Video game publisher Activision Blizzard Inc (ATVI) is set to release a new first person shooter ("FPS") game called The Walking Dead, according to IGN.com. Based on the AMC Network's popular television show bearing the same title, the new game is a prologue of the television series. Developed by Terminal Reality, the game is expected to hit the market in 2013 on Microsoft's (MSFT) Xbox 360, Sony's (SNE) PlayStation 3 and personal computers. Set in the zombie-infested Georgian countryside, the new game is based on the adventures of two brothers on their way to Atlanta. Apart from the protagonist, the new game features a host of new characters who are either friend or foe and players have to carefully select them as companions. Further, players are also required to manage scarce resources in order to survive the zombie attacks along their way to safety.
Over the years, Activision has adapted a number of successful television series and movies for developing new titles -- Battleship,Transformers and Spiderman are a few names that come to mind. Activision recently entered into a partnership with Disney Interactive, a division of Walt Disney Co. (DIS) for the production and distribution of its Wreck-It Ralph video game, which is expected to release in November, along with the namesake animation movie.
Activision recently released its new Spider-Man game, The Amazing Spider-Man. The company is also set to release Transformers: Fall of Cybertron later in the year. Activision also has the James Bond game - 007 Legends in its pipeline. The game features five classic Bond adventures and a sixth mission, which will be seen in the upcoming Bond movie-Skyfall.
However, all adaptations have not been equally successful. While the Transformers game was well received by the gamers, Battleship failed to live up to its billing. On the other hand, first-person shooters are the most popular genre of video games, which is reflected by the phenomenal success of Activision's Call of Duty franchise. In such a scenario, we believe that it is very difficult to predict the performance of The Walking Dead going forward.
We believe that Activision has a strong product pipeline for 2012. Most importantly, Activision's foray into the mobile gaming market is expected to be a long-term positive. However, the softness in the video game industry and increasing competition in most of the markets (including mobile) remains a concern.
We have a Neutral recommendation on Activision in the long term. Currently, Activision Blizzard has a Zacks #3 Rank, which implies a Hold rating in the short term.