Novice Investing - Long Winter For Video Gamers

Date: Monday 01st 2008f December 2008 05:44:46 PM

Long Winter For Video Gamers - 02/24/2006

By: Novice Investing Staff

The winter is not over for Video Gamers. First, it is the lackluster reaction for X-box 360 which debuted last fall. Supply constrain limits the sale of X-box Microsoft might have had. Hey, who can blame them? They lost more money when they sold more X-box. This is like giving away the razor and then make it up with the blade.

Then now, rumor has it that Sony Corp. (SNE) will delay its much awaited Play Station 3 until late 2006 or early 2007. Originally, the Play Station 3 is slated to debut during spring of 2006. That is a big difference. Most retail sales occur during the fall, which means that releasing the Play Station 3 on early 2007 will result in a huge loss in holiday sales and games. Who would want to buy the existing Play Station 2 on the fall, only to have it replaced by the new console a few months later?

Thus, time is not on Sony's side. The longer it released its much awaited console, the more it erodes the potential Play Station customers. Video game makers are not that better off too. Gamers with existing consoles may not want to buy new video games as they'd rather wait for the set of games of the new Play Station 3 consoles.

Which video game makers will be most affected? The affected game makers range from Activision, Take Two Interactive and THQ Inc. We believe that Electronic Arts will survive better than the rest as it has a more diverse collections of products. Now, most of these video game makers have solid balance sheet. Therefore, we do not expect them to go out of business just from this delay. Unless, of course, if they screw up real bad. Right now, Take Two Interactive seems to have the worst product stage as its biggest money maker, Grand Theft Auto, was pulled out of the market a few summers ago.


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Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Sony Corp. (SNE) or any other securities.

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