“Retail checks indicate that Activision is now offering key holiday title Call of Duty: World at War at a discounted price of USD 49 (versus USD 59). While the move may be part of an annual promotion, we believe a USD 10 discount on one of the industry’s top holiday releases highlights the risk of lower software pricing moving into the New Year. To put our new estimates into perspective, the combined change to EPS from our two recent revisions is -10 per cent, compared to a -40 per cent revision in estimates for Electronic Arts and THQ, and consensus estimates for Take Two declining by more than 90 per cent last week. Risks include the performance of key franchises, World of Warcraft subscriber trends, software pricing, and overall industry sales trends. Activision Blizzard remains our top pick in the sector, with industry leading operating margins, a diverse revenue base, and several of the strongest video game franchises.” – Lazard Capital senior analyst Colin Sebastian