Piper says big game publishers to catch up quickly to ‘Fortnite,’ ‘PUBG’
Shares of video game makers are in focus after Piper Jaffray noted that while so-called “battle royale” style games such as “Fortnite” and “PlayerUnkonwn’s Battlegrounds,” or “PUBG,” are drawing a great deal of player engagement now, bigger publishers will catch up quickly to the trend.
In a research note to investors, Piper Jaffray analyst Michael J. Olson said Epic Games’ “Fortnite” and PUBG Corporation’s “PUBG” may have some short-term impact on time/wallet share for the major game publishers, but he expects this impact to be temporary as these publishers incorporate similar battle royale modes into existing titles.
Olson said that the “mode,” not the game, has attracted users to “Fortnite” and “PUBG,” and therefore he expects major publishers to win back engagement as this style of play is included in their games.
The analyst noted that these battle royale games are most likely to steal time/wallet from other shooter titles, and as such, Activision Blizzard (ATVI) may have the most overlap, followed by EA (EA) and then Take-Two (TTWO).
The analyst maintained an Overweight rating on Activistion, EA, Take-Two and Zynga (ZNGA).
Meanwhile, mobile versions of “Fortnite” and “PlayerUnknown’s Battlegrounds” have launched this week. Currently, both are the most downloaded games on the iOS (AAPL) App Store.
JEFFERIES ON ACTIVISION
Yesterday, Jefferies analyst Timothy O’Shea maintained a Buy rating on Activision Blizzard, saying he sees a buying opportunity with the shares pulling back over the past week.
The analyst attributed the selloff to fears that “Fortnite” could siphon engagement and monetization away from games like “Call of Duty,” potentially pressuring near-term results. O’Shea said that while channel checks indicate “Fortnite” is in fact pulling some engagement away from Activision, the monetization fears are overblown.
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