NEW YORK (TheStreet) -- On Monday, the U.S. Supreme court said that it would make a decision on whether a California law that forbids the sale of violent video games to minors is constitutional; analysts say that while a decision in favor of the law could hurt game industry sales, the extent of that hurt would likely be limited.
IBISWorld analyst Toon van Beeck said if the law is declared constitutional, there could be a loss of sales for the video-game industry, and the companies that could be affected include Sony (SNE), Game Stop (GME), Nintendo, Microsoft (MSFT), Electronic Arts (ERTS) and Activision (ATVI). However, he noted, those sales could be transferred to other games. These minors could simply just "spend their money elsewhere" on other types of games, so the negative impact could end up being limited.
The video game industry -- which mainly includes games and game consoles -- is a $44.3 billion industry, van Beeck noted, and $29.9 billion of it comes from U.S. games sales alone. Those under 18 years of age comprise about 27% of the games side of the industry, according to van Beeck. He said that California is the biggest state for industry sales as a whole at 13.5%.
The analyst said that retailers are already sustaining an 80% compliance rate of not selling "mature" games to underage individuals.Consoles comprise about 18% of industry sales, while about 67.6% of sales go to games. Sterne Agee analyst Arvind Bhatia, who covers games companies, including Electronic Arts, Activision and Take-Two (TTWO), said "I have not heard any companies I cover express any real concern about this." In fact, Bhatia doesn't think the law has much of a chance of making the cut with the Supreme Court. "At the end of the day, free speech matters," he explained, and the games in question "are another form of expression." Like van Beeck, he pointed out that "retailers" are already "extra cautious" about ID-ing underage children. Then, of course, there's the long-held economic notion that banning a product -- such as video games -- for a segment of the population, only increases the demand for the product all the more. -- Reported by Andrea Tse in New York Follow TheStreet.com on Twitter and become a fan on Facebook.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV