Is the Activision Blackout a "Fortnite" killer? – The fool

There is no doubt that Fortnite was the surprise success of 2018. The idea of ​​the private Epic Games has quickly become a phenomenon of pop culture, generating more than a billion dollars in revenue since its release just a year ago. The free royal battle game quickly became the topic of conversation, not only among players, but also among analysts and leaders of the gaming industry. Many wondered aloud whether Fortnite expanded the gambling market or stole shares from established players like Activision Blizzard (NASDAQ: ATVI).

Activision responded with a Royal Battle Entrance, a mode called Blackout for Call of Duty: Black Ops 4. The private beta version of Blackout recently created, and early critics call it an unqualified victory for Activision. Some even went further, suggesting that Blackout could be a "Fortnite-killer."

A worthy opponent

Excitement about the initial reaction to Blackout resulted in an analyst saying that Fortnite may have reached its peak, based on his assessment of recent versions of the competition. The benchmark analyst, Mike Hickey, said in a note to clients that:

[The] next Call of Duty: Black Ops IIII [sic]: Blackout, Battle Royale mode (BR), PS4 beta launched yesterday, far exceeding our expectations. The buzz of the streamers was sensational, in our opinion. Twitch's popular streamers were enthusiastic about the quality and fun of the game, while subscriber comments Blackout a Fortnite and or[[[[Battlefields of PlayerUnknown] PUBG killer.

PUBG was the original royal battle game, but was quickly overshadowed by the success of Fortnite.

According to Hickey, the beta version of Call of Duty attracted nearly 400,000 viewers to Twitch, the popular video game-serving Amazon.com. The analyst believes that "Blackout Hickey believes this will be a potentially huge blow and will result in an additional $ 500 million increase in annual recurring digital revenue. "According to the first reactions of the players to the game, Hickey Blackout "will migrate the attention of investors from the Fortnite-LED [battle royale] competitive threat to the possibility for [battle royale] in the significant growth. "

Was the Fortnite phenomenon already endangered?

Even without Blackout & # 39; s entering the kind of growing royal battle, Fortnite growth had already slowed down. After recording double and triple digit growth each month since its release and generating more than $ 1 billion through in-game purchases, FortniteRecent growth has slowed to only 2% sequentially, as my colleague Travis Hoium has pointed out.

Fortnite recently released a new Battle Pass in July – which in previous cases had led to faster growth. This was not the case in July, according to the media intelligence company SuperData, which noted:

Fortnite & # 39; s pic can be behind us. Fortnite revenues are only up 2% from June. Growth has been modest despite the release of season 5 of the mid-year game play pass.

Fit your game

Even in light of the challenge presented by the royal battle genre, Activision has maintained its game plan. When the company released its second-quarter results, it not only beat its own forecasts, but also analysts' consensus estimates. Revenues reached $ 1.6 billion, up 1% year-over-year, while earnings per share of $ 0.62 easily exceeded expectations by $ 0.36. This enabled Activision to reach a record first semester in terms of revenue, net bookings (net sales less deferrals) and earnings per share.

With the full release waiting for Call of Duty: Black Ops 4 At the beginning of next month, we could simply see more Activision records.

John Mackey, CEO of Whole Foods Market, an affiliate of Amazon, is a board member of The Motley Fool. Danny Vena holds shares in Activision Blizzard and Amazon. The Motley Fool owns shares and recommends Activision Blizzard and Amazon. Motley Fool has a disclosure policy.