After seeing Medal of Honor gunned down last week, I got to thinking, what is going on with the video game industry? The past few years have given us not only poor financial results, but the games have gotten stale, leaving the casual gamer less than excited to spend $60 on a new game.
Fellow Fool Rick Munarriz pointed out that console and software sales were both down in September, showing gamer apathy heading into the holiday season. But the problem goes deeper than die-hard gamers who have come out in droves the last couple of months. StarCraft sold 1.5 million copies in its first 48 hours while Halo: Reach sales topped $200 million on its launch day. The problem, however, is casual gamers who don't look for games at launch and have become bored with the same concepts over and over again.
Asleep at the wheel
The gaming business has begun resting on its laurels after growing incredibly well through the middle part of the decade. Electronic Arts
Fast-forward to 2010, and these games are the same titles we see today. Electronic Arts' fall lineup could just as well be from 2007 with Medal of Honor, FIFA Soccer, and The Sims -- really? And this is an intentional strategy of fewer franchises but stronger brands. Great concept in theory, but what happens when one of your fabulous brands lays an egg?
Innovation is still out there
It isn't like innovation is lacking in the entire industry. Apple's
A little innovation could also add some life to GameStop's
Foolish bottom line
Until we see some new, exciting games come out, Activision is the only stock in the group I would touch, and that's only because of its superior business model. But even Activision doesn't get me excited when I hear about a new expansion pack for Guitar Hero or DJ Hero every other day.
I would love to say I saw upside in the other video game developers, but I just see the industry getting old and stale along with my video game library.
Interested in reading more about gaming? Add one of these companies to My Watchlist to find all of our Foolish analysis on this stock.
More games, please:
Fool contributor Travis Hoium wishes there were cheat codes for stocks like the old school NES games. He also does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his Motley Fool CAPS picks at TMFFlushDraw.
Microsoft is a Motley Fool Inside Value recommendation. Take-Two Interactive Software is a Motley Fool Rule Breakers selection. Apple, Activision Blizzard, and Electronic Arts are Motley Fool Stock Advisor picks. Motley Fool Options has recommended a synthetic long position on Activision Blizzard. Motley Fool Options has recommended writing covered calls on GameStop. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Activision Blizzard, Apple, Microsoft, and Take-Two Interactive Software. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Fool has a disclosure policy.
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