Gadget Stocks » Video Games

Amazon Offers $20 Gift Card With Halo Reach

Michael Comeau — Thu, 25 Mar 2010 11:57:45 +0000

Are you planning on buying Halo Reach?

If so, check out Amazon. It’s offering a $20 gift card with the Xbox 360 title, bringing the effective price down to $39.99. Sweet deal on a brand-new game!

Why Activision Is Succeeding

Michael Comeau — Thu, 11 Feb 2010 22:38:05 +0000

It really is amazing how Activision (ATVI) managed to steal the video-game industry spotlight away from Electronic Arts (ERTS). Activision is the only video-game software publisher to have reported decent Q4 numbers and forward guidance, while EA disappointed for what seems like the 19th time in a row.
An industry insider once described Activision CEO Bobby Kotick as an “MBA-type” CEO, meaning that he was more corporate than creative-minded. Well, you can’t deny that Kotick has been on quite a roll in the past few years.

Under his watch, we’ve seen Activision do the following:

1) Acquire Guitar-Hero publisher Red Octane for a bargain-basement price.
2) Turn Call of Duty into a meg-mega-mega franchise.
3) Execute the merger with Vivendi games which brought in Starcraft, World of Warcraft, and Diablo.

What’s more is that Activision avoided many of Electronic Arts’ strategic errors – like churning out countless me-too games, arriving late to important genres like music/rhythm, and overemphasizing emerging platforms like the Apple (AAPL) iPhone and now the iPad tablet.

The proof is in the pudding, and Kotick’s team have formed the most powerful product portfolio in the history of the video-game industry. While the music genre is way past the glory days of 2006 and 2007, most of Activision’s key owned franchises like Call of Duty and World of Warcraft can stay relevant for years if not decades to come.

Call me crazy, but Activision in its present form reminds me of Procter & Gamble (PG) in the 1980’s.

Disclosure: Long Activision Stock

Is the Apple iPad a Real Gaming Machine?

Michael Comeau — Thu, 28 Jan 2010 16:37:53 +0000

Yes, I’m stilling writing about the Apple (iPad), and yes, I’m still disappointed, particularly because I can’t use it in my photography without a goofy adapter.

But let’s talk a new topic: Gaming.

Portable gaming is best done on a Nintendo DS or Sony PSP. Games for the iPhone and iPod Touch are more time-killers than anything else – though I will admit that I am super pumped for a portable version of Plants vs. Zombies, a game I like even more than Call of Duty: Modern Warfare 2.

Now the iPad, with its beautiful 9.7″ screen could have been an amazing portable gaming devices – but let’s face facts: real gaming, rather than pure time-killing casual games, require a d-pad and buttons. Platforming games can be awesome on a DS or PSP, but they just don’t work on a touch screen.

I’m also concerned about the lack of proprietary, killer content. That’s what gets people pumped up for a gaming platform. People don’t buy an Xbox 360 because it’s cool. They buy it to play Halo and Gears of War. Bigger-screen versions of iPhone games just aren’t enough to position the iPad as a legit gaming device.

It also would have been nice if the iPad had snazzier games to show off. Electronic Arts’ (ERTS) Need for Speed: Shift isn’t bad, but it is old and on all-platforms.

The iPad, and iPhone/iPod Touch for that matter, needs something exclusive – it’s very own Mario or Link or Samus or Master Chief. That’s what will get people to think of it as a real gaming device, and what’s more is that it would enable higher pricing.

Cheap games that cost a dollar or two are fine for small, indie publishers with low overhead, but not for the likes of EA and Activision (ATVI). Selling 1 million units of a $1 game just doesn’t move the needle for a large, publicly-traded company.

Check Out My Podcast With Frank Curzio!

Michael Comeau — Fri, 22 Jan 2010 01:50:10 +0000

I just wanted to give you folks a heads-up:

I appeared on Frank Curzio’s podcast yesterday. Frank was a great friend of mine at TheStreet.com (TSCM) and is simply the best in the business when it comes to low-dollar stocks. He’s now with Stansberry and Associates Investment Research, where he’s launching what should be the best penny stock/low-dollar/under $10 stock newsletter out there. Tim Sykes may have a new rival!

We hit all the fun topics: Apple (AAPL), Google (GOOG), video games – and what’s it’s like to work for Jim Cramer!

Click here to listen!

Take-Two Starting a Monster New Product Cycle

Michael Comeau — Wed, 02 Sep 2009 16:44:00 +0000

I have a new article over at Minyanville entitled Take-Two Entering New Peak Product Cycle. In it, I break down why Take-Two Interactive (TTWO) is an incredible buy right now.

Basically, Take-Two is leaving a product-cycle trough and entering an amazing new cycle that should generate enormous free cash flow for the company. With BioShock 2, Mafia 2, and Max Payne 3 on the way next year, Take-Two will benefit from incredibly easy comps that will allow for blistering revenue growth.

Plus, Grand Theft Auto V should come in 2011, giving the company an enormous financial windfall. The cash flow from that game alone could dwarf the company’s whole enterprise value. I own Take-Two common stock and vertical call spreads - and I plan on buying more.

Grand Theft Auto Movie?

Xbox 360 Price Cut – Blech!

Michael Comeau — Thu, 27 Aug 2009 15:30:00 +0000

Minyanville just posted my latest article on today’s Microsoft (MSFT) Xbox 360 Price Cut.

Here’s a quick taste:

In the wake of Sony’s (SNE) PS3 price cut, Microsoft (MSFT) just slashed the price of its top-of-the-line Xbox 360 console by $100 to $299. It sounds like good news, but it’s just not what the industry needs.

Before, Microsoft sold three versions of the Xbox 360 console — Arcade at $199, Pro at $299, and Elite at $399. More money got you goodies like a hard drive and cooler accessories. Now, the Pro will be phased out at $249, while the Elite slides into the $299 slot.

Don’t get me wrong — cheaper products are better for consumers and two versions are much better than three. But the cost of entry into Xbox-land remains the same. Anyone who really wanted an Xbox 360 wasn’t waiting for the Elite model to come down in price — he or she would have already bought an Arcade or Pro model instead. So any positive impact on Xbox 360 sales will be temporary.

Continue reading Is Price-Cutting What the Video-Gaming Industry Needs?

Ultimately, what the industry needs is a Nintendo Wii price cut. The Wii is losing its competitive advantages as the Xbox 360 and PS3 come down in price and introduce motion-control mechanisms like Microsoft’s Project Natal.

The Wii’s been out for three years and sales are slowing – it’s time.

FYI – I took a short position in Sony (SNE) this morning. I think they’ve lost far too much ground in the video-game war, the dollar continues to weaken vs. the yen, and the PS3 price cut came way too late. This holiday season could be brutal for video-game hardware, and a Wii price cut (if it comes) would present serious problems for Sony – unlike Microsoft’s $199 Arcade offering, it offers nothing to bargain shoppers.

Full Disclosure: short SNE

Dumped Activision (ATVI) After Hours

Michael Comeau — Wed, 05 Aug 2009 22:59:00 +0000

Reposted from LongShortTrader.com:

I just wanted to give you folks a quick note – I sold Activision (ATVI) after hours. The guidance just wasn’t strong enough for my liking, even when factoring in the delays of Starcraft 2 and Singularity.

The market’s had a huge run and the stock trades at a significant premium to Take-Two Interactive (TTWO) and THQ (THQI), where I see more upside in the near term. So it made more sense to just dump the stock and take the tax loss now – I don’t want to hope it rallies just when the market seems to be turning down. This move also frees up cash for other trading ideas I’m throwing around.

And a quick update on Perfect World (PWRD) – I sold the August $40 call options against my common stock position. The stock’s been ripping and I’m in a hold mentality – I definitely don’t want to buy it, but I don’t think it’s quite fully valued yet. So if the stock keeps going up, I’ll be forced to sell at about $41.14 – about 11% higher from here. Covered calls don’t always make sense but in this case I believe it’s the best way to play.

The company reports earnings on August 10th and I believe a significant beat is already priced into the stock price – so it could easily sell off in the event of an upside surprise.

ATVI/ERTS Earnings Previews

Michael Comeau — Tue, 04 Aug 2009 14:12:00 +0000

We’ll learn a lot about the state of the video-game industry this week as two of its biggest players — Electronic Arts (ERTS) and Activision (ATVI) — report earnings.

I’m not placing much stock in the value of the actual numbers they’ll report, which were somewhat telegraphed by the monthly NPD numbers, channel checks, and the general buzz around particular titles. There is some concern over the performance of casual and catalog titles, as well as the economy’s ongoing impact on the industry. But by and large, both EA and Activision are expected to deliver solid results.

Guidance remains another issue altogether.

The second half game lineup is stacked, and awfully reminiscent of 2007, an absolutely huge year — far from shocking, since this year’s biggest titles, like Halo 3: ODST and Call of Duty: Modern Warfare 2 have direct lineage to 2007’s monsters.

It’s gamers’ paradise. But is it investors’ paradise as well?

No.

The economy is still tough and it’s difficult to predict how many casual gamers at the edge are going to come in and buy. And when people do buy, will they buy used to save money? Industry observers are also very correctly pointing out that upcoming titles like the EA-distributed The Beatles: Rock Band and Activision’s DJ Hero are very expensive, forcing gamers to pick and choose. What should be blistering second-half growth will actually be driven by only a few titles – the ones that hardcore gamers can’t live without.

As far as actual guidance goes, Activision is more likely to guide up. It has the biggest game of the year in Modern Warfare 2, with preorder activity through the roof, even for the absurdly-priced $149.99 Prestige edition. Its opening weekend will easily top all video-game and movie releases in history, and that may be enough to carry the day. However, my conviction level is not such that I am not adding to my position ahead of Wednesday’s report.

EA, on the other hand, is likely to sandbag on their guidance because of the competitive slate – it just doesn’t have enough core-gamer mega titles to keep up with the Halo’s and Call of Duty’s of the world. It would be far better for the company to set expectations low and beat them rather then set them high and miss.

In terms of conference call discussion, we’ll have the usual blather about a potential Sony (SNE) PS3 price cut and the state of the economy, but what I want to hear about is music games. Finding a copy of Guitar Hero 2 after its late-2006 release date was pretty hard.

To quote a Circuit City manager I spoke to at the time, “Damn, I can’t believe how many people are buying this game. Even black people love it!” Those were his words ladies and gentlemen, not mine.

But since late last year, retailers have been overstocked with music games that take up a lot of valuable floor real estate. Viacom also just reported a significant drop in sales of Rock Band. I’m very much want to hear about how retailers, especially mass-market ones like Target (TGT) and Wal-Mart (WMT), are gearing up for the holidays in this regard.

Disclosure: Long ATVI

USA Today Covers UFC 2009 Undisputed

Michael Comeau — Tue, 04 Aug 2009 13:42:00 +0000

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The massive runaway success of THQ’s (THQI) UFC 2009 Undisputed has finally been picked up by the mass media. Here’s what the good folks at USA Today had to say about the game:

UFC 2009 Undisputed ($60, rated T for ages 13-up), based on the Ultimate Fighting Championship— the largest organization in mixed martial arts — has become the surprise hit of a slumping summer. It has sold more than 1.5 million copies since its release May 19, according to market tracking firm The NPD Group.

Publisher THQ has shipped nearly 3 million copies worldwide, and a Nintendo Wii version is in the works; so far, the game has been available only for the Xbox 360 and PlayStation 3.

"We knew this was a strong brand, but this has actually surpassed our expectations," says THQ president Brian Farrell.

I am a THQ shareholder and therefore I’m far from an objective prognosticator, but UFC is THE next sports mega-franchise. The sport of mixed martial arts is exploding around the world and the UFC is leading the charge. It’s recent blockbuster UFC 100 event drew over 1.5 million pay-per-view buys, and marked the debut of the UFC on television in Mexico and China.

In addition, the UFC is about to penetrate the Middle East with an event in Abu Dhabi, UAE – a place with a rich combat sports tradition and lots of wealthy folks willing to pony up huge bucks for tickets.

Electronic Arts (ERTS) is making some waves with its own plans for an MMA game, but it’s facing an uphill battle. The vast majority of the sport’s recognizable stars are contracted with the UFC, and the EA MMA no promotion with which to tie itself. UFC is the NFL of MMA. Therefore, if EA really wants in on the mixed martial arts boom, it should just acquire THQ.

I’ll make one thing clear – I don’t own THQ because it’s a potential takeover target. I own it because it’s a publicly-traded proxy for the UFC, with the added bonus of having some other awesome franchises that only add value. Trading at about 0.4 times sales, it’s still dirt cheap and I’ll probably be buying more in the near future. While I also own Activision (ATVI), Perfect World (PWRD), and Take-Two Interactive (TTWO), I see THQ as having the most potential upside over the next 12 months.

The Downside of Direct Downloads

Michael Comeau — Tue, 28 Jul 2009 14:59:00 +0000

I just published my first feature for The Escapist, which is truly one of the best video-game sites in the world. I’ve been watching the Zero Punctuation series of reviews for years, so I’m really happy to have done this piece for them.

Entitled “The Downside of Direct Downloads", I explore what the video-game world might look like as it heads further and further towards a direct-download model. If you can, PLEASE Digg it for me.

Here’s a sneak peak:

Accessing content online has some benefits for gamers. It’s incredibly convenient. We can receive patches to update our games, download expansion packs and even purchase some games without leaving the couch. We can also download demos to try out new titles, something I wish I had 20 years ago before I bought garbage like Friday the 13th for the NES. But if you care about things like games staying affordable and having some choice as a consumer, you might want to start worrying right about now.

At its core, the movement from standard methods of content delivery to virtual ones is just a big, crazy chase for dollars. This shift will have a major impact on the whole supply chain from console-makers to software publishers and retailers.

Did I mention how awesome it would be if you Dugg this story?

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