Atari (NASDAQ:ATAR) wants to get back into the world of Neo and Morpheus and Agent Smith this upcoming Christmas season (boy, is it almost that time again?). The Matrix: Path of Neo, to be developed and published by the company, will be sure to draw a lot of interest from gamers; it will be available for the two major console platforms -- Sony's (NYSE:SNE) PlayStation 2 and Microsoft's (NASDAQ:MSFT) Xbox -- as well as the PC. The movie franchise that the game is based on has been a winner for Time Warner (NYSE:TWX), so this title should offer another opportunity to squeeze out a few more bucks for the conglomerate's coffers.
The last time Atari entered the matrix was when it released -- fittingly enough -- Enter The Matrix in 2003. Remember what happened during that time period? The game was hot and gave Atari's stock some incredible buzz. Have a look at the left side of this two-year chart, and you'll see what I mean. Now, start moving your eyes over to the right -- what do you see? Words like "depressing" and "disillusioning" and "disquieting" come to mind (and that's only the d's -- how about going further down the alphabet to check out terms like "incapacitating" and "unsettling"?). It's not a pretty picture.
History tends to repeat itself, unless it doesn't; now, granted, that sounds like the kind of goofy, non-sequitur analysis that Seth Jayson hates. What I basically mean is that individual investors should resist any temptation to buy this stock if it by any chance starts to rally ahead of the game's release, because I think Atari is going to remain speculative for quite some time. The game will probably be a decent seller, considering the cult following that is associated with the Matrix franchise, and I can imagine that traders will have a field day with the equity if the market does respond to the game's influence -- but the stock could just as easily go down as it could go up. None of this has happened yet, obviously, and I'm merely thinking out loud. The moral is that long-term investors must focus on fundamental trends, and right now, I don't see a good one for Atari (check out why I found its latest quarter full of woe).
Better companies in this area continue to be Activision (NASDAQ:ATVI) and Electronic Arts (NASDAQ:ERTS). Those publishers are much safer bets and will allow you to get that proverbial better night's rest; I'm not saying that Atari will never be a buy candidate, but it probably won't be on my watch list for a long time to come. It pains me to be negative on the company -- I used to put a lot of quarters in the classic Asteroids arcade game way back when, always breaking out in a sweat when that tiny UFO made its appearance, the saucer screaming shrilly as it would attack me with unfairly accurate shots. Right now, the competitive video gaming landscape is like that tiny UFO -- Atari has to figure a way to dodge it and thrive.
More Takes on video games:
Don't forget to check out the Video & PC Games discussion board.
Fool contributor Steven Mallas owns none of the companies mentioned. He also tended to blow his ship up whenever he pressed the Hyperspace button to avoid that dreaded tiny UFO.
