There’s no doubt that Activision has been kicking ass and taking names, recently overcoming EA to be the top third-party publisher, but now it seems that they have their work cut out for them, as competition for their top franchises are drawing near.
Janco Partners analyst Mike Hickey thinks that competition for Activision’s Guitar Hero and Tony Hawk may eventually get in their way.
Speaking of EA’s Rock Band and Skate, Hickey says, “Emerging competition for some of their core franchises, including Guitar Hero and Tony Hawk will likely prove damaging for growth prospects.”
“In addition, their mass market licensed sales in fiscal ’08, which included Spiderman, Shrek and Transformers should be near impossible to replicate in fiscal ’09.”
Competition isn’t always a bad thing. Hickey expects more to come out of Guitar Hero in the future, speculating that another instrument may be on the way.
“We expect Guitar Hero to follow a natural product evolution by adding additional music peripherals in CY08. Importantly, the Guitar Hero franchise that is developed internally and owned, offers a meaningful operating margin expansion potential versus Rock Band, which is purely a distribution deal for [Electronic Arts].”