"They've had a lot of excitement recently," Michael Olson, senior equity research analyst at Piper Jaffray, told CNBC's "Squawk Box" on Friday. "Overwatch is a huge phenomenon if you look at the revenue it generated."
Overwatch was designed for competitive play, or e-sports, and is especially popular in China and South Korea, Olson said. Watching others play competitively can prompt consumers to go out and buy games and add-ons he said.
"It seems crazy that people are watching other people play video games, but it's a real thing," Olson said. "And we're definitely seeing a lot of different titles that are benefiting from it. Today it's hard to quantify the positive impact of e-sports from a financial perspective, but what we know for sure is that it's helping with player engagement."
The maker of games like "Call of Duty" "World of Warcraft and "Candy Crush" saw shares pop in early trading Friday, though they fell to trade nearly 1 percent lower mid-day. The stock ended the day modesty lower.
With an earnings beat under its belt, Activision's shares are up 41 percent over the past year. Given the rally, it's possible that the stock could pause in the near-term, wrote Stifel analyst Drew Crum. Plus, Activision's recent acquisition, King Digital, saw monthly active users fall slightly, wrote Wedbush analyst Michael Pachter.
It comes as more and more players are downloading games online, rather than physical disks, which can boost margins for publishers, Olson said.
Still, not all digital game companies have performed well: Zynga shares tumbled on Friday after forecasts for bookings missed estimates. The kind of gamers that play "bite size" games on phones are a separate audience than those looking for an immersive experience, Olson said.
"Overwatch is a phenomenon that demonstrate's Blizzard's creativity and the audience it has built over the last two decades," wrote Pachter.
Disclosure: Piper Jaffray makes a market in Activision Blizzard, and will buy and sell the securities of the company on a principal basis.