In 2012, the trends in the gaming industry have all been to get away from what has made gaming enterprises successful in the past. Sales of all consoles have decreased thirteen percent this year as the amount of other outlets for entertainment is at an all-time high. As a result, gaming manufacturers are in a race to reinvent themselves and remain relevant.
While it might be difficult for hard-core gamers to accept, they are no longer the key demographic that Microsoft (MSFT), Sony (SNE), Nintendo (NTDOY) and others are targeting. Microsoft announced today that it would offer a new way for customers to pay for the Xbox 360 system with a monthly subscription service in the model of what many cell phone companies use. Additionally, subscribers would have access to a cheaper up-front payment for the console and be able to watch NetFlix (NFLX), ESPN (DIS),and Paramount (VIA) and have access to other content providers with which Microsoft has struck deals. A new service called Xbox Music is also being launched that will contain forty million new tracks and work across other Microsoft devices.
The tablet sphere is also changing the game for these companies. This morning Nintendo announced it would be launching the Wii U, the first gaming device with a tablet-based controller. The device has been hailed as a “Swiss army knife” of video games by P.J. McNealy of Digital World Research and is another product in the tablet mold set to be released by years end. According to Nintendo this will also be the first device that shifts the focus of the gaming experience from the television to the console.
With the continued proliferation of the tablet platform and the shift of gaming consoles to multi-purpose and all-encompassing entertainment systems, traditional gamers are less and less the focus of gaming innovation. In order for these companies to succeed into the future they will have to balance retaining their gaming audience and adapting to the changing landscape of their industry.
Business Section: Investing Ideas
Microsoft and Nintendo are both diving looking to revolutionize the gaming console industry. How do you think it will play out?
Here’s a short index of companies exposed to the increased use of gaming and consoles:
Interactive Chart: Use the Compar-O-Matic to compare changes in average analyst recommendations over the past two years for EA, MSFT, NTDOY and other gaming industry names:
1. Microsoft Corporation (MSFT, Earnings, Analysts, Financials): Develops, licenses, and supports a range of software products and services for various computing devices worldwide. Market cap at $239.51B, most recent closing price at $28.51.
3. 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. Market cap at $4.18B, most recent closing price at $13
4. Activision Blizzard, Inc. (ATVI, Earnings, Analysts, Financials): Activision Blizzard, Inc. publishes online, personal computer (PC), console, handheld, and mobile games of interactive entertainment worldwide. Market cap at $12.91B, most recent closing price at $11.61.
5. Apple Inc. (AAPL, Earnings, Analysts, Financials): Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Market cap at $526.28B, most recent closing price at $562.83.
7. GameStop Corp. (GME, Earnings, Analysts, Financials): Operates as a retailer of video game products and personal computer (PC) entertainment software. Market cap at $2.58B, most recent closing price at $19.54.
8. Take-Two Interactive Software Inc. (TTWO, Earnings, Analysts, Financials): Develops, and distributes interactive entertainment software, hardware, and accessories worldwide. Market cap at $1.B, most recent closing price at $11.14.
9. Glu Mobile, Inc. (GLUU, Earnings, Analysts, Financials): Engages in the design, marketing, and sale of casual and traditional mobile games worldwide. Market cap at $283.8M, most recent closing price at $4.40.
(List compiled by Daniel Connelly )
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Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
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Dig Deeper: Access Company Snapshots, Charts, Filings
- Microsoft Corporation (MSFT, Chart, Download SEC Filings)
- Nintendo Co., Ltd (NTDOY, Chart, Download SEC Filings)
- Electronic Arts Inc. (EA, Chart, Download SEC Filings)
- Activision Blizzard, Inc. (ATVI, Chart, Download SEC Filings)
- Apple Inc. (AAPL, Chart, Download SEC Filings)
- Zynga, Inc. (ZNGA, Chart, Download SEC Filings)
- GameStop Corp. (GME, Chart, Download SEC Filings)
- Take-Two Interactive Software Inc. (TTWO, Chart, Download SEC Filings)
- Glu Mobile, Inc. (GLUU, Chart, Download SEC Filings)
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