With Activision Blizzard Studios now producing Skylanders Academy and exploring development opportunities for film and television shows around Call of Duty, we asked some leading video game analysts what that means for Activision Blizzard Inc. and the video game industry as a whole.
Moving into films and Hollywood branding is the next logical step for strong franchises that resonate with a wide audience, Wanda Meloni, CEO of M2 Advisory Group, said. With the success of movies like The Hunger Games series, Insurgent and Mad Max: Fury Road the idea of powerful characters that cross gender lines is something that is not only welcome, but frankly something that has been lacking in entertainment for some time.
Blizzard Entertainment is working with Legendary Entertainment and Universal Pictures to bring Warcraft to the big screen next summer through a prior relationship and deal. Joost van Dreunen, CEO of SuperData Research, said the strength of many of Activision’s franchises comes from a deep underlying lore.
The industry has come a long way from a time when game-based movies were outright terrible to a point where a rich, narrative economy for games like World of Warcraft allow for the development of movie franchises, van Dreunen said. The transition to digital and the growth of the games market as a whole are key to this: even though we now see a much larger, global market it has also exacerbated discovery issues. By leveraging traditional channels, both Activision and Ubisoft are trying to diversify their marketing approach and cultivate customer loyalty.
Joe Dodson, analyst at EEDAR, said Skylanders Academy will help Activision compete with newer toys-to-life games from Disney Interactive and Warner Bros. Games. While Activision was first to market with and has generated over $3 billion in revenues, the stakes have changed of late.
“Skylanders is in a very difficult competition with two competitors with extremely powerful licenses, and Disney Infinity is consuming more market share every year,” Dodson said.
Despite the power of Marvel/Disney/Star Wars, the television content for those brands is not strong for very young children and toddlers. Lego, on the other hand, has The Lego Movie, as well as Lego DC content. That may be the blueprint that Activision follows with Skylanders. By creating a show that appeals to young children, they could find themselves competing for brand recognition with just Lego, instead of Lego and Disney and Marvel and Star Wars.
From an investor standpoint, we are going to see a lot more reach and cross-over between the different properties and platforms to push revenue across multiple properties, Meloni said. Activision believes in supporting strong properties and ultimately that is a consumer play. They are the leader in interactive entertainment and I’m looking forward to see how they mesh their tightly-knit closed ecosystems with the more open and social play options that mobile devices enable. There are a lot of new areas for exploration there and time will tell how that will play out over time financially.
Activision is following Ubisoft into Hollywood. The French game publisher launched Ubisoft Films in 2011 and has had success with a Rabbids TV series and is developing several Tom Clancy films, as well as filming an Assassin s Creed movie with Michael Fassbender at Pinewood Studios in England right now.
Michael Pachter, managing director of equity research at Wedbush Securities, said, “Initially, I think Activision will hire a production company with a profit share, but they are bigger risk takers and have better IP than Ubisoft, so they can take greater risk.”
This new Hollywood approach also should connect with Activision s new eSports division, which is being helmed by former ESPN CEO Steve Bornstein and Major League Gaming co-founder and president Mike Sepso. The eSports division will build on the company s competitive gaming leadership by creating all-new ways to deliver the best-in-class fan experience across games, platforms and geographies, furthering the development of its world-leading eSports ecosystem.
“Activision Blizzard Studios will definitely complement Activision’s new eSports division,” Meloni said. Activision is a master at partnering their properties with strong consumer brands. I see this as another added layer to what Activision has up its sleeve for us in 2016 and beyond.
Not every analyst is sold on this expansion into linear entertainment. Peter Warman, CEO of Newzoo, said adding a professional movie studio business to their portfolio is something he would have argued against, especially as they need all their talent and focus on making the acquisition of King work.
Being based close to Hollywood this is tempting, but big investments should have an impact on a global scale and I am not sure if making movies would do that for them, Warman said.
Nevertheless, Activision has officially gone Hollywood and it has some of the biggest gaming IP’s lined up with a global audience that s used to forking over $60 or more for interactive experiences. Now the question is whether this new linear venture can have the same type of success in Hollywood, where video game movies and TV shows have struggled to connect with gamers over the years.