Activision Blizzard, Inc. ( NASDAQ:ATVI ) has had quite some turbulence lately, with the price tumbling some 3.7% this week, and experiencing a slow 6-month decline of 18.8%. The internal activities have already resulted with some management members leaving ( 1 , 2 ), and litigation seems to be piling up. This additional uncertainty is putting a strain on the stock, and might provide long-term investors with an opportunity to tap into the gaming industry.

When investors are buying Activision Blizzard, they are buying the game-chains from three main brands:

• Activision: Leading with the Call Of Duty Franchise
• Blizzard: Leading with the World of Warcraft, Diablo 2 & 3, Hearthstone, Overwatch
• King: Leading with Candy Crush

These are known new and legacy titles that are bringing the majority of revenues for the company at a significant 29% net profit margin , making the company valuable for investors.

If the uncertainty surrounding the company clears with minimal impact, then investors might have a moment of opportunity on their hands.

In this article we are going to estimate the intrinsic value of Activision Blizzardby projecting its future cash flows and then discounting them to today’s value.One way to achieve this is by employing the Discounted Cash Flow (DCF) model.

We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model .

Check out our latest analysis for Activision Blizzard

What’s the estimated valuation?

A DCF is all about the idea that a dollar in the future is less valuable than a dollar today,so we need to project how much cash flows will Activision Blizzard make and discount the sum of these future cash flows to arrive at a present value estimate:

Present Value of 10-year Cash Flow (PVCF) = US$25b

After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage.

Terminal Value (TV) = US$81b

Present Value of Terminal Value (PVTV) = US$42b

The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$67b.

This is effectively what the business is worth today! The intrinsic value is usually different from the current market price. When investors are looking at a company that is trading below its intrinsic value, they may feel more confident that the price may rise to what the cash flows are worth, giving them a better chance to profit from a stock. 

To get the intrinsic value per share, we divide this by the total number of shares outstanding.

Compared to the current share price of US$74.7, the company appears about fair value at a 14% discount to where the stock price trades currently.

The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent.

There are many important assumptions based upon which we build a DCF model, you can view all the details of our model by visiting our valuation section , and clicking on the “View Data” button on the bottom right.

Key Takeaways & Next Steps:

The DCF model is not a perfect stock valuation tool, and our rough estimate shows that the company may be >10% undervalued, which warrants a deeper dive to see if the stock is right for investment.

When thinking about Activision Blizzard, investors should ask themselves some essential questions:

• What will be the financial impact of the current internal crisis? Will the problems cripple the company on the long term, or will they open an opportunity to invest while the price is lower?
• How do the long-term growth prospects look for the company?
  • Will something like the new rollout of Diablo 2 Remastered energize players and revitalize the franchise?
  • What is the growth potential of the new Call of Duty and Overwatch titles?
  • The mobile segment is catching up at high speed, is there an untapped potential for mobile games done right (unlike Diablo for mobile)?
• Does the company have a strategy to sow the seeds of new promising titles or to grow by acquisitions?

There are also quantitative factors to consider, and we’ve compiled threeimportantaspectsyou should further research:

1. Risks : For example, we’ve discovered 1 warning sign for Activision Blizzard that you should be aware of before investing here.
2. Future Earnings : How does ATVI’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart .
3. Other High Quality Alternatives : Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!

PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NASDAQGS every day. If you want to find the calculation for other stocks justsearch here .

Simply Wall St analyst Goran Damchevski and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Analysts are onsite in Honolulu while players, casters, and crew are spread across the globe

It has been wild ride for Activision Blizzard Esports’ Broadcast Technology Group during the 2021 Overwatch League Season. After producing OWL regular-season matches online and from Project Aloha in Honolulu using its cloud-based, remote-production model, the Group had been prepping for the OWL Playoffs in Dallas and Los Angeles, its first live, in-person matches in more than two years. However, when the Delta variant of COVID-19 hindered those plans, the Broadcast Technology Group pivoted quickly for a return to Honolulu to broadcast the playoffs, which conclude with tomorrow’s OWL Grand Final.

The OWL Playoffs feature analysts on-site in Honolulu manning a set at the Moana Surfrider Resort.

“When the [in-person events] were canceled, we had only about two weeks to pivot the entire show,” says Corey Smith, director, live operations, Broadcast Technology Group, Activision Blizzard Esports. “The fact that the team was able to get it done was nothing short of a miracle. We simply wouldn’t have been able to do it without the cloud and all the work we had already put in to develop [remote workflows]. We couldn’t have been orchestrating trucks and satellite uplinks and coordinating fiber drops in that small of a window. We just didn’t have the time to turn around that traditional type of infrastructure. We had to do it with cloud production.”

Project Aloha: A Unified Champion Thanks to Hawaii-Tokyo Connection

After being forced to have regional champions in Asia and U.S./Europe last year because of travel restrictions and transcontinental bandwidth challenges, Tomorrow’s OWL Grand Finals will crown a unified global champion for the first time since 2019.

To pull this season off, Activision Blizzard Esports (ABE) partnered with the University of Hawaii Mānoa to launch Project Aloha, a competition model in which teams could compete live between Honolulu and Asia. The university provided access to a high-capacity trans-Pacific subsea fiber cable between Tokyo and Honolulu, allowing players to compete online with near-zero latency.

“Project Aloha allowed us to combine the teams from North America and Asia for competitive matchmaking, which was great because we weren’t able to do that last season,” notes Smith. “We obviously didn’t want to end this season again by crowning separate champions in Asia and North America, so Hawaii allowed us to conclude the season in a way that made sense.

Onsite in Honolulu: Analyst Desk Heads to Waikiki Beach

During this week’s OWL Playoffs, for the first time at Project Aloha, analysts are located onsite in Honolulu, delivering live coverage during broadcasts from its set on the balcony of the penthouse suite at the Moana Surfrider Resort.

OWL Playoffs coverage spans the globe with interviews across multiple continents.

“The big challenge here for the set was connectivity at the top of the Moana Surfrider,” says Senior Technical Manager Ryan Cole, one of the few crew members onsite in Honolulu. “[The hotel] cannot support the network at the level and scale we needed at the penthouse, so we ended working with the Marriott folks and some onsite vendors to setup two point-to-point [wireless bridges] from different locations around the island to the suite to get the network connectivity we needed. And it has been going really well.”

A small crew is also on hand in Honolulu: the production team manning the Moana Surfrider set and the competition room at the UH Mānoa, four editors located at the Sheraton Waikiki, an ENG team shooting behind-the-scenes content with the teams, and IT and operations staff. UH Mānoa students are also playing a role in the productions and getting hands-on experience in a live-esports-broadcast environment.

OWL observers remote into cloud-based VMs in both South Korea and Los Angeles.

At the UH Mānoa where teams compete, ABE has deployed Always-On Player POV cameras for each player, a wide shot of the competition room, two handheld cameras, and ambient microphones throughout the room. In addition, the broadcast will incorporate Player POV cams and shots from the competition rooms in China and South Korea.

“We’re focused on making this feel like it’s truly a Grand Finals and not just another Overwatch league show,” says Smith. “We’re upping the scale of the show as much as possible. We owe it to the teams, the players, and the community that’s watching to polish it up and do whatever we can do to entertain them in a new and different way.”

Spanning the Globe: How the Cloud Brings It All Together

Nearly the entire production team, meanwhile, remains remote and continues to use ABE’s cloud-based production workflow. This production model allows the production crew and casters to continue to work entirely from home, from locations across the mainland U.S., Hawaii, South Korea, and China.

Observers use remote stations like this one to tell the story as “in-game camera operators”

The cloud production ecosystem is built around vMix live-video-streaming software and uses software-based Unity intercom, Viz Trio graphics in the cloud, and Parsec remote-desktop software. ABE also created its own master-control platform — dubbed Echo — which can distribute multiple regionalized feeds with different graphics and commercial insertion for each region.

Observers — the “camera operators” who cut the in-game action and are integral to the broadcast — remote into cloud-based VMs in both South Korea and Los Angeles, which provide them with ultra-low-latency connections.

OWL’s cloud-based-production ecosystem is currently built around vMix software

In a first for OWL in the pandemic era, casters are calling the action together in the same room during the playoffs — with one pair in Los Angeles and one in Austin. Previously, casters were calling the action separately from their homes and were integrated into the broadcast via a virtual set.

For the first time in the pandemic-era, OWL broadcasts feature casters calling the action together from the same location.

In addition, the analysts in Honolulu conduct interviews with individuals all over the world throughout the live broadcasts.

Crew members are able to remote into VMs from across the globe via Parsec software

“This has been a truly global show,” says Cole. “We’re bringing all of these international components into a single broadcast, which we’ve never done at this scale before. We’re obviously very familiar with cloud, but, when you start adding all these other locations, it becomes that much more complicated because now you’re coordinating with people on the ground halfway around the world. But it’s coming together quite nicely.”

According to Smith, the most significant challenge for the multisite production was synching the timing of all the different feeds — both local and in the cloud — from around the globe. To account for this, the technical team timed every feed to a uniform delay and then would work through it on the production side from there.

“All of the different feeds that are coming through have been retimed to some degree because the casters have to be able to hear themselves and hear each other,” says Smith. “The timing of all of that is just one giant mathematic problem that we had to solve in order to avoid any lip-sync issues or timing problems when cutting video. That was a massive hurdle that we had to overcome.”

Looking Ahead: Hopeful for a Return to LAN Events, GV AMPP on the Horizon

With the 2021 OWL season soon to be in the rearview mirror, Activision Blizzard Esports is optimistic about returning to in-person events at traditional venues next year — hopefully, venues filled with fans. With that in mind, the ABE Technology Broadcast Group is looking at how to integrate its now ubiquitous cloud-based workflows into onsite events.

The TD cutting the OWL broadcast works remotely from home via the cloud

“Right now, we’re trying figure what we need to do in order to make this all work for when we get back to [in-person] venue shows in 2022,” says Smith. “Hawaii is giving us a blueprint for how this will all look when we roll back to that hybrid production model and [in-person] events.

“When we go back to venue-based shows, that doesn’t mean we’re just going to kill off all the cloud-production [workflows] and go back to trucks. For us, trucks are simply no longer cost-effective because we can do all this production work in the cloud with a small crew onsite. There’s not a world in which we’re going to go back to traditional television broadcast; it’s just not effective for us.”

Observers – along with the majority of the crew – continue to work remotely from home.

Smith adds that the team is currently working with Grass Valley to enhance the GV AMPP (Agile Media Processing Platform) cloud-based SaaS production solution and leverage it for OWL and Call of Duty League productions in 2022.

Cole notes that the agility that the cloud provides opens up a whole new range of possibilities: “The nature of the cloud has allowed us to be very agile with our workflows. When you think about it, all we need for a show are a couple of small-scale switchers, cameras, and a lot of PCs. Everything else is in the cloud. It has given us an outlook on the future where we can definitely make things happen at a drop of a dime.

“During the pandemic,” he continues, we’ve basically said there’s no challenge that we can’t tackle. No matter what the challenge is, we will find a way to solve it.”

Overwatch League fans have noticed that two of the OWL’s more prominent sponsors, Xfinity and Coca-Cola, have reappeared for the 2021 playoffs after seeming to disappear as Activision-Blizzard’s investigation news broke.

In July 2021, it was revealed that Activision-Blizzard was being sued by California over gender discrimination in the workplace. And, in the months since, the company’s franchised leagues — the Overwatch and Call of Duty Leagues — have quietly suffered from disappearing sponsors. 

By the start of September, three separate waves of sponsorship uncertainties had emerged: T-Mobile was noticed missing on August 2; Coca-Cola and Statefarm were reportedly “reevaluating their partnerships” on August 5; Statefarm, Pringles, and IBM vanished on August 7; and, finally, Xfinity seemed to drop out around September 1.

Now, fans are surprised to find out that both Coca-Cola and Xfinity returned to the league’s official broadcast for Day 1 of the playoffs on September 21.

If Pine plays, it’ll be the second-most surprising return we’ll see today pic.twitter.com/iQM6j5w361

— Overwatch League Statistical Insights (@owlstatsnet) September 22, 2021

As pointed out by Twitter and Reddit users, it seems that Coca-Cola’s tumultuous partnership with the OWL has given way to a renewed sponsorship. 

This is interesting news in particular, as fans had been quick to point out that, during the turmoil, popular player Su-min “SADO” Kim had removed the Coca-Cola labels from his trademark mid-game beverage.

Sado chugs an unspecified bottle of soda from Competitiveoverwatch

Interestingly, Coca-Cola was never removed from the league’s website despite reported partnership uncertainties — but Xfinity was. And, while still not listed on the site, it appears that their sponsorship has returned to the broadcast.

Xfinity was seen on broadcast during the OWL’s Day 1 playoff stream.

What these renewed partnerships mean for the OWL is uncertain, but many fans speculated such a situation might arise. As mentioned on Reddit, some believed that the sponsors would return once the Activision-Blizzard heat simmered down.

That heat most certainly remains active, as the SEC is now subpoenaing executives like CEO Bobby Kotick. But, with fans excited for an Overwatch 2 show match during the playoffs, this may be as good a time to partner with the OWL than ever.

For now, the OWL, Activision-Blizzard, and sponsors remain quiet about partnership discussions. Concerned fans will likely keep an eye out for sponsors during the rest of the playoffs, though, as there have been reports of league financial struggles.

The departures of leading game developers and creators continues for Activision Blizzard Inc (NASDAQ: ATVI). The latest departure could impact one of the company’s highest anticipated games.

What Happened: Overwatch Executive Producer Chacko Sonny is leaving Blizzard Entertainment. He was the development head on the highly anticipated “Overwatch 2” sequel.

“Chacko Sonny is leaving Blizzard to take some time off after 5 years of service,” the company said in a statement to Polygon.

Why It’s Important: Sonny’s departure adds to a long list of people who have left the company:

• Jeff Kaplan, the director of “Overwatch” left the company in April.

• “Diablo 4” saw its game director Luis Barriga and lead designer Jess McCree let go by the company.

• “World of Warcraft” designer Jonathan LeCraft was also let go by the company.

• Blizzard president J. Allen Brack left the company recently.

The departures and firings come as the company was accused of a hostile work environment and sexual harassment. The accusations led to a high-profile walkout by Activision Blizzard employees.

The controversy surrounding Activision Blizzard has also led to sponsors pulling support for the company’s esports events.

On Tuesday, it was announced the SEC is investigating Activision Blizzard over discrimination allegations from employees.

Related Link: Activision Announces New Co-Leaders Of Blizzard

What’s Next: The departure of another person on the Overwatch team could have gamers and investors concerned about the sequel to the hit game.

“The deep, talented Overwatch team is making excellent progress on Overwatch 2 and thanks to their hard work, the game is in the final stage of production,” the company said in a statement.

Activision Blizzard said it will share more details on the progress of “Overwatch 2” at the Overwatch League Grand Finals, which are scheduled for Saturday, Sept. 25.

“Overwatch 2” doesn’t have a release date yet but many industry experts have pointed to the second quarter of 2022.

Story continues

“Overwatch” was released in 2016 and hit $1 billion in revenue in 2017. The game hit the 50 million players milestone in 2019 and became a staple in the esports market.

ATVI Price Action: Shares have fallen over the last two trading sessions and are trading near the bottom of their 52-week range of $71.19 to $104.53.

Photo: Screenshot from “Overwatch.”

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© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Chacko Sonny, the executive producer for Overwatch and development head for Overwatch 2, is leaving developer Blizzard Entertainment. According to Bloomberg, Sonny plans to leave at the end of the week, the latest departure in a larger exodus from the publisher following state and federal investigations into alleged sexual harassment and discrimination at the company.

A statement given by a Blizzard representative to Polygon regarding Sonny’s departure doesn’t mention the company’s ongoing legal battle or internal reckoning.

“Chacko Sonny is leaving Blizzard to take some time off after 5 years of service,” the statement reads. “The deep, talented Overwatch team is making excellent progress on Overwatch 2, and thanks to their hard work, the game is in the final stages of production. We’ll be sharing more at the Overwatch League Grand Finals later this month.”

The Overwatch League Grand Finals are scheduled for Saturday, Sept. 25, 2021.

Blizzard’s Overwatch 2 is saying goodbye to executive producer Chacko Sonny, after the executive revealed he would be leaving the company this week. Bloomberg revealed that Sonny’s last day with the company would be Friday, and that he was seen internally as a “stabilizing force” on the game’s development team. 

“Chacko Sonny is leaving Blizzard to take some time off after 5 years of service,” Blizzard told GamesRadar in a statement. 

“The deep, talented Overwatch team is making excellent progress on Overwatch 2, and thanks to their hard work, the game is in the final stages of production. We’ll be sharing more at the Overwatch League Grand Finals later this month.”

The Overwatch 2 team also lost game director Jeff Kaplan earlier this year, with Aaron Keller, previously the assistant director on Overwatch, stepping into his shoes. While Overwatch 2 is still without a release date, losing two major executives from the development team is significant, especially as there are rumors that the sort of sequel/sort of update could potentially be set for Q2 2022.

Blizzard has confirmed that an early build of the game will be used for the Overwatch World League’s (OWL) 2022 season next April (lining up nicely with those release date rumors) and we’re getting that new Overwatch 2 information Blizzard mentioned – including updates on Bastion and Sombra – on September 25 during the Overwatch League grand finals.

While Bloomberg reports that Sonny made no reference to it in his departure announcement, the move comes as Activision Blizzard faces a lawsuit over its treatment of staff. 

For all the details you need to know about the ongoing lawsuit facing the Overwatch publisher, you can read up on our Activision Blizzard lawsuit explained article for more.

It looks like Dr Disrespect has finally hit his Warzone breaking point, with the YouTuber admitting he is “genuinely considering stopping” anything to do with the Call of Duty battle royale — on stream or off — until Activision releases Vanguard’s new Tropics map.

Dr Disrespect’s history with Warzone is dotted with rants and raves.

Ever since the battle royale was released midway through 2019, the YouTuber has been suggesting ways to improve the title, dished out bucketloads of roasts and rants, and even quit the game on several occasions.

The Doc’s issues with the Activision-helmed game boils down to two things: its “lackluster speed” and the unstoppable wave of Warzone cheaters swarming the battle royale. These problems have sent Dr Disrespect to Apex Legends, Overwatch, and Valorant for stints in the past.

This time, however, it looks like the two-time may hang up the CoD sticks for good, with the new Vanguard map the only thing that may bring him back.

The two-time sounds burnt out with Warzone in a big way ahead of Vanguard’s release.

Dr Disrespect has had plenty of Warzone rants before. In fact, he’s probably close to hitting triple digits. Those all came with his signature over-the-top in-character tirades, however. This time though, during his September 20 stream, the YouTuber just seemed burned out.

“That’s it for me, man,” he sighed.

“Get me off this f**king game. Holy sh*t, what a snooze fest. I’m literally falling asleep… I don’t know if I can do this anymore. I am genuinely feeling like completely stopping until this new map comes out. I’m not getting anything from that map anymore, the gunplay, the gunfights. It’s all the same to me now.

“I just have no passion, no interest to play a game designed for 11-year-olds,” the two-time continued. “Either 11-year-olds or 85-year-old men. The game has turned into a joke at this point, and I’m just not into it.

“Warzone is just… I really think it’s never been this bad to play. I have no interest left, no enthusiasm. I’ve done it, seen it all, experienced it all in the game.”

Related segment begins at 5:36:04 in the video below.

The one thing Dr Disrespect admits could lure him back to Warzone to grind again would be the release of the new Call of Duty Vanguard map. 

The YouTuber has already dished out high praise for early leaks of the next battle royale battleground, suggesting the upcoming Pacific battleground “feels like a PUBG map.” Doc pointed out similarities with the forerunner title’s Sanhok map, released back in 2018, and admitted he’s eager to give it a go.

“Yes, please, let’s get the hell out of the Verdansk map.”

Doc previously quit Warzone on July 24, claiming he was “bored” of the battle royale and was now “totally uninterested in playing [Warzone] anymore.”