Activision Blizzard Inc. (ATVI) recently announced the availability of Cabela’s Big Game Hunter 2012 in stores. The title can be played on Microsoft Corp.’s (MSFT) Xbox 360, Sony Corp.’s (SNE) PlayStation 3 and Nintendo’s Wii gaming consoles.
The game features the Top Shot Elite plastic gun peripheral, which was first offered with Cabela’s Dangerous Hunts 2011 released in 2010. The gamers also have the option of purchasing the peripheral separately.
Cabela’s Big Game Hunter 2012 offers an expanse of mountains and valleys for gamers in search of prey. Gamers will be able to explore regions by climbing or taking the low, concealed route to take the best possible shot.
Gamers will face dynamic weather conditions, as well as the most realistic animals ever seen in the Cabela’s series as there is focus on distinct movement of every creature that would provide gamers with a clue to the animal’s next move.
Cabela’s Big Game Hunter 2012boasts a gun locker with shotguns and various hunting rifles. Additionally, gamers will be able to purchase gear upgrades to increase their stealth capabilities. Moreover, the game offers new multi-player modes, where up to four players can take turns to shoot, hunt together, or challenge one another in arcade shooting modes.
Although the new hunting game is expected to boost Activision’s growth given its attractive features and loyal customer base, we believe it will face significant competition from the upcoming release of Activision’s Call of Duty: Modern Warfare 3and Electronic Arts Inc.’s (ERTS) Battlefield 3.
However, we also believe that the partnership with Cabela’s will drive significant growth for Activision going forward. Activision is expected to ship Cabela’s new game Cabela’s Survival: Shadows of Katmai on November 1, 2011.
Our Take
Activision is currently focused on the digital channel, which helped drive revenues in the last quarter. This is an encouraging move, since digitized games tend to yield higher margins and are also more likely to grow at a faster rate than packaged versions.
However, Activision also does not have a presence on social and mobile gaming platforms, where Electronic Arts has made strategic acquisitions and partnerships. This could impact its competitive position over the long term.
Further, the gloomy macro environment in North America and weak video game results over the last 12 months compel us to remain on the sidelines.
We, therefore, have a Neutral recommendation on Activision over the long term (for the next 3 to 6 months). Activision boasts of a strong product pipeline for the upcoming holiday season, which will boost its top-line going forward. This is the reason for the Zacks #2 Rank on the shares, which implies a Buy rating in the short term.
