Video Game Companies (Investing)

[Japher]

Last night my dad calls and asks me "Have you ever heard of Halo... the video game?"

If my dad knows about, it has to be huge. He mentioned something that preorders for the game were over $1.5MM, at $50/each, that over $75MM in sales. It beat the opening weekend for any movie last weekend, and I wouldn't be suprised if it beats out any movies opening weekend for the rest of the year.

What I want to know, as a potential investor, is what are some gameing companies out there (apart from MSFT and Sony) that may pose for a good investment?

Anyone got some big titles coming out that you are looking forward to?

[dunk]

I would assume EA is a good investment. They publish all those sports games that do very well every year.

[Asher]

The latest estimate is well over $100M in 24 hours for Halo 2...

[Japher]

The latest estimate is well over $100M in 24 hours for Halo 2...

The problem is, that ain't gonna do a whole lot for MSFT sales. So, MSFT as a video game play might not be the best option. MSFT is down 0.02 today.

[Standup]

EA is a big, listed company already and i think the big gains have already been made. Ten years ago, maybe even five, video games were a niche market and nobody seemed to think they were going to take off. Or the main financial markets weren't interested. Now they're mainstream and covered by finance analysts pretty comprehensively.

I'd imagine the companies to invest in are the small publishers with some good intellectual property but i don't think there's too many around. The big publishers are already parts of large media conglomorates and the small ones are too small.

I made quite a bit on Electronic boutique UK but i still held the shares for around 5 years. The annual reports i get talk of increased growth in 2006 based upon new hardware so i assume the current share price reflects that.

On the downside i lost big on Eidos and even if (when?) they get bought out i'll have lost about 80%

[SnowFire]

Electronic Arts would have been a fine investment. They're still doing well- I think you would have made 15% or so in a year with buy & hold, had you bought last year. Problem is, now that the markets are recognizing this, they may not be undervalued anymore.

Whatever you do, don't buy Square-Enix's stock (it'd be listed on the Tokyo Stock Exchange if anywhere, so it may not matter in any case). I liked what they used to be, but every indication indicates that they're taking the road of slow, easy decline. FFXI may keep 'em going strong though, online games are big money makers.

[lord of the mark]

arent the video card makers close to a pure PC gaming play? If you want to bet on the platform?

[Japher]

arent the video card makers close to a pure PC gaming play? If you want to bet on the platform?

Yes. However, a good video card maker is hard to find. They all swing very widely and seem to go out of buisness quicker than the games' min reqs... ATI and NVDA? They have been good plays, as well as good shorts. Rather scary prospects IMO

[Dinner]

Eidos never realy seemed to come up with more then the Tomb Raider series.

[SnowFire]

You're forgetting 3dfx. They were THE graphics card company at one time, and then, in the span of a year or so, they just got completely buried by NVidia, and in the next year, they went completely out of business.

If you bet on the right horse, there's a lot of money, but if not... ahh. History means little there. It's all about who will have the next big thing in 6 months.

[DrSpike]

I prefer to invest in games rather than game companies.

[Standup]

Eidos never realy seemed to come up with more then the Tomb Raider series.

They have Championship Manager although this years', the first without Sports Interactive, will be interesting to watch. The latest tomb raider didn't do as well as hoped (maybe because it wasn't much good?) and the annual report talked about the Hitman franchise much more than Lara.

[Japher]

For all of you who said EA, this chart is from Oct. 14th to date:

[Japher]

If only I had listened to you

Actually, if only I had money

[Moral Hazard]

Ahh! Video Game investing. I haven't done it in a year and don't have the money to do it now; when I did it I was really gambling.

Made good money on IFGM -> ATAR when they released their Matrix game. I sold it before the release because the stock had gotten rediculously overpriced in anticipation of the release. Bought 300 shares at 2.05 and sold them at 100 for 5.95 and 200 at 5.90 (one sell order). It's now trading at 2.63 . But it's run by fools. Made some money on ATVI as well.

I can't tell you what to buy now, since I haven't paid attention (no money). In general look for companies which are beat up but have a good pipeline. Also be prepared to lose most of it.