Stock Wars: Activision Blizzard Vs. Electronic Arts Vs. Take-Two

Three of the largest video game companies have shown impressive five-year runs of their share prices.

New console releases from Sony Corporation (NYSE: SNE) and Microsoft Corporation (NASDAQ: MSFT) will make their debut in fall 2020.

Today’s Stock Wars looks at Electronic Arts Inc (NASDAQ: EA), Take-Two Interactive Software Inc (NASDAQ: TTWO) and Activision Blizzard Inc (NASDAQ: ATVI).

Key Games: Activision Blizzard’s “Call of Duty: Modern Warfare” was the bestselling game in 2019. This was the only Activision Blizzard title in the top 15 bestselling games, according to NPD.

Take-Two had four games on the 2019 bestseller list. “NBA 2K20” ranked second for sales in 2019. “Borderlands 3,” “Grand Theft Auto V” and “Red Dead Redemption 2” ranked fourth, 11th and 12th, respectively.

Electronic Arts had four games on the 2019 bestseller list, with “Madden NFL 20,” in the No. 3 spot, being its highest-ranking game in sales.

“Star Wars Jedi: Fallen Order” was the sixth-bestselling game of the year. “FIFA 20” and “Anthem” rounded out the list, ranking 14th and 15th, respectively.

Activision Blizzard saw 67% of its revenue last fiscal year come from “Call of Duty,” “Candy Crush” and “World of Warcraft.”

Take-Two saw “Borderlands 3” sell 10 million copies in the last fiscal year, which was 50% higher than the previous release in the franchise.

“Grand Theft Auto V” sold 130 million copies through the last fiscal year and ranks as one of the most successful games of all time.

Electronic Arts launched eight major games in the last fiscal year. Electronic Arts saw strong initial sales figures from “Madden NFL 21,” which was released in August.

Esports Growth: Activision Blizzard is a leader in the esports sector.

The company launched the Overwatch League in 2018, with franchises paying $20 million to secure a spot in the league. The league now has 20 teams, with the latest franchises paying an estimated $30 million to $60 million fee.

The finals for the 2019 Overwatch League saw over 1.1 million viewers on the (NASDAQ: AMZN)-owned streaming platform Twitch.

Overwatch League teams are owned by large companies like Comcast Corporation (NASDAQ: CMCSA), Huya Inc (NYSE: HUYA), Bilibili Inc (NASDAQ: BILI) and NetEase Inc (NASDAQ: NTES). New England Patriots owner Robert Kraft also owns a franchise.

Overwatch League was the first professional esports league with city-based teams. Activision Blizzard is now working on the growth of its Call of Duty League with a similar franchise format.

Activision Blizzard signed an exclusive esports deal with Google’s (NASDAQ: GOOG) YouTube. The $160-million deal includes the three-year streaming rights to “Overwatch,” “Call of Duty” and “Hearthstone.”

Take-Two has a 50-50 joint venture with the National Basketball Association for the NBA 2K League. The esports league revolves around the popular NBA2K video game franchise from Take-Two. The league launched in 2018 and now includes 23 of the 30 NBA teams. Deals have been signed with Twitch and ESPN.

Electronic Arts has seen wide popularity in its annual Madden and FIFA games. That popularity has yet to translate into a successful esports league.

Financials: Activision Blizzard has seen its revenue grow from $4.66 billion in fiscal 2015 to $6.49 billion in fiscal 2019. Fiscal 2019 was the first year in the last five that revenue fell year-over-year. The company saw net income of $1.5 billion in fiscal 2019.

Electronic Arts revenue has grown from $4.4 billion in fiscal 2016 to $5.54 billion in fiscal 2020. The company saw net income of $3 billion in fiscal 2020.

Take-Two has doubled its revenue over the last five years, going from $1.41 billion in fiscal 2015 to $3.09 billion in fiscal 2019. Revenue has increased in each of the last five fiscal years. Net income was $405 million in fiscal 2019.

Activision, Electronic Arts Stock Performance: Shares of Activision Blizzard are up 153% over the last five years. Shares traded at $16.79 the day the Playstation 4 was released and now trade at $80.98. Shares are up 36% in 2020.

Shares of Take-Two are up 452% over the last five years. Shares traded at $17.99 when the Playstation 4 was released and now trade at $165.78. Shares are up 35% in 2020.

Electronic Arts shares are up 89% in the last five years. Shares traded at $24.06 when the Playstation 4 was released and now trade at $131.19. Shares are up 22% in 2020.

What’s Next: New console releases from Sony and Microsoft act as a major catalyst for all video game companies.

Activision Blizzard has new Call of Duty and World of Warcraft games coming out this fall.

Electronic Arts just released its latest Madden game to strong sales. Investors and gamers continue to eagerly await details from Take-Two on their next Grand Theft Auto game. Take-Two also will release an NFL game in 2021, which could threaten Electronic Arts' annual Madden game.

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