Wall Street analysts and firms that cover Activision Blizzard (ATVI) have recently been noting “Diablo 4” in their research and/or forward looking estimates. The following article noted two sell side analysts who are bullish on the stock based on mobile, console and PC titles that have yet to be announced or launched.
Are Investors Missing an Opportunity In Activision Blizzard?
Furthermore, back in May, Credit Suisse put out research that speculates a 3rd quarter 2019 release of “Diablo 4” with an estimate of 9.5 million units (which is potentially on the conservative end considering that they will likely launch PC and console simultaneously) during that launch quarter.
This is all just the usual estimated projections undertaken to look at potential growth (revenue) opportunities but it also does put pressure on company leadership to announce and ship these titles given the expectations that are set (that’s one of the pitfalls when you are a publicly traded corporation) since it is not just individual investors who may acquire shares based on this research, but also fund managers who oversee mutual funds or 401k’s.
The point is that the next game in the Diablo franchise is an important revenue driver for the company (and thus the stock); it has always been as I’ve written before (that post was about extrapolating console sales when Blizzard consolidated those numbers). As I’ve also noted before, staggering releases is a thing at the company where there is a clear distinction with titles that have recurring revenues (via subscription and/or micro transactions) versus revenues booked at purchase (DLC or expansion, buy 2 play titles) where the latter has release schedules that tend to occur during quarters in a fiscal year where it can serve as filler to boost earnings.
All too often though, players of Diablo equate success based on active players (which none of us really know given the fact that Blizzard does not publicly release concurrency numbers). Public game numbers have never been a good indicator because there are many that just play private or with their own private/static group. And so there is often times the off based “franchise is dead” comment. For ATVI, the franchise is hugely successful (they already have your money once purchased) to not do another game so it is more a matter of when and not if when it comes to “Diablo 4”.
Somewhere mixed in all this is what sort of progress the classics games team is having with remastering the earlier Diablo titles. Former Blizzard North president David Brevik has previously weighed in about the technical challenges that would be faced. These remasters wouldn’t move a significant number of units (IMHO) but would still add to revenues which they wouldn’t be able to realize without having the ability to sell and support these titles on modern day operating systems.
Finally, there have been rumors about a mobile version of Diablo. I don’t doubt there is a team prototyping something (because it’s good to have options) but I doubt there is anything beyond the conceptual stage. The franchise has already been experimented with too much with Diablo 3 and executives are well aware of the lost goodwill resulting from missteps associated with those design decisions.
No one really knows when “Diablo 4” will be announced. Gamescom 2018 (August 21-25) seems highly unlikely at this juncture. The Diablo faithful may also “riot” (ok. that is mild hyperbole) if they aren’t even talking about something new with the franchise at Blizzcon 2018. Myself, I haven’t touched my Battle.net account since November 2015 and I only briefly played the Necromancer beta test on one of my other accounts last year. The titles of theirs which I did play (primarily Diablo and StarCraft) have fallen out of favor with me. I guess the design for “Diablo 4” will end up determining my actual interest in it when that time comes.
Note: I have Diablo 4 in quotes because Blizzard may stylize the name as Diablo IV or even possibly just refer to it as Diablo (and go with named expansions) if they decide to move away from the numbering system in the future.
Disclosure: I do own common shares of ATVI (Activision Blizzard)
