The floor of that chart is 4.4 billion a quarter, there peak is 5 billion a quarter. That is stable income especially when compared to most game companies.
As an investment, you should treat Activision (or EA, or any other dev studio) like you would a movie studio. The business model is fundamentally the same, albeit with potentially bigger numbers on a per-project basis. Hell, most movies use a lot of the same production techniques that games do (motion capture, 3d modeling, etc).
As a result of that, it's a boom-bust company. A few bad releases can put them in trouble. Media is volatile because consumer tastes are fickle, and video games are no exception.
That's only partially true in the case of Activision Blizzard. World of Warcraft has provided them with something that very few gaming companies have ever had: massive, dependable monthly payments.
That has gradually declined of course, over a decade. They still have ~5.6 million paying subscribers to WoW, generate a billion in sales annually from it, and hundreds of millions in profit.
Yeah, but WoW is a once in a generation type of game. No MMO since (or likely ever to come) will capture the type of mindshare that WoW did. It's got staying power that can be rivaled by very few games -- CounterStrike and Starcraft the only other games that come to mind for maintaining that level of popularity for that long.
Yes. Like movies and music, games is a "hits" business. The model is wholly dependent on churning out 99% formulaic content and having 60% of it at least break even (and 10% breakaway hit, making back many times production costs to pay for the 30% of projects that don't meet expectations).
Games may have a longer shelf life than movies, but at the macro level, the same principles apply. EA and Activision are the MGM and Paramount of the games industry because they know and practice this. As unpopular as it may make them among industry insiders or hardcore fans, this is the way the hits business (as applied to conventional notions of a stable company) works.
