To Fight Fortnite, Activision Is Retooling How Its Games Work

(Bloomberg) -- Activision Blizzard Inc., battered by the runaway success of a rival video game, is fighting back.

The video-game giant is looking to mimic the popularity of Epic Games Inc.'s Fortnite, a shoot-'em-up with a “battle royal” format. Activision's counterattack strategy includes releasing updated versions of its games and new modes of play.

“Fortnite is definitely a lot of competition right now,” Chief Executive Officer Bobby Kotick said in an interview. “It's been a really important catalyst in attracting new gamers to gaming.”

Fortnite has quickly signed up tens of millions of players and taken the video-game industry by storm. The title also has become a cultural phenomenon, with everyone from professional basketball players to the rapper Drake embracing it. Chinese internet giant Tencent Holdings Ltd. bought a 40 percent stake in closely held Epic Games in 2012.

Key to Fortnite's success is the battle-royal format, which lets 100 players compete at once until there's only one person standing. The approach also is used by another popular game, PlayerUnknown's Battlegrounds.

The good news for Activision is the games are bringing new users into the industry, including women and people who play on devices other than traditional game consoles and PCs. Kotick said the success of Fortnite will inspire changes in Activision titles.

“The idea of new competition is going to be a staple for gaming,” he said. “For most new franchises, this will be an important mode of play.”

Tepid Forecast

Activision, known for Call of Duty and Candy Crush, disappointed investors with its forecast on Thursday. The company expects earnings of $2.51 a share in 2018, excluding some items. That compares with the average analyst estimate of $2.61. Revenue also will fall short of Wall Street projections.

The shares declined 2.3 percent to $66.82 in New York in the wake of the report. Since its March high, the stock is down about 15 percent.

Still, Activision's earnings last quarter were better than expected. The Santa Monica, California-based company reported profit of 38 cents a share, excluding certain items. That compared with an average prediction of about 34 cents. Adjusted revenue also was ahead of projections, at $1.38 billion.

Activision plans to introduce six more teams for its Overwatch league this year, two or three in Europe and the rest in other big cites around the world. The company is asking for twice the previous $25 million franchise fee.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net.

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Andrew Pollack

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