It takes more than a Fortnite to shoot down Call of Duty. But what happens when even more bullets start flying?
Investors had been worried that the runaway videogame hit from independent developer Epic Games would hurt franchise properties from publishers such as
Take-Two Interactive and
But first-quarter results from Activision last week suggest that established games are a bit more resilient. That also bodes well for Take-Two, whose “Grand Theft Auto” franchise was also thought to be vulnerable, as well as Electronic Arts. All three stocks jumped Friday following Activision’s report.
But competition in the shooter category of videogames is only loading up. The upcoming fall season will see not only a new “Call of Duty” from Activision, but also a new “Battlefield” from EA as well as “Red Dead Redemption 2.” The latter is the first sequel to a surprise blockbuster first put out in 2010 by Take-Two’s highly regarded development partner Rockstar Games. And those games will still be competing against “Fortnite,” whose popularity is showing no signs of slowing, as well as “PlayerUnknown’s Battlegrounds,” another recent hit.
The big question that remains is whether “Fortnite” has truly expanded the market. The game has popularized a style of play called “Battle Royale,” in which a group of players battle until only one remains. That isn’t a mode common in today’s big shooters. “Fortnite” also skews to a younger crowd, with many parents reportedly liking the game’s more social aspects. Still, hours spent on one game are hours not spent on another.
Activision believes “Fortnite” has added more to the market than it has taken, even though the company acknowledged “some near-term impact” from the game on its recent results. Activision also issued a weaker-than-expected revenue forecast for the current quarter while at the same time nudging up its full-year outlook. That suggests confidence in its slate of games coming later this year, including the new “Call of Duty” that will be the fourth iteration in the game’s highly popular “Black Ops” sub-franchise.
Investors should expect a similar tune from EA in its upcoming March quarter report on Tuesday as well as Take-Two’s results, slated for May 16. They also have time to incorporate some of “Fortnite’s” popular aspects into their own releases. In his earnings call, Activision Chief Executive
noted rightly that the company is “very quick to figure out how to capture inspirations from innovation.” It sounds like he has “Fortnite” squarely in his gunsights.
Write to Dan Gallagher at firstname.lastname@example.org