E3 Expo Recap and Highlights for Investors in Video Games
Last week’s E3 Expo was one of the biggest events of the year for video game companies. Here is analyst Michael Pachter’s takeaways:
• We attended the E3 Expo last week in Los Angeles, CA, and met with over a dozen companies presenting products at the show, including Activision Blizzard (NASDAQ:ATVI), Electronic Arts (NASDAQ:ERTS), GameStop (NYSE:GME), Majesco (NASDAQ:COOL), Microsoft (NASDAQ:MSFT), Nexon, Nintendo, OnLive, Sony (NYSE:SNE), Take-Two Interactive (NASDAQ:TTWO), THQ (NASDAQ:THQI), Trion World Networks and Ubisoft Entertainment.
• The hardware highlights of the show were Nintendo’s Wii U (the successor to the Wii), Sony’s (NYSE:SNE) PlayStation Vita (PS Vita, formerly known as Next Generation Portable, or NGP), and the new features of Microsoft’s (NASDAQ:MSFT) Kinect peripheral (including Bing search, Kinect Fun Labs, live TV, and YouTube). Many hardware details remain unsettled, including the price and specs of the Wii U, and the specific release dates for the Wii U and PS Vita.
• The software highlights of the show included Activision’s (NASDAQ:ATVI) Call of Duty: Modern Warfare 3, Electronic Arts’ Battlefield 3, Mass Effect 3, Overstrike, and Star Wars: The Old Republic MMO, Microsoft’s Dance Central 2, Gears of War 3, and Halo 4, Nintendo’s upcoming 3DS releases, Sony’s Resistance 3 and Uncharted 3: Drake’s Deception, Take-Two’s BioShock Infinite, THQ’s Saints Row: The Third, and Ubisoft’s Just Dance 3.
• There were relatively few surprises on the software front, with most of the publishers showcasing games that had previously been announced. The major reveals were Electronic Arts’ (NASDAQ:ERTS) Overstrike, Microsoft’s Halo 4, Nintendo’s Super Smash Brothers for the 3DS and Wii U, and Ubisoft’s Brothers in Arms: Furious 4, Far Cry 3, and Just Dance 3. There were no game announcements for Bungie Software (developers of the first three Halo games), Respawn Entertainment (formed by the ex-heads of Activision’s Infinity Ward studios), or Take-Two’s Grand Theft Auto V.
• Activision Blizzard’s (NASDAQ:ATVI) 2011 dinner event was subdued compared to last year’s concert at Staples Center. As expected, the focus was on Call of Duty: Modern Warfare 3, which looked very impressive in Microsoft’s (NASDAQ:MSFT) Xbox 360 Media Briefing, and its new Elite subscription service. Although Call of Duty: Modern Warfare 3 will most certainly be one of 2011’s best-sellers, the game faces increased competition and a difficult comparison.
• Electronic Arts (NASDAQ:ERTS) once again showed a solid lineup, highlighted by Battlefield 3, Mass Effect 3, and Star Wars: The Old Republic. We thought all three games looked very impressive, with Battlefield 3 and Star Wars: The Old Republic likely to take share from Activision’s market-leading competing offerings, Call of Duty: Modern Warfare 3 and World of Warcraft.
• The focus of Microsoft’s (NASDAQ:MSFT) Media Briefing was Kinect-compatible software and the peripheral’s new features. Microsoft displayed many high-profile games that will leverage Kinect, including: Crytek’s Ryse, Electronic Arts’ Mass Effect 3 and four sports titles, Microsoft’s Dance Central 2, Forza 4, Kinect Sports: Season 2, and Kinect Star Wars, and Ubisoft’s Ghost Recon: Future Soldier. New Kinect features include Bing search (which allows the gamer to use voice to search for various types of media accessible through the console), Kinect Fun Labs, live TV, and YouTube.
• Nintendo’s E3 Presentation and Analyst Briefing were highlighted by Wii U and 3DS. In our view, Nintendo’s announcement lost some impact, as the company left many questions about its console unanswered. Gamers and investors still do not know specifics around power, pricing, and a release date, and we continue to believe that Nintendo’s HD console is arriving two years late, given recent momentum for PS3, Xbox 360, and their respective peripherals. Nintendo successfully shifted perception of the 3DS into a must-have handheld through previews for high-profile upcoming releases.
• The highlight of the Sony (NYSE:SNE) Press Conference was the PS Vita (formerly known as Next Generation Portable, or NGP).Features include dual analog sticks, dual touchpads (front and rear), a D-pad, dual cameras (front and rear), WiFi, and 3G WiFi. The WiFi version of the device will cost $249, while the 3G WiFi version will cost $299. Sony is partnering with AT&T for the 3G WiFi version of the phone, the only announcement to draw an overtly negative response from the audience.
• The THQ (NASDAQ:THQI) Investor Meeting focused on the company’s upcoming games lineup (uDraw for Kinect and Move, multiple uDraw games, and new iterations of Darksiders, Metro, Saints Row, UFC, and Warhammer 40,000, and its MMO).
• The Ubisoft Press Conference included announcements of Brothers in Arms: Furious 4, Far Cry 3, Just Dance 3, and Rabbids for Kinect. We thought Ghost Recon: Future Soldier and Assassin’s Creed: Revelations looked very strong.