Game Sector Update: Ghostbusters Up, Ubisoft Down

Let's start with the big news: Ubisoft (UBSFY.PK) reported first-quarter results that were well below guidance, citing the following:

• Significantly lower back-catalog sales of titles for PLAYSTATION® 3 (SNE) and Xbox360® (MSFT) than in the first quarter of 2008-09.
• Poorer-than-anticipated market conditions.

The above items point to the fact that the video-game industry is feeling the pain of a slowing economy. Given this news, I"d be VERY wary of holding Nintendo (NTDOY.PK), Electronic Arts (ERTS), or GameStop (GME) into earnings.

NPD Analyst Anita Frazier, however, has another point of view on the economic debate, saying

...it’s recession resistant. If the content is there, and the content is compelling, it will drive sales. I still believe content is king.

On a more positive note, Atari (ATAR.PK) announced that Ghostbusters reached the 1 million unit sales mark - a very solid performance in a slow month for the industry.

THQ (THQI) also had good news yesterday, reporting that it prevailed in its litigation against JAKKS (JAKK). THQ will record a one-time $23 million gain in its September quarter as a result. Already riding high on the success of UFC 2009 Undisputed, THQ is doing an excellent job of breaking out of its slump.

And finally, UK gamers are planning a boycott against Activision's (ATVI) upcoming state-of-the-art bang bang Call of Duty: Modern Warfare 2. Believe it or not, gamers aren't concerned with unfavorable currency trends!

Will the boycott matter? I can't say, because this game looks pretty freaking awesome. Gouge me all you want Bobby!

Disclosure: Long THQI, Long ATVI

Comments

[Forager:]

Content is key....that is what I got from the Ubisoft call. When economic times were good gamers had no reservation about scooping up a second tier game to give it a shot....but now for $59.99 we are thinking twice about whether a game is really something worth the money. Gamers will reward the companies with quality releases and Ubisoft didn't have them this quarter....however...the Jan 10 quarter for Ubisoft looks like the motherload of major releases for them so it wont be long before they are in good graces again....

Jul 28 07:06 AM

[Michael Comeau:]

I get the feeling that Ubisoft is trying to get out of the way of Modern Warfare 2. That game is just a damn monster.

Jul 28 08:59 AM