Activision Stock Forecast : Why Activision Still Enjoys $70 Million Monthly Net Sales From Candy Crush Saga

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

Activision Stock Forecast

Summary:

  • Activision bought King Digital because of its highly successful Candy Crush Saga mobile game.
  • The $5.9 billion gamble to own King Digital was judicious. King’s five-year old Candy Crush Saga still generates net monthly sales of $70 million.
  • It means Candy Crush Saga still touts around $100 million in monthly bookings.
  • The strong monetization is due the live in-game events that King Digital implemented in Candy Crush Saga.
  • In-game events encourage players to play longer. Candy Crush Saga is energy-based so players will have to spend real dollars if they want to play longer every day.

Activision Blizzard’s $5.9 gamble to buy King Digital is very rewarding. The 5-year old mobile game of King, Candy Crush Saga still generates estimated monthly net sales of $70 million. It means Activision still owns a 10-figure annual revenue generating mobile game. Candy Crush Saga is why Activision is one of the world’s top mobile games companies.

The $70 million estimate from SensorTower already deducted the 30% cut of Android and iOS App store owners. This estimate does not include Candy Crush Saga’s Android platform revenue inside China. SensorTower still can’t access the sales in China because Tencent (TCEHY) is the publisher of Candy Crush Saga and Tencent owns its own proprietary Android app store in China.

(Source: SensorTower)

ThinkGaming also lists Candy Crush Saga’s daily average gross sales from iPhone gamers in the U.S. at $2.15 million. More than 55% of iOS revenue is from the United States. The past 30 days have shown strong daily sales for Candy Crush Saga in America. I expect Candy Crush Saga to deliver $50 million in October global net sales from iOS devices.

(Source: ThinkGaming)

Why It Matters

I am highlighting the strong revenue stream of Candy Crush Saga because Activision’s hit shooter game, Overwatch is no longer among the five top-grossing PC and console games. I Know First currently has negative or pessimistic near and medium-term algorithmic market trend forecasts for ATVI. This is likely because of Overwatch’s declining revenue stream.

It is undeniable that Overwatch’s breakout success is why ATVI soared in price this year. However, there are a limited number of PC gamers who like First Person Shooter games. Sad but true, Overwatch is now running out of steam. It is therefore fortuitous that King Digital still enjoys strong monthly bookings from mobile games. Mobile games can offset the declining revenue from Activision Blizzard’s hit PC and console video game titles.

Overwatch’s monthly revenue will probably recover once the e-sports event about it gets more backing from gamers and industry influencers. If Overwatch’s e-sports tournaments become as big as League of Legends or DOTA 2, we can expect this game to again deliver around $40 million in net monthly sales.

Why Candy Crush Saga Is So Lucrative

It is easy to explain why Candy Crush Saga continues to generate around $100 million in monthly gross bookings. King Digital implemented live in-game events earlier this year. Live in-game events encourage players to extend their daily playing time in Candy Crush Saga.

Candy Crush Saga is energy-based. It means players have limited amount of free daily energy count which they can use to play. If they want to play longer and join the live in-game events, they will have to spend real dollars to buy more energy points.

Activision even hired Mario Lopez to host the Live TV game show of Candy Crush Saga last July. Marketing gimmicks like live TV (and live in-game events on TV) entice more people to play Candy Crush Saga. The more people that actively join the live events of Candy Crush Saga, the more potential in-app purchases will be made.

Conclusion

King Digital’s Candy Crush Saga is very important to the quarterly earnings performance of Activision Blizzard. Going forward, I am highly confident that Candy Crush Saga will generate more monthly revenue than Overwatch or any other PC/Console games of Activision Blizzard.

The match-3 puzzle gameplay of Candy Crush Saga appeals to a bigger total addressable market than a first-person-shooter game. The clever use of compelling players to buy more energy points so they can level up faster makes Candy Crush Saga’s monetization model more effective than Overwatch’s premium loot boxes. Loot boxes only give players skins and special in-game items.

Live in-game events however provide Candy Crush Saga lots of daily social fun.

I am endorsing ATVI as a buy. I Know First still has a positive one year forecast for ATVI so I am highly confident that this stock will not suffer a prolonged setback. The bullish technical indicators and moving averages also back my optimism for Activision Blizzard.

(Source: Investing.com)

 

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

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