Analyst Sees Encouraging Diversification At Activision Blizzard

A new report from Sterne Agee analyst Arvind Bhatia sees encouraging signs that Activision Blizzard's 2011 lineup will make the company less reliant on its Call of Duty and World of Warcraft profit centers. In the note to investors [PDF] Bhatia says he thinks the company's lineup "will look much more diversified over the next 12-24 months," which will lead to general expansion of the company's earnings in that period. Bhatia specifically cites Spyro-based toy/game hybrid Skylanders as an exciting new property for the company, and one that "is apparently testing very well with kids." He also sees potential in "a new casual MMO" from the company, telling Gamasutra he was referring to the previously revealed project Titan from Blizzard, which he expects to hit some time in 2013. Added on top of new Starcraft and World of Warcraft expansions, the long-awaited launch of Diablo III and Bungie's upcoming Activision project, the releases make for a pipeline that Bhatia thinks should alleviate investor fears about Activision Blizzard's over-reliance on a few major franchises. This is important, Bhatia said, because EA's upcoming release of Battlefield 3 and Star Wars: The Old Republic may eat into the market shares for Call of Duty and World of Warcraft, respectively. Still, he saw no reason to downgrade the company's "Buy" rating for the stock.