As the holidays slowly creep into view Nintendo (NTDOY), Sony (ADR) and Microsoft (MSFT) are once again jostling for market share in the video game console market. Sony will be unveiling a new lighter PlayStation 3 this season while Nintendo launches the Wii U that supports games such as Super Mario and Call of Duty. Not to be left behind, Microsoft has hired a former CBS television executive to improve the entertainment and digital media portion of the Xbox 360.
Meanwhile, these consoles may be facing greater competition from cable providers including AT&T (T), Verizon (VZ), and Time Warner Cable (TWC), all of which expressed interest in breaking into the video game industry by offering a cloud-gaming service directly to their customers’ T.V sets. These cable companies are not just trying to provide “Pong” and “Angry Birds”, but realistic and high quality games that are a console industry norm by utilizing publishers like Electronic Arts (EA) and Activision Blizzard (ATVI).
Business Section: Investing Ideas
Despite their best efforts console providers have seen overall gaming console market decrease by 5% over the past year, largely due to competition from internet and application games. With the news of a few more big players entering the market it seems as though this negative trend will likely continue.
With the cloud-gaming technology not yet perfected and console sales decreasing, some analysts argue neither the cable companies nor the console providers are the right investments at this time. But that doesn’t mean there aren’t opportunities..
In reference to this new trend with cable companies the stocks to look out for are game publishers who will be able to develop content for cloud gaming. In addition, keep an eye on how gaming companies are adapting to the internet / smartphone demand that is stealing away market share from Nintendo, Sony, and Microsoft.
Here are the names to add to your watchlist:
1. Electronic Arts Inc. (EA, Earnings, Analysts, Financials): Develops, markets, publishes, and distributes game software and content for video game consoles, personal computers, mobile phones, tablets and electronic readers, hand held game players, and the Internet. AT&T, Verizon, Comcast and Time Warner are all looking to offer Call of Duty caliber games to it’s users
2. Activision Blizzard, Inc. (ATVI, Earnings, Analysts, Financials): Activision Blizzard, Inc. publishes online, personal computer (PC), console, handheld, and mobile games of interactive entertainment worldwide. Some of their titles are already being used by a similar venture between Singapore Telecommunications and Playcast
3. Take-Two Interactive Software Inc. (TTWO, Earnings, Analysts, Financials): Develops, and distributes interactive entertainment software, hardware, and accessories worldwide. Develops and publishes iconic series such as 2K and Rockstar games
4. THQ inc. (THQI, Earnings, Analysts, Financials): A worldwide developer and publisher of interactive entertainment software for all game systems, including home video game consoles, such as the Microsoft Xbox 360 (Xbox 360), Nintendo Wii (Wii), Sony PlayStation 3 (PS3) and Sony PlayStation 2 (PS2); handheld platforms, such as the Nintendo DS and DSi (collectively referred to as DS), and Sony PlayStation Portable (PSP); wireless devices, including the iPhone, iTouch and iPad, and personal computers (PCs), including games played online. Offers content not only for consoles but the iPhone and iPad
Written by Nicholas Sousa
Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
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Dig Deeper: Access Company Snapshots, Charts, Filings
- Electronic Arts Inc. (EA, Chart, Download SEC Filings)
- Activision Blizzard, Inc. (ATVI, Chart, Download SEC Filings)
- Take-Two Interactive Software Inc. (TTWO, Chart, Download SEC Filings)
- THQ inc. (THQI, Chart, Download SEC Filings)
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