Activision-Blizzard posts results

Yesterday we finally got to peek into the books of the merged Activision-Blizzard, and from what I can tell it looks pretty good, especially given the free-fall the market has experienced.  In fact, given today’s near 500 point drop in the Dow, to see a comany, any company, beat Wall Street estimates and pick up 10% in the value of its stock is like a beacon of hope.  It certainly gives credence to the argument that gaming companies do well during recessions since gaming gives you the most entertainment bang for your buck.

 

I read the trascript from the Activision-Blizzard earnings call and it’s clear that its management is more optimistic about their prospects in the coming months than Electronic Arts, who is battening down the hatches by lowering forecasts and laying people off.  ATVI, on the other hand, affirmed their outlook for the year and even increased their estimate of cost savings to be realized from the merger by $50 million. 

 

They have big releases coming up: Call of Duty (World at War) and WoW’s Wrath of the Lich King, and the just-released Guitar Hero: World Tour attracted 25,000 user-generated songs which can be downloaded by others and could lead to a subscription model for Guitar Hero.  (Take that, youtube!)

 

So ATVI looks to be well positioned for the holidays.  Obviously the big question mark is whether the consumer will come through.  Personally, I think these games are a fairly cheap way to keep the cheer in the holiday season for kids.  I could easily see hardware sales being way off, especially big ticket items like laptops, and the “must have” smartphones.  Those items might have been the Big Kahuna under the Christmas tree before the economy tanked, but forget about it now.  However, parents can still afford to throw a few games at junior to at least avoid feeling like the grinch. 

 

And luckily for the software companies, the latest generation of consoles came out when everyone was only to happy to run up more debt on the ol’ credit card.  (Ah, how I miss those days already.)  That means that most people don’t have to buy the console this Chistmas, just the new game releases.  If the new consoles were just coming out this year, I’d be writing a decidedly different post.  But as it stands, your average high school/college student only needs to return a few garbage bags of beer cans in order to get enough cash to head down to GameStop for Call of Duty.

 

So cheer up everyone.  Activision-Blizzard has arrived to save Christmas!  Sure, they can’t include the horrific October we just had in their numbers, but then again they won’t have to report on October numbers until after the holidays are over.  Until then, what better way to escape reality than to settle in with a new game release?

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World Golf Tour – public beta

World Golf Tour

World Golf Tour just launched its public beta.  This game is interesting to me primarily because it has crossover potential.  By that I mean it could introduce a new group of folks to interactive, social-based gaming.  Not only the guys playing from their desk at work with their old school buddies, but also the retirees who can’t make it out to the real links any longer.  Or it could fail without so much as a whimper.  Time will tell.

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In-game ads – Obama making more buzz

So you’ve probably heard by now that Obama has taken ads out on Xbox live in order to try and reach that pesky male 18 – 34 demographic. It certainly has created a buzz. I say good for him, but also that it’s just the inevitable next step in monetizing gaming, and is another hint at how gaming companies can become far more valuable.  

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It’s the stupid economy

Note that the title of this post is not “It’s the economy, stupid” but rather “it’s the stupid economy” because our economy is now officially for the stupid.  I came to this conclusion while watching an analyst’s comments on Apple this morning.  He said that Apple represents everything that is right with America.  It has the best growth prospects, one of the best balance sheets, and is overall likely the best company we have.  He then proceeded to say he bought it at 90 a few days ago and was selling today.  These are the people running and ruining our economy.

 

Here we have a guy that the good people down at network X have deemed to be an ‘expert’ on the economy and market.  According to them, his words carry weight.  So in one breath he’s saying that Apple is a company worth owning for the long haul because it’s one of the best U.S. companies, if not the best, and in the next breath he casually mentions he’s day trading its stock.  And the hosts say nothing about this hypocrisy. 

 

This attitude is now so common-place that we think nothing of it.  We no longer invest in companies, we trade on momentum.  Instant gratification and the quickest possible buck.  That’s what we’re all about.  And that’s what our stupid market and stupid economy have come to.  It’s the largest legalized gambling operation in history.  An economy of the stupid, for the stupid, by the stupid.

 

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Is the market bounce for real?

Talk about a roller coaster ride. The market had its single largest point gain yesterday. It was also the 5th largest gain on a percentage basis. Personally, I don’t trust it.

Do you know when the largest percentage gain was? 1933.  Yep, smack dab in the middle of the great depression. In fact, eight of the top 10 all time best days occurred during the depression. Why?

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The future of music in gaming – Part 1

So you probably heard about the little spat between Activision Blizzard and Warner Music concerning royalties for songs on Guitar Hero.  Or maybe you didn’t.  Either way, I’m going to talk about it, because it gives us a hint about the future of music in gaming.

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The envy trap

As a professional investor, I have been repeatedly asked my opinion of the credit crisis and what will come of it all. My first answer is that we’ll get through it, so just sit tight.  My second point is that it’s vital that people understand what led to the crisis so that we can learn from our mistakes.  And yes, they are our mistakes, as in all of us as people with money invested in the market, not their mistakes. 

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Youth lead the charge, pt. 2

In my last post I brashly predicted that gaming will be at the forefront of digital convergence.  Why? Because the youth of the world are spending billions of dollars each year to play in the digital world. This means that it’s the gaming companies that have the current revenue streams and profit margins that enable them to push the technological envelope.  They will develop (and own) the technologies that businesses and non-gaming inviduals will later use to operate in the digital world (when they finally get with the program).

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Hello world!

Digital convergence is the human journey from the physical world into the digital world.  This journey will encompass not just games and other forms of entertainment, but also business, finance, communication, religion, politics, investments, social interaction, miliarty conflict, and more. Nearly every facet of human existance will be duplicated in the digital world, where they will rearrange themselves far, far more rapidly than what is possible in the physical world. In fact, this journey is already well on its way….

This blog focusses on the business, investment and finance aspects of digital convergence, translating the technical morass and other bits of nonsense into plain talk and common sense predictions.

So where will this journey bring us? Keep reading….  

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