Video Games: Video Game Company Investments? What Say You?
- Details
- Category: Ms H. News
- Published on Thursday, 24 November 2011 03:47
Electronic Arts' Battlefield 3 -- Released October 25, 2011
Activision's Call of Duty Modern Warfare 3 -- Released November 8, 2011
Source of News: The Gazette (Financial Post), Eric Lam, November 10, 2011
Article: Video Game Makers' Profits Blowing Away Estimates
If you were asked to choose a business or company to invest in, would you choose the video game industry? According to the author, video games are billion dollar businesses worthy of the attention of any would be or current investor.
Of the many video game companies, the author chose to compare two -- Electronics Arts vs. Activision. Games discussed were Electronic Arts' Battlefield 3 (pictured) and Activision's Call of Duty Modern Warfare 3 (pictured).
Electronic Arts estimates that Battlefield 3 sold 5 million copies globally during its first week. Since launching the franchise in 2002, it is estimated Electronic Arts has sold 50 million games in this series globally.
By comparison, it is too early to make a call on the number of units of Activision's Call of Duty Modern Warfare 3 that will sell during its first week; however, based upon the midnight lineups and the past performance history, this game is expected to perform strongly. Overall the franchise has sold 114 million units since it began as a second world war simulator game on the PC in 2003.
Activision's Call of Duty is a key driver of the company's results, making up a third of the company's revenues, while Electronic Arts appears to be more spread out in its porfolios.
According to Todd Mitchell, analyst with Brean Murray Carret & Co. LLC in New York, investors should be cautious because video game stocks are highly seasonal, with most video companies losing money in the March and June quarters, breaking even in September and making their profits in December.
Regarding the most recent stock performance as of this printing, Electronic Arts' stock has risen 40% so far this year with revenues of $731 million in U.S. dollars, up from $631 million in U.S. dollars from the previous year. Activision has earnings of 7 cents per share, on revenues of $754 million in U.S. dollars with a forecast of sales of $558 million, trading currently at $13 per share.
Ms. H's take. I am interested to know how Call of Duty Modern Warfare 3 will fare against Battlefield 3 after a full week of release has passed! Unfortunately, I do not have much to offer regarding investment advice except if you are thinking of investing in any companies -- be very cautious, even if you are a risk taker!
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