With the PlayStation 4 and Xbox One's releases fast approaching, video game designers have the difficult job of making the transition from current to next-generation consoles as smoothly as possible. Which games should be released for next-generation consoles and how long should the current-generation consoles be supported?
First next-generation games
Three big, publicly traded video game developers Take Two (NASDAQ:TTWO), Activision Blizzard (NASDAQ: ATVI), and EA (NASDAQ:EA) have all made plans for dealing with the console transition.
Fresh off the success of Grand Theft Auto V, Take Two's first next-generation offering will be NBA 2K14. The NBA 2K series is one of the company's most consistent earners. It recently sold over 700,000 copies in its first week on the market. With a new release every year, the series offers the most popular basketball video game in stores. 2K Sports said that the game has been completely redone to leverage the capabilities of the new consoles.
EA has similar tactics. The company will rerelease its newest Madden and FIFA games to accompany console releases during the holiday season. If you played one of the sports games on a current-generation console, you will be able to easily transition your team's roster to the new console. This is a convenient feature for serious fans of EA Sports games. The company has made a point of saying that it will support the launch of next-generation consoles while continuing to service gamers who still use current-generation consoles. This implies that it will be a little while before EA games are produced exclusively for new consoles.
Activision Blizzard is not releasing its big game Call of Duty: Ghosts until Nov. 5, a few days before the PS4 and Xbox One hit the shelves. The game will be available on current and next-generation Sony and Microsoft consoles. So far, preorders for Ghosts have not been as high as they were for the former record holder Black Ops II. This is partially because of the console decision gamers have to make before they can order the new game. The company has an aggressive marketing campaign behind the new game. It is confident that Ghosts is the best Call of Duty game and that sales will reflect this.
Right now Take Two and EA have a bird in the hand, while Activision's bird is still in the bush. However, gamers are going to need games to play on their new consoles. I think Call of Duty, one of the best-selling game titles ever, will outsell its sporting competition.
Current-generation keeps chugging
With the next-generation consoles coming out, current consoles are beginning their descent into video game history. Despite their new obsolescence, the PS3 and Xbox 360 have sold 79.89 million and 78.84 million units worldwide, respectively, and they will still play a vital part in the video game business For the next few years there will be millions of people who still don't have a PS4 or Xbox One, and game makers should produce games for both platforms.
Game makers won't stop producing for current-generation consoles until the market shrinks to an unprofitable size. One way to tell when this happens is to look at console prices. New PS3s and Xbox 360s still go for $200 and $180 respectively for the most basic version of these consoles. When Microsoft and Sony are done producing these consoles, the price will drop to clearance levels (around $100) and game designers will no longer produce current-generation games. Until then, expect these games to remain a major revenue source.
Activision Blizzard, Take Two, and EA all have major, consistent titles being released on next-generation consoles. Of the three, I think Activision will have the most immediate success with Call of Duty despite the lower pre-order numbers. All game makers will have to juggle current and next-generation production for a few years. These three companies have the pipelines to successfully make the transition and continue to profit in the future.
Ben Popkin has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard and Take-Two Interactive. The Motley Fool owns shares of Activision Blizzard. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.