Activision likely decided to end Bungie agreement, says William Blair
William Blair analyst Ralph Schackart believes the end of the Bungie partnership was likely an Activision Blizzard-driven decision, as Destiny 2 had been underperforming commercial expectations. Despite solid unit sales, it appears the game did not meet expectations on reach and in-game monetization, Schackart tells investors in a research note. He imagines Activision will redeploy developers earmarked to Destiny to existing or new intellectual property that is fully owned. However, the analyst believes last night's announcement, which follows recent management departures, will create more near-term uncertainty. Looking forward, three Blizzard games, Overwatch, Hearthstone, and World of Warcraft are likely to decline in 2019, which made Activision's performance during the year particularly important, says Schackart. Nonetheless, he believes Activision "will ultimately manage through the recent near-term headwinds." He keeps an Outperform rating on Activision Blizzard.