This week marks the beginning of the Electronic Entertainment Expo, or E3, the largest video-game trade show in the world. It's a week where the biggest names in gaming, including Activision Blizzard (NASDAQ:ATVI), Electronic Arts (NASDAQ:EA), Sony (NYSE:SNE), Nintendo (NASDAQOTH:NTDOY), and Microsoft (NASDAQ:MSFT) get a chance to catch consumers' attention and hold on to it for the rest of the year.
E3 can often make or break a video-game company's year, so it pays for investors to keep an eye on the conference. Here's a look at what you can expect to see from all the big developers and console-makers at E3 this year.
After face-planting last year, Microsoft needs to have a good showing at E3 2014. The company estranged gamers in 2013 when it presented the new Xbox One and all of its cool media features that hardcore gamers don't care about. That, plus a larger price tag than the PS4, left Microsoft reeling, and that's why the Xbox One has dramatically undersold the PS4.
But don't call it a comeback -- Microsoft has lowered the price of its Xbox One to level the playing field, and it has a slew of hot new games and exclusives coming up this year and into 2015, including Call of Duty: Advanced Warfare (Xbox users will get DLC content for the game before PS4 users), a new Halo collection (exclusive to Xbox), and more. Expect to hear a lot about these games at the show.
Meanwhile, Microsoft's console rival Sony hopes that the good times keep rolling. So far it has been winning the new console war based mainly on price differentiation -- there hasn't been any strong console-exclusive content yet (even Titanfall's success may be in doubt, but more on that later), and neither console is sufficiently more powerful or faster than the other to warrant gamer loyalty. But with Microsoft lowering the price of the Xbox One by $100, can Sony hold its lead?
It all comes down to the games. Now that price isn't an issue, the strength of a console's library will lead it to success or failure. The hit Uncharted series from Naughty Dog is a Sony exclusive, as is God of War, and neither has yet to appear on the new generation of consoles. Rumors also abound over the development of long-awaited game The Last Guardian. Giving fans what they want by announcing the release of a game like that could go a long way to securing Sony's future.
Last and certainly least is Nintendo. Despite releasing the Wii U a year earlier than the new consoles from Microsoft and Sony, Nintendo's newest console is an unmitigated flop. While Sony has sold 7 million PS4s and Microsoft has sold 5 million Xbox Ones, Nintendo has barely sold 6 million Wii Us. So what's the solution? Nintendo hopes the answer comes with Mario Kart 8. The newest iteration of the classic series has been a success so far, selling over 1 million units in its first weekend on shelves, pushing sales of the Wii U up as well.
Expect Nintendo to focus on that and the success of its 3DS, which continues to sell well -- but don't let these glimmers of hope blind you to the tough times Nintendo has had recently. Unless it can really wow at this show with something like the release of a new and improved Zelda title, don't expect things to turn around for Nintendo anytime soon.
Activision is sitting pretty after a strong year with the big release of its newest Call of Duty, which sold over $1 billion worth of units in its first day on shelves. That, plus the continued success of Skylanders and World of Warcraft, means that Activision has had plenty of breathing room to focus on Destiny, its big new IP for the coming year. But the company has apparently already sunk half a billion dollars into Destiny, which means it's going to take some huge sales numbers for Activision to break even on its investment. Expect the company to hype the game up big time this year, alongside the new Call of Duty: Advanced Warfare.
EA also made a big bet this year with Titanfall, the Xbox One exclusive, but it may not have seen as big a return on that investment as it expected. While the NPD Group noted that EA sold 925,000 copies of Titanfall in March, when the game was released, EA itself hasn't provided any color or commentary on these numbers itself. That's suspicious, and it might lead one to think things didn't go as planned. On top of that, it seems that a Titanfall sequel is in the making, but this won't be an exclusive for Xbox One, indicating that EA wants to expand its audience in the hopes of finding success.
Whatever the case may be, expect EA to swiftly move past this to focus on bigger and better things, especially Star Wars: Battlefront, a fan favorite game. EA also has a huge lineup of annual installments like Madden and FIFA to bolster the balance sheet, but it's games like Mirror's Edge that are really going to catch attention this week.
So who's going to come out ahead?
This is the first E3 with all of the next-gen consoles out on the market, so it'll be pretty interesting to see what new and improved games each company can bring to the table. As long as it doesn't stumble this year, Microsoft looks poised to recover strongly, while Sony should continue cruising along. Meanwhile, EA's lineup looks particularly strong this year and should generate a lot of excitement among large fan bases.
Keep an eye on these three companies in particular; E3 may be an indication of just how well they'll do this year.
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Mark Reeth has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard, Apple, Google (A and C shares), and Netflix and owns shares of Activision Blizzard, Apple, Google (A and C shares), Microsoft, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.