What You Missed This Week in Video Games

‘Callisto Protocol,’ ‘Marvel’s Midnight Suns’ out this week

"Game On" is The Fly’s weekly recap of the stories powering up or beating down video game stocks.

NEW RELEASES: This week’s biggest release is Krafton’s survival horror game "The Callisto Protocol," which is being directed by former "Dead Space" executive producer Glen Schofield. The game launches on December 2 for PlayStation 4 (SONY), PS5, PC, Xbox One (MSFT), and Xbox Series X/S. Also out this week is Electronic Arts’ (EA) racing sim "Need for Speed Unbound," which rolls out December 2 for PC, PS5, and Xbox Series. In addition, Take-Two’s (TTWO) tactical role-playing game "Marvel’s Midnight Suns" launches for PC, PS5, and Xbox Series on December 2, with versions for Switch (NTDOY), PS4, and Xbox One coming at a later date.

ACTIVISION/MICROSOFT: Last week, media reported that the Federal Trade Commission is likely to file an antitrust action that would seek to block the $69B purchase of Activision Blizzard (ATVI) by Microsoft. In particular, a report from Politico indicates that while a lawsuit is not guaranteed as several FTC commissioners have yet to meet with lawyers for the companies, the FTC staff reviewing the deal is skeptical of the companies’ arguments why the deal should proceed.

Following the news, several analysts upgraded Activision Blizzard shares, with Wells Fargo analyst Brian Fitzgerald upgrading the stock to Overweight from Equal Weight and noting that the market is undervaluing Activistion relative to both outcomes — deal or no deal. Meanwhile, Truist’s Matthew Thornton upgraded Activision Blizzard to Buy from Hold, saying he put a bull case at $95, under which Microsoft closes the deal, and bear case at $62. Additionally, Morgan Stanley analyst Matthew Cost upgraded the stock to Overweight from Equal Weight, saying he is "incrementally bullish" on the company’s position as a leading game publisher. While calling it "challenging" to assess the likelihood that Microsoft’s proposed acquisition receives regulatory approvals, Cost believes the risk reward is compelling on a fully standalone basis with "a call option" of $95 in cash per share if and when the deal closes.

This week, Reuters’ Foo Yun Chee reported that Microsoft will likely offer concessions to EU antitrust regulators in the coming weeks to ward off formal objections to the deal , Reuters’ Foo Yun Chee reports, citing people familiar with the matter. Such proposed remedies will consist mainly of a 10-year "Call of Duty" licensing deal with Sony, according to Reuters.

BLACK FRIDAY: U.S. Black Friday results varied according to a number of tracking services, but looked decent. Store traffic was on the rise, jumping 7% y/y according to RetailNext, while Sensormatic Solutions reported traffic was up 2.9% y/y. However, the latter noted in-store sales edged up only 0.1%.

With respect to video games, Gamesindustry.biz’s Christopher Dring reported, citing GfK data, that physical video game sales in the U.K. during this year’s Black Friday week were 15% lower than during the same period last year. Software sales over the period have been declining in recent years, with last year’s Black Friday sales having fallen 10% year-over-year, Dring noted. The best-selling boxed game of the Black Friday period in the U.K. was EA’s "FIFA 23," with Activision’s "Call of Duty: Modern Warfare II" in second place and Nintendo’s "Pokemon Violet" in third, the author says. Other top-selling games during Black Friday in the U.K. were "Mario Kart 8 Deluxe," Sony’s "God of War Ragnarok," and Sega’s (SGAMY) "Sonic Frontiers.

OTHER STORIES TO WATCH:

• Nintendo said it will unveil a second trailer for its upcoming "Super Mario Bros." movie in partnership with Comcast’s (CMCSA) Illumination [more]
• CD Projekt (OTGLY) said during it squarterly results that its remake of the first "Witcher" game will be open world [more]

Keywords: video games, game on, activision blizzard, need for speed, electronic arts, microsoft, ftc