Blizzard/Activison CEO admits AION competitive threat

Janco Partners analyst Mike Hickey says that despite the promise of holiday success for games like DJ Hero and Tony Hawk: Ride, Activision's year end could see some snags -- chief among them the increasing likelihood that Starcraft II won't make this calendar year.

Although Blizzard's not yet pinned a specific release date for the game, it's maintained a 2009 window. But Starcraft II lead designer recently told consumer weblog Kotaku that the team plans to have a beta that will last "four to six months," leading Hickey to conclude: "We find it increasingly probably that the game will be released in [Activision's] fiscal '10 period."

Hickey also called CEO Bobby Kotick's recent warnings that Activision could withdraw PlayStation 3 support by 2011 with no price cut "likely a realistic reaction to a near term breakdown in market growth."

If hardware pricing stays high, Hickey says, it "could eventually compromise holiday sales expectations."

"While we expect price cuts from Sony, Microsoft and Nintendo before the holiday, the ultimate timing and magnitude remain uncertain," he adds.

According to Hickey, other areas of caution are a recent boost in Activision insiders selling shares -- "impossible to ignore," he says -- and increasing challenges for World of Warcraft.

The analyst says that although the number of WoW players in China is higher, the average revenue per user is lower due to the specific business model -- and downtime in the transition from operator The9 to rival Netease could cause the player base to take a hit, even though the migration will mean higher royalties in the end.

"We view looming competition in the West from new MMORPGs as a greater threat to WoW’s future then the current transition," he adds, including NCsoft's September launch of Aion as a possible competitive threat.