Activision Blizzard, Inc. (NASDAQ: ATVI) Re-Introduces Mobile In-Game Ads

December 11, 2017, 15:00 pm ET, BY Simon M.- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Activision Blizzard, Inc. (NASDAQ: ATVI) has had a stellar 2017 where it has grown its overall revenues by 8% while increasing its net income by 24%. The company is looking to expand its gaming revenues by re-introducing in-game ads on its mobile games formerly owned by King Digital Entertainment.

Article Summary

Activision Blizzard is re-introducing in-game ads in King’s Candy Crush Saga.

This is a strategic move to monetize all available revenue streams.

The company dwarfs its main competitors and is a leader in the e-sports industry.

Here’s the trading report on ATVI.

King had scrapped its in-game ads back in 2013 after experiencing massive growth in its in-app purchases, which reduced the need for running in-game advertisements. The main reason for the re-introduction of mobile ads in King Digital’s flagship game Candy Crush Saga is based on the company’s desire to fully monetize all its offerings.

The company has a stable of extremely popular games including Activision’s popular Call of Duty, Blizzard Entertainment’s popular World of Warcraft, and King Digital’s Candy Crush Saga. The company dwarfs its main competitors such as Electronic Arts Inc. (NASDAQ: EA) and other smaller competitors such as Zynga Inc (NASDAQ: ZNGA) and Glu Mobile Inc. (NASDAQ: GLUU)

The re-introduction of mobile ads in King’s popular Candy Crush Saga is a strategic move by Activision that is likely to yield positive results for the company. The main motivator for this move is that the company is looking to maintain its current growth trajectory given that it registered double digit revenue growth in 2017.

Candy Crush Saga boasts of about 300 million monthly active players, which gives the game a significant advantage over its main competitors Zynga and Glu Mobile. Zynga has 80 million monthly active players, while Glu Mobile has about 30 million MAUs, yet the two companies have effectively monetized their audiences through in-game ads.

A close comparison of the ad revenues generated by Zynga and Glu Mobile indicate that if King could reach Zynga’s levels of ad performance, the company could add about $600 million to its annual sales figures. There is significant untapped potential in the in-game advertising market which is why King is re-introducing such ads after pulling them off in 2013 before being acquired by Activision.

Investors in regular sports companies can invest in companies such as Activision and Electronic Arts as a way of hedging against the disruption risks posed by e-sports companies to traditional sports leagues and teams such as the Formula One Group.

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