Deutsche Bank downgraded Activision (ATVI

) to hold from buy.

Analyst Jeetil Patel says while the third-quarter shortfall was expected, he did not expect the video game maker to re-evaluate its product pipeline for the fourth quarter and fiscal 2004. He says it now appears the business could see year-over-year revenue declines throughout the first half of 2003.

Although Patel says he thinks the interactive entertainment industry is increasingly becoming a hits-driven business dominated by a handful of major brands, with a trend towards titles developed by Activision and Electronic Arts, he says it now appears that Electronic Arts represents one of the few beneficiaries of shifting consumer demand to well-established titles. He significantly cut his estimates. Patel now sees 87 cents earnings per share for fiscal 2003 (March) and 80 cents earnings per share for fiscal 2004. He has a $15 target.