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Janco downgrades Activision (NASDAQ:ATVI) to Market Perform. The firm cut their target to $12 based on their belief that the company will struggle to meet fiscal 2007 guidance and a more conservative view of the company's fiscal 2008 operating period.Prudential initiates Activision with an Overweight and $18 target. They believe the company is extremely well positioned to capitalize on the resurgence in growth they expect to return to the video game software market.

Digitimes reports combined sales of Microsoft's (NASDAQ:MSFT) Xbox and Xbox 360 game consoles accounted for less than 1% of Japan's game console market in July.

Disney's (NYSE:DIS) ESPN sports-cable titan is charging Internet-service providers for the right to offer its broadband Web site, ESPN360. The site offers full-length live sports and interviews, highlight clips and videogames. ESPN's charge-the-provider model has its roots in the cable-television world. However, so far, ESPN has yet to show the model can work on the Internet.

MTV (NASDAQ:VIAB) became one of the most valuable brands in the world by figuring out what young people want to hear and what they want to watch. But while the Viacom (NASDAQ:VIA) network will celebrate its 25th anniversary on Aug. 1, MTV isn't the dominant force it once was. The network was created at a time when the distribution of pop culture was firmly in the hands of a few entertainment companies. Now, much of that power is leaching out to the Internet, where MTV's target demo goes to find whatever they want to watch, whenever they want to watch it. As the delivery of music videos migrates away from TV to the Internet and cell phones, players like Yahoo! (NASDAQ:YHOO) and AOL (NYSE:TWX) stand out. Yahoo! has become a present-day version of what MTV used to be: a place where music fans turn first to watch their favorite music videos. Yahoo! streamed more than 4 billion videos last year. The chief appeal of the ad-supported business is letting fans watch whatever they want, whenever they want.

Prudential initiates Electronic Arts (ERTS) with an Underweight and $49 target. They think that the company will likely take market share from smaller video game publisher. They also think that the stock's 75% premium to its historical average and a 37% premium to peers are unjustified, since they do not think ERTS will be able to reach the 26% operating margins it achieved in 2004.

Source: Rob Black's Media Stock Report