Activision (ATVI)
- Missed Non-GAAP EPS by 7 cents – kind of a non-event quarter as they didn’t even have a confernce call
- Revenues in line, but fell 28% year over year
- Microsoft deal expected to close by June 2023 – still a long way to wait
- MSFT-ATVI would make MSFT the 3rd largest video game company in the world behind Tencent and Sony
- MSFT sees global gaming community growing from 3bn players today to 4.5b in 2030 (1% spend money; top 8% account for 60% of gaming rev)
- MSFT wants to add to its Game Pass offering and ATVI offers an installed user base of 400m monthly active games and strong franchises like Call of Duty
- Will regulators allow this deal to go through? Given their market shares in gaming, given precedent, the deal should be allowed but the Biden administration has signaled it will be tougher on large tech deals so it remains to be seen
Video Gaming Secular Shift
- Secular shift from console/PC to mobile to the future (virtual reality/augmented reality/crypto/NFT)
- Shift from free-to-play into play-to-earn
- Zynga (being acquired by TTWO = $12B deal) will launch its first blockchain NFT game in 2022. Gamestop NFT marketplace coming in 2022 – buy/sell/trade your avatar/weapons
- Ethereum based game Axie Infinity is the biggest NFT project of all time; in the last 30 days, Axie had 107k users = $487m in volume; 30-day retention 30% for Axie vs 17% for Candy Crush – almost 2x the retention
- web3 games are in their infancy
Are you invested in video game stocks? What do you think about the Twitter news?
By Chris Wang
