Activision’s latest quarterly earnings call revealed some concerns over increased competition this year, and a determination on the part of executives to increase marketing spending in response. Both Activision Blizzard CEO Bobby Kotick and Activision Publishing CEO and president Eric Hirshberg made it clear that marketing was going to be called on to defend the market share of Activision’s key franchises.
Here’s what Hirshberg had to say about Skylanders, the billion dollar toy/game hybrid brand that was a big winner last Christmas, and was the #1 selling game in dollar terms for Q1 of 2013: “This Fall, we are pushing the genre forward once again with Skylanders SWAP Force. Retailer and consumer response has been very positive, and we expect to receive even more shelf space this fall than last. However, we will obviously see more direct competition and expect to see significant resources being spent on competitive launches. As always, we will remain laser focused on delivering the things we know our consumers care about most: Innovation and great game play, all supported by the largest sales and marketing campaign in Skylanders franchise’s history.”
Hirshberg is obviously referring to Disney’s upcoming toy/game hybrid, Disney Infinity, which will feature many of Disney’s iconic brands. This is shaping up to be a battle royale between the two brands. Activision has the advantage of first-to-market, and has great relationships with key retailers like Toys R Us. Disney, of course, also has great relationships with those retailers that include a much broader range of products; Disney brands probably represent a respectable chunk of toy retail.
With Disney cutting back on other areas of game development, it looks like Disney Infinity will be by far the most important game for the company in 2013. This implies a good level of marketing attention and spending on the part of Disney, which is no doubt why Activision isn’t standing pat.
One important component of this marketing battle is going to be shelf space and retail positioning. Activision will have an advantage here, with a much broader array of Skylanders figures (old and new) that have demonstrated solid revenue generation. Expect Activision to have key endcaps nailed down at Toys R Us, with extensive signage. Disney should try to have an impressive kiosk to counter this, but are they ready to make an investment on that scale You’ll be able to judge how serious Disney is about this title by how much presence the company has at key retailers like GameStop, Walmart, Toys R Us, and Target.
Expect both Disney and Activision to make solid TV ad buys aimed squarely at the younger kids who will be clamoring for these collectible toys and the accompanying video games. As usual, don’t expect to see budget numbers from anyone, but you’ll be able to see the spending’s magnitude for yourself if you tune into kid’s programming at all.
Skylanders is just one of Activision’s key franchises under attack, though. CEO Bobby Kotick noted that “the competitive landscape will likely require us to further increase our sales and marketing investments for our three largest franchises, especially in the important holiday season.” He’s referring to Call of Duty, which will be under attack from Electronic Arts’ Battlefield 4, and Blizzard’s aging World of Warcraft, which is bleeding subscribers to a myriad of free-to-play options.
Again, look to the retail stores to see what sort of ground game is being played. Last year Call of Duty had a strong visual presence on the retail floor. Will Electronic Arts be willing to compete heavily for attention at retail Or will EA focus on the air war with a strong television ad buy, and work social media heavily Will we see some interesting marketing twists from either company We’ll know more after E3, when some aspects of the marketing plans will be revealed.
One thing is clear, though: Activision intends to fight a hard marketing battle this holiday, and is willing to spend more to win.