The public market's removal of Blizzard stock collection is drawing this stock era to an end for all gamers. Activision Blizzard (ATVI) will stop appearing on trading screens worldwide after its acquisition by Microsoft in 2023 for $69 billion, yet the investment strategy for gaming has not ended. It has changed to continue with new business avenues.

If you purchased ATVI shares or CFDs, you're currently searching for the next great asset in the gaming industry. Fortunately, with the acquisition and business model changing to continue capturing advancements in gaming, there are currently more efficient avenues to participate in the advances occurring in gaming. This document provides a rundown of the past developments, what to pay attention to, and where your time and money can be the most effective moving forward.

Blizzard Stock Before Delisting: Why ATVI Was a Core Gaming Investment

Before the purchase of Activision Blizzard stocks by Microsoft, the company was regarded as one of the most secure investments within the gaming industry. Activision Blizzard is much more than an average publisher within the gaming industry; it is a "monetisation machine" of epic proportions that consists of many of the largest gaming franchises in history across a broad range of media. 

Activision Blizzard emerged as a major player when Activision merged with Vivendi Games (Blizzard Entertainment), allowing it to build a catalogue of gaming franchises unmatched by any of its competitors. World of Warcraft, for instance, generates approximately $1 billion annually from subscriptions alone. Call of Duty has consistently ranked as the best-selling console game, and Overwatch created the hero shooter genre. Each of their franchises (e.g., Diablo, Candy Crush, and Hearthstone) is a unique revenue-generating opportunity for the company. 

The Regulatory Gauntlet

As evidenced by the statistics, Microsoft's Game Pass subscriber base has significantly increased, with the number of subscribers growing from 18 million in early 2021, and continuing to grow to over 34 million subscribers in early 2024. Each subscriber contributes approximately $120-$180 annually, depending on which tier they subscribe to, giving Microsoft between $4 billion in recurring annual revenue, as long as the library continues to expand. In addition to significantly increasing the value of Game Pass due to the additional game content added to the service, Activision's franchises will enable Microsoft to convert a larger number of casual gamers to long-term subscribers. 

Microsoft made concessions: Took Microsoft approximately 21 months to close this $69 billion deal with Activision Blizzard, due to significant scrutiny by the regulatory bodies like UK’s Competition and Markets Authority, blocking the deal primarily due to antitrust concerns arising for cloud gaming, along with a lawsuit from the FTC trying to stop them, and the European commission insisting Microsoft produce some behavioural commitments before approval.

The Impact on MSFT Stock

Immediately after the announcement of the acquisition, Microsoft's stock price barely changed, as investors had concerns related to regulatory risks associated with the deal and questioned the $69 billion price paid by Microsoft to acquire Activision Blizzard. Fast-forward two years from the acquisition, and there is now greater clarity on the strategic reason for acquiring Activision. Microsoft now generates in excess of $21 billion in annual revenue within its Gaming Division, comparable to Windows within Microsoft.

In addition, the acquisition of Activision Blizzard adds significant weight to Microsoft's changes to its revenue model from Microsoft for the past 35+ years. Wall Street investors reward stable, recurring revenue. Software licensing is the old Microsoft. Subscription-based services (Azure, Office 365, Game Pass) are the new Microsoft. With the acquisition of Activision, Microsoft demonstrates further movement toward that new business model.

Comparing the Cost of CFD Trading to Stock Ownership:

CFD trading can sometimes appear to be less expensive than stock ownership. For example, many online brokers do not charge commission on trades and instead charge a spread. Additionally, CFD traders also incur overnight financing fees. While overnight financing fees do not apply to trades held for only a short period of time (i.e., around earnings announcements or new product launches), they can add up when you hold a CFD position for more than a few weeks.

Most CFD brokers charge an overnight financing rate that is equivalent to an annual percentage rate (APR) of approximately 7-8%. Therefore, considering that finance on a CFD position held for three months would cost the trader approximately 1.75-2.00% in financing fees, CFD traders should always compare their costs for CFD trading with traditional stock ownership and establish which method will produce a better return based on how long they plan to hold the CFD position versus purchasing the stock outright.

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