This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Nintendo Buzz Likely a Bust for Game Makers

Nintendo could be the big winner this holiday season in the video-game wars, but that might not be great news for game publishers.

The venerable video-game company's Wii console was the surprise hit of the industry's E3 conference this spring, and many analysts now believe that Nintendo could have a big hit on its hands once the Wii debuts later this year.

But don't expect game makers such as Electronic Arts (ERTS) to cash in right away on the Wii's success. Indeed, such companies will likely have few Wii games to offer this holiday as stocking stuffers.

The publishers "were caught off guard" by the buzz around the Wii, says James Lin, a longtime industry analyst and a consultant with Simba Group. "They weren't expecting anything."

That the publishers were apparently unprepared for the Wii is also bad news for investors in the sector who have seen their holdings get beaten up lately amid sinking sales and rising costs.

The implication is that investors may have to wait even longer to start seeing the stocks turn around.

"No one's going to make money on the software except Ubisoft," whose Red Steel title Nintendo showcased at E3 , says one hedge fund manager, who is short shares of THQ (THQI) and Take-Two Interactive (TTWO - Get Report). "Everyone got caught flat-footed."

Still, investors may be able to catch a ride on the Wii. But they will have to do a little thinking outside the game box, analysts say.

The former industry leader, Nintendo has been a distant also-ran behind Sony (SNE - Get Report) in the last two generations of home video-game machines.

Things had gotten so bad for the company that many analysts were largely writing off Nintendo in the next console cycle, portraying the market as largely a battle between Sony and Microsoft (MSFT - Get Report).

Nintendo, however, has been bouncing back lately. Many analysts had expected Sony to challenge Nintendo's dominance in the handheld game market, its last remaining stronghold, when Sony introduced the PlayStation Portable last year.

But Nintendo has more than met the challenge, as its simpler, cheaper DS has outsold the PSP by a long shot in Japan and has run fairly even with it in the U.S.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
MSFT $43.93 0.07%
MOSY $1.50 -0.66%
SNE $25.87 0.04%
TTWO $29.78 2.97%
AAPL $112.00 -0.81%

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs