Monday, April 21, 2008

video games; gme

quite a bit happened in the video game world recently. first, npd reported that march sales numbers were astoundingly strong, with software sales up 63% year over year and hardware sales up 51%. the only disappointment was with lackluster sales of the Sony PS3 and Microsoft Xbox 360, though the latter is still supply constrained. Super Smash Bros: Brawl was an absolute monster, moving a whopping 2.7 million units, while Ubisoft's Rainbow Six Vegas 2 and Electronic Arts' Army of Two also did pretty well.

in sum, it's the same old story: the economy is slowing, but the gamers haven't yet noticed.

buzz for Take Two's (TTWO) Grand Theft Auto IV has become absolutely deafening, and we should see reviews start to filter in later in the week. also, GTA IV will mark the series' first foray into multiplayer mode, and I fully expect Xbox Live and the PlayStation Network to crash because of the increased traffic load. regardless, the mainstream media are about to start covering the GTA IV story, which could drive increased investor interest in video-game stocks.

earlier today, gs downgraded gme to a sell rating, saying the following: "While the much anticipated release of Grand Theft Auto IV (GTA IV) at the end of April is expected to produce record sales, and Wii Fit, slated for May, is also expected to be a blockbuster, the remainder of the year lacks any big releases, and compares get tougher throughout the year as we lap titles such as Halo 3 and Guitar Hero 3."

goldman's disdain for the stock is fine with me, but the statement "the remainder of the year lacks any big releases" simply has no basis in reality. on top of the usual batch of sequels to annualized franchises, we have Metal Gear Solid 4, Gears of War 2, Star Wars: The Force Unleashed, Starcraft 2, World of Warcraft: Wrath of the Lich King, Fallout 3, Too Human, Prototype, Soul Caliber IV, Resistance: Fall of Man 2, and Killzone 2. the comps will be tough later in the year, but saying there are no more big releases is downright "kooky talk," as kramer would say.

there's also more drama regarding the potential ERTS/TTWO combination. looks like ERTS isn't willing to pay up as many thought it would. i think TTWO owners should take their profits and forget the arb game -- that's only fun with other people's money leveraged to the hilt!

long gs and gme

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