Player interest in Activision Blizzard's "Destiny 2" is dropping, which will hurt the game publisher's add-on revenue this year, one Wall Street firm predicts.

Cowen reiterated its market perform rating on Activision Blizzard shares, citing increasing evidence players are leaving the "Destiny" community.

"While Call of Duty: WWII clearly had a great holiday, which likely sets up strong franchise live services revenue in 2018, Destiny 2 is struggling right now with player engagement appearing to be on the wane," analyst Doug Creutz wrote in a note to clients Tuesday entitled "Destiny is Not in a Good Place."

"We are a bit cautious that potentially disappointing live service revenue there could at least partially offset upside from CoD in 2018," he said

Creutz reaffirmed his $66 price target for Activision Blizzard shares, representing 7 percent downside to Monday's close.

He said several key "Destiny" video streamers have announced they will reduce content for the game in the future. He noted Twitch viewership for the game is at "franchise-low" levels averaging 4,000 to 7,000 viewers on Friday afternoons versus 14,000 to 17,000 for "Destiny 1" one year ago.

Creutz also shared four key reasons why he believes the game is faltering:

1. "Design decisions were made that have made D2 a less engaging, and less distinctive, game than D1. In particular, key aspects of the D2 end game feel neutered compared to D1."

2. "Microtransaction implementation, while not nearly as problematic as in Star Wars Battlefront 2, has still been a source of player unhappiness."

3. "Bungie's [the studio that developed the game] apparent urgency in responding to player feedback has been disappointing."

4. "Until recently, Bungie did a poor job communicating its road map going forward, particularly compared to the more open stance of many other live service games."

As a result, the analyst is not optimistic the company will be able to turn the "Destiny" franchise around.

"We do think Bungie still has some opportunity to fix the game's problems over the next year and recapture engagement, but we're not sure they have the ability to pull it off at this point," he wrote. "We also note that Destiny currently has more serious competition in its genre from a refurbished Division (Ubisoft) and the indie title Warframe than it did three years ago, when D1 had its own share of player dissatisfaction."

The company did not immediately respond to a request for comment.