In the downturn of the economy, one market is still going strong. The video gaming industry.
There is a notion that consumers are trading down for their entertainment, but it just makes more economic sense to pay nearly the same price of a movie for a video game instead, which provides far more hours of entertainment.
The video game industry isn’t predicated upon the economic cycle nor the Austrian business cycle but by the video game cycle as dictated by hardware innovations.
The Video Game cycle
Activision Blizzard is the upcoming stock to watch: they have 3 strong franchises – World of Warcraft [WoW], Guitar Hero and Call of Duty. In the next quarter they are releasing the decade long awaited heavily anticipated Starcraft II. Next year they are releasing another of their stellar franchise sequels, DIABLO III.
Let’s talk about the wars between consoles vs p.c. gaming, for a second. It mirrors the wars between investment banking vs local banking. Where investment banking did not have mass appeal like local banks, they played underhanded and moved from investment banker status, to commercial banker status and got in with the in crowd of the federal reserve. Once that happened, they then could gobble up local banks and squeeze them out of the financial market. The same is true for consoles. There wasn’t mass appeal for consoles, and consoles competed amongst themselves at first. meanwhile the p.c. had years of unchallenged gaming, with innovations driving the industry into higher directions and consumer expectations. console developers then made game designer sign exclusivity agreements to keep p.c. out of it, knowing they could not compete with p.c. technology.
The Top Player
Luckily Activision / Blizzard platform does not lend itself to console and their Warcraft franchise spanned nearly 2 decades on the p.c., once MMORPGS’s [massive multi-player online role playing game] became mainstream on the p.c. the rest is history, with the company doing $1billion monthly in revenue. In the U.S. alone they have 2.6 million monthly subscribers to WOW. Single handedly they are maintaining the p.c. still in the gaming industry. Microsoft games are releasing their console and p.c. games simultaneously, however they have yet to scratch the surface of popularity that Activision Blizzard games enjoy currently. Also, and this is just my pure opinion, Microsoft tends to shell out games with lackluster quality control nor innovation, of course greed is involved.
Unfortunately Activision / Blizzard does not pay stock dividends, nor do they offer a DRIP program [dividend reinvestment program]. You’ll have to purchase their stock either from your broker or from their Transfer Officer. There is a silver lining though. From 2001 – 2005 the stock split six times. Who knows, you might end up with 10% of the company one day.
[ I am not a stock broker, nor does anything in this article suggests that I am giving you any financial advice. Always check with a financial professional and be aware of the risks when investing. ]
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