Activision Blizzard Stock Fell Following Bungie Split, Analysts Believe the Decision Is for the Best

January 12, 2019Written by Zarmena Khan

activision bungie split

In this week’s most surprising news, Activision Blizzard and Bungie announced that they were breaking up after eight years of partnership. While the exact terms of the split weren’t disclosed to public, we know that Bungie retained the rights to Destiny, which it will publish itself going forward.

Following this news, Activison Blizzard’s stock plummeted by as much as 12 percent. When trading closed on Friday, January 11, the drop in value stood at 9.37 percent.

While this may be bad news for the company, Cowen & Company analysts believe that the decision will be beneficial for both Activison and Bungie in the long run.

In a note to investors, the research firm suggested that the publishing giant will ultimately benefit more from investing in its own franchises, including Call of Duty, rather than continuing to invest in a series that is underperforming according to the company’s expectations.

On the other hand, Cowen & Company believes that the “growing divergence” between Activision and Bungie was negatively affecting Destiny‘s development, which is partly to blame for the game struggling.

“We think having two head cooks in the kitchen with somewhat divergent views created some issues with the development process and led the game down some blind alleys,” Cowen told its investors. “Destiny was a worthwhile attempt by Activision to build another cornerstone franchise, one that just didn’t quite pan out as they had hoped.”

Interestingly, Cowen analysts predict that Bungie will release the next Destiny title in 2020. Although the developer has secured some investment from NetEase, reports suggest that it will continue to look for investors.

[Source: Variety, GameSpot]