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Activision Launches All Console Diablo III???Ultimate Edition

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Activision Blizzard Inc’s (ATVI) Diablo III: Reaper of Souls – Ultimate Edition pack is now available in stores. The expansion pack is available on Microsoft’s (MSFT) Xbox One and 360 gaming systems as well as on Sony’s PlayStation 4 and 3 systems.

Launched in May 2012, Diablo III sold more than 6.3 million units in the first week. The game’s unprecedented success earned Diablo III the coveted title of ‘the fastest-selling PC game ever’ after its first-day sales figure touched 3.5 million. The expansion pack Reaper of Souls continued the tradition, as more than 2.7 million copies of the expansion pack were sold in the first week.

The expansion pack introduced a new class of warriors known as “The Crusader” and brought back Malthael as the antagonist. Reaper of Souls increased the game’s level cap to 70 and featured new adventure modes. All these features are available in the new all-console Ultimate Edition pack.

The continuous release of downloadable content (:DLC) and expansion packs for major franchises such as Call of Duty and Diablo helps the aging franchise to remain fresh for gamers for a long time.

Over the upcoming months, Activision will launch World of Warcraft: Warlords of Draenor, the newest expansion in the epic franchise, which has already been pre-purchased by over 1.5 million subscribers. Additionally, the third quarter will witness the release of Call of Duty: Ghosts Nemesis on platforms other than Xbox One and Xbox 360 consoles.

Activision is expected to benefit from its strong product pipeline in 2014. In October, the company intends to launch SkyLanders: Trap Team. Activision also plans to release its highly anticipated game Destiny on consoles in the third quarter.  

The November release of its blockbuster franchise Call of Duty: Advanced Warfare presents a significant growth opportunity in the upcoming holiday season. Moreover, Electronic Arts (EA) and Take-Two Interactive (TTWO) have delayed their much anticipated games Battlefield and Evolve to 2015, which will benefit Activision.

Activision faces significant tough year-over-year comparison in the second half of 2014. The company released its hugely popular Call of Duty: Ghosts last year in November that helped it to report record revenues and earnings growth in the fourth quarter.

We believe that it will be difficult for the upcoming Call of Duty installment to beat the last-year numbers. Moreover, the company faces execution risk with its largest IP to-date, Destiny. Additionally, Activision’s limited presence in the mobile gaming segment, higher adoption of free-to-play games and significant competition are the major headwinds in the near term.
Currently, Activision has a Zacks Rank #3 (Hold).

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