Hi Martin,
I hope you had a good holiday. I spent it playing Battlezone and the Heavy Gear II demo. Battlezone is the best strategy game that I have ever played. Seriously. More fun and engrossing than even Warcraft II (my previous favorite), Command and Conquer, Age of Empires, Dark Reign, TA, Uprising, Warlords, etc. etc. Even better than the Mechwarrior 2 series...my favorite games of all time.
The way I see it now is that Activision studios and programmers are great. They come out with great games and know what makes a great game. The quality of these releases minus all of the bugs, is exceptional....from the FMV sequences to the graphics, to the gameplay, to the music, to the sound....etc.
Management strategy has been consistent. They have accessed key licenses...Star Trek, Marvel Comics...Spiderman, X-men...Space Invaders, Asteroids...They have signed key deals for distribution with major players like id Software and Lucas Arts. They have executed key acquisitions, like Head Games, Raven Software and the European suite of distributors. They have kept to their game plan of growing revenues but have failed in producing concomitant increases in net income. The key now should be reducing inefficienies in the company...now that they have achieved critical mass...and improving their profit model. Just because their mix of distribution/publishing has lowered margins, doesn't mean that the company should be barely profitable. Here is where management needs to step up to the plate and execute.
What frustrates the hell out of me is that although ATVI has great games and good management, they have not been able to capitalize on the quality of their games. Although they have not had any sure-fire winners since Quake II...I would argue that Battlezone should have been one... part of job of marketing is to create consumer awareness and excitement for their products where none existed before.
Look at what TV advertising did for Tenchu!....that was a job well done. Consoles games are where the money is...BUT...don't then neglect your PC titles which still make up a large percentage of sales!
However, they have totally neglected the selling of action PC titles on TV....Maybe I'm not looking in the right place?!....THEN MARKETING ISN'T doing the job right!....Why couldn't I find Asteroids in CompUSA?....Is it because the game was in a single cash register aisle and I only found it by asking 5 salespeople? There is a great article in Gamecenter.com....lots of stuff that you probably already knew, but it goes very in depth into the difficulties in marketing games...
Battlezone is a great game and they abandoned it. Totally. How often do you get a 4 star/4 star 9/10 game and leave it to die?!!!! If they screwed up the initial launch, they should have done it again at the $19.99 price point....but after doing a more effective TV advertising campaign.
IMO, Marketing is the weak link in ATVI. That and buggy games. Fix these, and ATVI will fly. Although, after the Battlezone mess up, marketing went through an overhaul, they need more. Bring in a marketing genius from Mattel or something...ATVI needs this.
Re: news concerning a possible acquisition...
Message 6752364
I am disillusioned with ATVI....I have held this stock for many years and I have ridden the roller coaster once too many times.
What should you do, Martin? I will not give this advice....I've been burned once too often. What I will say is that I think that ATVI is on the right track. ATVI, though, has a hell of a lot of cost-cutting and cleaning up to do before it can think about digesting another acquistion. Streamline, streamline, streamline. Yes this sounds like the rantings of an armchair analyst....but if they don't cut costs and don't market more effectively, a billion dollar revenue company won't be worth squat if they can't make a dime out of it.
I am still holding though very frustrated. I want to see some press releases from ATVI telling us what they are doing to cut costs and improve the financial picture. I am glad to see that Heavy Gear 2 will be a polished product. This is critically important.
We are seeing some pressure of end of the year tax selling, but I think a lot of people are dumping their positions because Christmas is over. I'm looking for the stock to wallow in the $8-11 range. Earnings should be announced I beleive the 3rd week of Jan. I would not count on happy tidings of joy. Heavy Gear II did not ship, Sin was a disappointment. I was hoping for Quake II on the Playstation, Vigilante on the N64...got nada. Let me look at the sales figures for December...I will let you know more on how ATVI fared.
They "may" have been able to pull it out but the shipment of Extreme Tennis at the end of the quarter seemed like the last ditch effort to ship Shanghai last December...and look what what happened then. I think we will have a profit, but no where near the estimates. YOu may just want to take your money out of the games sector and stick it somewhere else for the meantime.
Bleak, yes. But the new year should bring better things....especially with Lucas coming out with his new Star Wars movie in March. As far as Quake 3 Arena...I haven't been able to find a target date. Planet Quake has Carmack's files on it, but he doesn't mention it. There's a lot of potential here....just haven't tapped it yet.
I understand your frustration...whatever you decide, best of luck in 1999.
Take care,
Tom |
