Activision's Stable Track Record Is Pleasing Investors

Any active gamer's heart will tremble with the mention of Activision Blizzard, Inc (NASDAQ: ATVI), the creator of gaming gems like Call of Duty, Crash Bandicoot, Guitar Hero, Candy Crush Saga, and Spyro/Skylanders. Investors' hearts will react in a very similar way, as ATVI did not miss in its earnings in the last 5 years, and that is a true track record. The company's stock has been riding on the Call of Duty momentum since the launch of CoD: Mobile in October 2019. Still, Activision's revenues had only a slight growth (on average) in the last couple of years, depending on the launching dynamics of new gaming titles.

On the other hand, Sea Limited (NYSE: SE), an e-commerce and video game development company, which publishes games under the name Garena, has a much more aggressive strategy when it comes to revenues. Last year, the company's revenues jumped to $4.4. billion which was an increase of 101%. The analysts' expectations for this year are quite ambitious. They expect that the company's revenues will rise another 90%.

Activision's Heritage

This American developer and creator of electronic games were formed through a merger of Activision and Vivendi Games. Activision was the first third-party and independent video game publisher, initially founded by former Atari game developers in 1979. Vivendi Games was the parent company of Blizzard Entertainment, a video game developer famous for Diablo, Warcraft, and StarCraft franchises. Both Blizzard and Activision kept their corporative identities and development streams.

Better Operating Margin Due To Higher Digital Sales

Probably (or at least partially) because of the effects that the COVID-19 had on how we spend our time, we started spending more time at home, spending more money from home, which led to ordering more online, playing various games on phones, tablets, laptops… So, it is no surprise that the structure of Activision Blizzard's revenue has changed.

In 2020, 82.3% of the company's revenues came from digital sales, such as subscriptions, downloading games, and in-game spending. Comparing to 73.6% in 2016, this a growth that affected the company's operating margin, which jumped to 43%, and that is in the same ballpark as the tech giants like Facebook (NASDAQ: FB) and Alphabet (NASDAQ: GOOG).

Don't Underestimate Sea's Huge Potential

Especially during the pandemic, Sea's gaming division, Garena, generated more than $2 billion in profits, which was the company's main firepower to battle its rivals until the group's other segments like Shopee and SeaMoney start making profits. Shoppe is an e-commerce platform like Amazon (NASDAQ: AMZN), while SeaMoney is a leading digital financial services provider in Southeast Asia, both aiming to become the region's most popular apps, together with the remaining Sea's apps and services.

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