Equity Report AND Template

Risks
1 Risks
Activision Blizzard conducts a significant share of their business
outside of the United States, and thus derive significant revenues
from international trade from Europe, Asia and Australia. Moving
forward, they expect sales from emerging market to form
significant part of their revenue streams.
As such, Activision Blizzard is expected to become more exposed
to the systematic risk of foreign trade as well as the economic
and political implications of doing business with emerging
markets. Moreover, deterioration of relations with any of the
countries they do business with could cause significant losses in
revenues.
The most recent example is China’s strict regulatory approval,
thus the Chinese government’s decision to revoke its approval for
the games of Activision Blizzard could result in a
negative impact on its business.
2 Covid-19
Recently, events such as Game Developers Conference (GDC) in San
Francisco, were cancelled due to the wildfire-like spread of the
coronavirus as companies like Facebook, Sony, Electronic Arts,
Microsoft, Amazon, Activision, etc. have pulled out. E-sport events
are being cancelled or getting moved such as the Overwatch
League.
Weeks 6 and 7 were scheduled to be played in Guangzhou,
Hangzhou and Shanghai, and now they have been moved to Seoul,
South Korea. This was due to the forecast of having matches at
half-empty venues because of the widespread panic.
The impact of the Coronavirus is estimated to be minimal on
Activision Blizzard due to its low market capitalisation in Asia and
the virtual distribution business model, however, a very important
factor to take into account for the long run is that Activision
Blizzard have operations in the China. So, the outbreak could lead
to game delays as security requirements and software tools make
remote-access impossible if restrictions extends into months. Late
2020 is the critical launch time frame for the next generation of
consoles from Microsoft and Sony. Both console makers manufacture
their hardware in China. And if next generation consoles are