Activision Blizzard (Nasdaq: ATVI ) CEO Bobby Kotick believes that the video game industry will make more money than movies and television in five years or less. Are we watching the ascendance of a new King of All Media -- and if so, which video game stock should you buy today?
Kotick's high-flying claims have a solid basis in reality. Time Warner (NYSE: TWX ) property Warner Brothers scored one of the biggest home runs in the movie industry when The Dark Knight opened to more than $150 million at the box office in its first weekend, and $67 million alone on the day it debuted, on its way to a cool $1 billion worldwide gross. But Take-Two Interactive (Nasdaq: TTWO ) one-upped Batman with a little video game called Grand Theft Auto IV, which brought $310 million in first-day sales.
After that initial burst of 4 million units sold, GTA4 went on to sell more than 13 million copies in total. Simply put, that game is one of the biggest money-makers in entertainment history.
And it's not the only video game ever to rack up sales. Kotick's own Guitar Hero III hit the lofty $1 billion benchmark; Activision's catalog of online multiplayer games have tens of millions of dependable fans who pay monthly subscription fees; and I shudder to think how many billions of dollars Electronic Arts (Nasdaq: ERTS ) has made from its Madden NFL football franchise.
The video game industry is already sniffing at supremacy. In 2007, games collected $19 billion of domestic revenue -- more than than movie theaters. PricewaterhouseCoopers sees a $50 billion global industry in 2011. And the secret sauce in this success is clear: Interactive games let consumers take part in the action in a way that no movie, TV show, book, or music CD can.
We're rocking out with plastic guitars to Activision's Guitar Hero series or Viacom's Rock Band franchise -- both of which are getting major updates this week. Nintendo has us playing virtual tennis and doing aerobics with hardly a button-push in sight. Both Microsoft (Nasdaq: MSFT ) and Sony (NYSE: SNE ) are scrambling to duplicate the Nintendo Wii's convention-busting controllers. Video games are not the exclusive domain of pimply teenagers anymore -- and last generation's teenagers, who grew up with gaming, are today's middle-aged consumers with their own paychecks to spend.
"I view the medium as having the potential to eclipse film and television," Kotick tells Barron's. That future may be closer than you think. The technology is catching up with the ambitions of the storytellers who make the games.
I've told you what I think. Do you think video games can be bigger than the small and big screens? Let me know in the comments section below.
RSS Headlines
Fool UK