Can you hear that? Wait, listen closely... hear it now? It comes every so often during these last couple days leading up to Christmas -- it is the sound of yet another video game being snapped off the shelves of a Best Buy (NYSE: BBY) or an Electronics Boutique (Nasdaq: ELBO). Perhaps the last copy, even.
Activision (Nasdaq: ATVI), THQ (Nasdaq: THQI), and Electronic Arts (Nasdaq: ERTS) are in utter love with that sound and listen for it all the time. Who can blame them? This is the final stretch, the crunch time, when sales are, it is hoped, maximized and inventories depleted as much as possible. Of course, these companies were listening for the sound all season long, hoping to have a Halo 2 or Grand Theft Auto: San Andreas.
That's why I'm always taken aback when I see a game slate that's scheduled to debut after the holidays. I always think to myself, "Why couldn't they have gotten those games out before Santa arrived to take advantage of the gift-buying momentum?" I mean, convince enough kids that a game is hot, and that's all it takes to convert a title packed with potential into a bona fide blockbuster; after all, once it's on the list, it's a guaranteed sale. Naturally, I realize that not every game can come out in the fourth quarter, and that January needs product too (plus, you don't want to clutter time frames); I'm obviously thinking in ideal terms here.
Nevertheless, I was a bit puzzled at a press release issued by Electronic Arts, announcing that NFL Street 2, the sequel to a game that moved a million copies, would be in stores by Dec. 26, essentially missing this holiday shopping season.
Is it really so odd, though? If you're a shareholder in Electronic Arts, should you really rue such a scheme? I mean, kids have always gone on post-Christmas shopping sprees with cash and paper gift certificates scored from the grandparents. So a game released in late December or early January still has a chance of doing well.
But then, something else dawned on me. We are in the era of gift cards. I mean, we are really in the era of gift cards. I have been reading so many promotional releases from retailers on the subject of gift cards as of late; these products are almost guaranteed to become one of the top sellers for Christmas 2004, and they've become something of a media sensation. Every store wants to differentiate its card in some way, via packaging or design or what have you. As time goes on, gift cards will be leveraged for complex, highly integrated marketing programs even more than they are now. Since gift cards offer so much value for retailers in the form of no-change-given-back, efficient transactions and interest generated on funds not yet redeemed, companies know it is in their best interest to make them popular, even if it means shifting sales gains to the new year.
So, fear not EA shareholders. NFL Street 2 will do just fine. All those video game players cannot wait to hand their cards over to a cashier so they can pick up one of your company's post-holiday releases.
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Fool contributor Steven Mallas owns none of the companies mentioned.
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