Sozzi: Are These the Next Videogame Blockbusters?

NEW YORK (TheStreet) -- Each month, videogame sales are reported by various third-parties. This year the data has been especially fun to track as the Sony (SNE) Playstation 4 and Microsoft (MSFT) Xbox One are the newbie consoles on the market,  pitched as living room entertainment hubs by the folks at Sony, Microsoft, and Best Buy (BBY) stores. For March, hardware sales spiked 78% year over year, and thus far for the five months of availability of the new consoles, sales have risen 60% compared to the same point in the demand cycle for the Playstation 3 and Xbox 360.

Unfortunately, I have some blunt truth to share with the number crunchers: this industry data basically tells you nothing regarding the next major hardware trends or games in the industry that could cause shares of Electronic Arts (EA) and Activision Blizzard (ATVI) to pop or drop, or bring GameStop (GME) much closer to the grave in the age of increasingly streaming everything.

To get the true pulse of the videogame market you have to search in obscure places. Here are four things that could be hot topics in short order:

Game pre-loading: mostly for intense gamers, and available only on the Playstation 4 (for now, an update to the Xbox One will likely bring with it a pre-loading option), a game could be bought and downloaded from a digital store ahead of its official release. The title stays locked until it launches for the masses, but pre-loading saves the avid gamer precious hours of download time. The benefit to game publishers Electronic Arts, Activision Blizzard, Ubisoft, and others is that they receive improved early reads on demand, can tweak marketing if need be, and build in promos to download further content for those that opted to pre-load. Obviously this is bad news for GameStop, less so for Best Buy as it has substantially reduced floor space for videogames, in their place installing shops from Sony, Samsung, Google (GOOG), and Apple (AAPL).

Augmented reality: the CEO of Electronic Arts shared with me a few months back that the company is testing holograms for its games - think the New York Giants' Eli Manning popping up from your living room floor while playing the latest Madden. Before that breakthrough happens, I think what Sony is testing in its Playstation Lab will arrive to market. That test: augmented reality, which are images inside the content experience that escape the traditional two-dimensional screen view.

Streaming on demand, minus the traditional game console: details are a touch fuzzy on this, but according to reports Electronic Arts and Comcast (CMCSA) have for two years tested streaming games on demand in the manner Netflix (NFLX) does for movies. Tablets will be used as controllers, though I'm not sure how hardcore gamers would embrace the emotionless tap and swipe experience. Nevertheless, streaming games (and potentially streaming shows based on videogames, as suggested by breaking news on Halo being made for Showtime), with or without a recognized games console, amid improved Internet connections appear to be where the industry is headed as publishers seek to maximize profit margins on titles that are costing ever more to develop and market.

Watch out for this title: after two years in development and a well-publicized delay in November 2013, Ubisoft's Watchdogs will be released on May 27. Very few videogame titles manage to penetrate the mainstream - Mario Brothers, Halo, Call of Duty, and Madden come to mind as those that made the jump. However, with a great storyline (big data turning on big data and attacking the world), and a clothing line based on the game, Watchdogs looks prepared to enter the non-virtual world.

Here is the Watchdogs trailer to watch while doing nothing at work:

 


And be sure to program that Watchdogs release date into Hootsuite so a nice tweet hits on May 27. Oh yeah, Halo: Destiny will be released on September 9, 2014.

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-- By Brian Sozzi CEO of Belus Capital Advisors, analyst to TheStreet.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

At the time of publication, Sozzi held no position in the stocks mentioned.

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