games this year, such as “Mirror’s Edge Catalyst,” due out June 7, and “Battlefield 1,” set for release Oct. 21. Also in the pipeline are “Titanfall 2,” scheduled for fiscal Q3, and “Mass Effect: Andromeda,” set for late Q4. New Star Wars Games Coming From EA Jefferies analyst Brian Pitz maintained his buy rating on EA stock but raised his price target to 105 from 95. “We continue to believe EA is poised to benefit from numerous multiyear tailwinds, including fast sales of consoles and ever more direct-to-consumer digital downloads, which drive improved profitability,” Pitz said in a report. Benchmark analyst Mike Hickey also reiterated his buy rating on EA and inched up his price target to 82.64 from 81.48. Key factors driving his enthusiasm for the company include expectations for continued sales and earnings growth, a compelling game slate ahead and growth of digital downloads and services, Hickey said. Wedbush analyst Michael Pachter reiterated his outperform rating on EA and 12-month price target of 86. “The company provided greater visibility into its long-term release schedule, expecting to launch at least one Star Wars title each year over the next three to four years,” he said in a report. “In fiscal 2018, it expects to launch a Star Wars Battlefront sequel. “In fiscal 2019, it expects to launch a Star Wars action game from Motive Studios and Visceral Games. It also expects to launch a Star Wars game from Respawn Entertainment, which we have penciled in for fiscal 2020. In addition to its Star Wars efforts, EA expects to launch a new, unannounced IP (intellectual property) in fiscal 2018.” Last week, Activision Blizzard ( ATVI ) reported better-than-expected first-quarter sales and earnings , thanks to a boost from newly acquired mobile game publisher King Digital Entertainment. A third major video game publisher, Take-Two Interactive Software ( TTWO ), is scheduled to report fiscal-fourth-quarter earnings on May 18.