Activision (ATVI) - Get Report is poised to make a killing in the explosive mobile gaming market, with the video-game producer on track to reap a substantial increase in earnings as consumers spend more and more time playing games on their smartphones, according to analysts at Jefferies.
Activision's mobile gaming division is on track to become a $1 billion business by 2023, adding 25 cents of incremental revenue, write Jefferies analysts Alex Giaimo and Ken Rumph.
Shares of Activision edged up 0.17% to $58.76 a share on Monday.
Activision's push into mobile comes as consumers spend more time playing games on their smartphones, Jefferies noted in its research report, pointing to the results of a survey by the firm.
A survey commissioned by Jefferies of 1,000 smartphone owners found 90% play games on their phones, while 41% reported the time spent on mobile games had increased over the past year, the analysts noted.
Mobile should remain the fastest-growing segment in gaming for some time, with the sector poised to hit $100 billion by 2022, with an 11% compound annual growth rate, according to Jefferies.
"The data suggests ongoing tailwinds, with mobile game penetration and engagement increasing," the Jefferies analysts noted. "We believe ATVI's aggressive approach will continue to pay off."
For Activision, 'CoD Mobile' (Call of Duty) is just the tip of the iceberg, with 100 million downloads, or four to five times annual console/PC sales, the analysts wrote.
'CoD Mobile' alone will generate $300 million in gross bookings and 7 cents a share in earnings in 2020, according to Jefferies, with 'Diablo,' 'Overwatch' and 'WoW' "three additional franchises ATVI can bring to mobile," the Jefferies' analysts noted.