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Tips For Investors: Blizzard Conquers Video Game Industry

30 January 06:59 PM

There is probably no country in the world that doesn’t have video game stores selling games produced by Blizzard.  Such games series as Diablo, WarCraft and StarCraft have been the bestsellers around the world. They made Blizzard one of the most popular video game developers in the world.

Blizzard Entertainment: Success History

WarCraft, a real-time strategy, was the first series developed by Blizzard. It was started in 1994 to become a bestseller within weeks. Of course, the developers didn’t miss a chance to make a couple of sequels: In 1995 they released WarCraft II: Tides Of Darkness. It was a hit as well. Over 1 million copies were sold around the world. Diablo, a gloomy RPG, was the next project that won the hearts and minds of millions of gamers from around the world.

The next popular game series was StarCraft, a new real-time strategy. It was released on March 31st 1998. Over 11 million copies were sold. Later it became one of the disciplines for multiple cyber tournaments.

In 2000 Blizzard released Diablo 2. Two years later, another sequel to WarCraft (WarCraft III) was released.  The former one became especially popular among cyber-tournament lovers.

2004 was another successful year for Blizzard Entertainment after it released World of Warcraft (WoW), the world’s most popular MMORPG. Over 17 million people play it around the world. A monthly fee is $10-$15. Can you imagine how much money Blizzard earns on WoW every single month?

The latest hit released by Blizzard was StarCraft 2 (June 2010). The sequel was so anticipated that a couple of million copies were pre-paid before the official release.

Despite releasing so many bestsellers, the company is not going to retire. The next project the developers are currently working on is Diablo 3. The release is scheduled for the first quarter of 2012. However, there are rumors that the release will be postponed because the developers want to improve it. In the meantime, Blizzard has already launched the Diablo 3 beta-testing. After reading the feedback, one can definitely say that the game will impress and come up to the bravest expectations.

It is difficult to say how many gamers will rush to the local stores to buy this game. There will definitely be millions of them. If to look at the price chart of Blizzard’s stock, once can see a major upswing. Probably, investors start anticipating massive sales of Blizzard’s new masterpiece with breathtaking gains. This will definitely be another bestseller.

Why does Warren Buffet consider investing in Blizzard?
 
Warren Buffet, one of the world’s richest investors, once said in an interview that he was thinking about investing in Blizzard’s stock.

According to Eugene Olkhovsky, Masterforex-V Academy’s leading experts in financial markets from Canada, nobody knows for sure whether Mr. Buffet will eventually buy a certain amount of the shares of Blizzard’s stock (Nasdaq: ATVI ). However, we can try to evaluate the stock in order to find out whether it is attractive enough to interest such big-scale investors as Warren Buffet.

1.    Let’s have a look at Activision Blizzard’s profitability history:
 

Over the last few years its profits and free cash flow have grown considerably.

2.    Blizzard’s return on equity and debt efficiency.

First of all, a company’s return of equity is a more indicator if its stability and the efficiency of its management.  When considering this factor it is important to make sure the company doesn’t have considerable debts because debts can distort the real picture thus making the company in question more stable on paper than in reality.


Competitiveness in the global video game industry is a major factor to consider:
 

3.    Management.  Robert A. Kotick has been the CEO of Activision Blizzard since 1991, which suggests stability in terms of management.

The bottom line: The Department of Portfolio Investments of Masterforex-V Academy recommends buying the company’s stock. It is likely to rally on record sales and income per share (0.54-0.58). Numerous analysts have already improved their forecasts.

If you look at the chart, you will see that the price has come out of a 3-year-long range. The analysts assume that around the 11-12 area there is a high chance of massive purchases. The stock may decline only if the overall economic situation in the USA deteriorates.
 

Market Leader and Masterforex-V Academy would appreciate if you could participate in a survey. Please, visit the Academy’s forum for traders and investors and answer the following question:

Will Blizzard continue making best-selling video games?
 

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