UBS analyst Eric Sheridan said the video games industry is undergoing a significant transition from a hit driven business to a media consumption model where monetization is layered on top of prolonged engagement with key franchises driven by increased digital full game downloads, increased digital content, and consumer intent. The analyst increased free cash flow multiples to reflect the industry shift from a licensing model to a subscription model. Sheridan raised his price target on Activision Blizzard (ATVI) to $67 from $60, on Electronic Arts (EA) to $132 from $112, and on Zynga (ZNGA) to $4.80 from $3.50.

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