Michael Comeau's  Instablog

Here's a quick and clean round-up of the hottest news stories impacting the video-game world:

First things first, THQ (THQI) reports first-quarter earnings after the close on Tuesday. Riding high on the success of UFC Undisputed 2009, THQ is set to begin what looks like an impressive comeback following two lackluster years. Here's a full preview of the quarter, courtesy of PleaseActAccordingly.com.

Elsewhere in THQ news, the company hired a new executive from Midway to head up marketing for the upcoming title Darksiders, which is generating considerable buzz within the industry.

Activision's (ATVI) Call of Duty: Modern Warfare 2 continues to excite gamers. Watch this brand-new trailer to find out why this game will set the world on fire.

Disney (DIS) Interactive boss Graham Hopper had this to say about movie-game crossovers: "I don't think they've all lived up to their potential, but again: the future doesn't always arrive exactly when you want it to." 

Elsewhere in big media, Viacom (VIA) saw Q2 profits fall by 32%, with declining sales of Rock Band being one of the culprits. That's not a good sign for Electronic Arts (ERTS), which publishes the music/rhythm title.

In my first feature for The Excapist, I discuss why consumers should be very wary about the the exploding market for direct video game downloads, and what it could mean for companies like GameStop (GME).

And finally, is the recession killing the video-game industry? I answer that question here.

Disclosure: long ATVI, THQI

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 and Xbox360® than in the first quarter of 2008-09.
− Poorer-than-anticipated market conditions.

All three 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 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 today, 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!

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Disclosure: Long THQI, Long ATVI

As always, the video-game industry's active with news coming across the wires 24/7. Here are this weekend's 5 most interesting stories:

1) Is a Grand Theft Auto movie on the way? Take-Two Interactive's (TTWO) RockStar Games studio says no.

2) Elsewhere in the video game/movie crossover world, Lionsgate Entertainment (LGF) believes a Nintendo (NTDOY.PK) movie store will emerge soon. I'm not buying this rumor - the Wii's low-tech audience probably isn't looking to watch movies through their console, especially since there's no hard drive!

3) Nintendo's Wii Sports Resort is garnering some very positive reviews, including this one. This should make it pretty easy for Nintendo to keep dominating Wii software sales to the detriment of third parties.

4) Heavyweight software-development house Bungie announced that Halo: Reach will be its last contribution to the Halo series. I'm sure Microsoft (MSFT) will carry on the Halo franchise until the end of time, but Bungie's next original IP should be a monster.

5) Is $149.99 too much for a piece of video-game software in a recession? Not if you're looking at the Amazon.com (AMZN) and GameStop (GME) sales charts, where Activision's (ATVI) Call of Duty: Modern Warfare 2 Prestige Edition just hit #1. I guess night-vision goggles go a long way these days...

Disclosure: Positions in TTWO, ATVI

Some interesting things happened in the video-game industry today that you may have missed, so I thought I'd put together a brief recap of what's hot and what's not.

This morning, Electronic Arts (ERTS) announced that its recent download-only title Battlefield 1943 has sold over 600,000 units in its first two weeks after release. While that made Battlefield 1943 a record-setter for downloadable games, the actual revenue generated from the game doesn't amount to much.

And in its fourth-quarter earnings results, Microsoft (MSFT) announced that it sold 11.7 million Xbox 360 units during the 2009 fiscal year - representing a nice 29% year-over-year gain. For comparison, the Sony (SNE) PS3 only notched a 9% increase in units during its most fiscal year. (ended in March)

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As I've written, THQ's (THQ) got a major hit on its hands with UFC Undisputed: 2009, its first game based upon the Ultimate Fighting Championship mixed-martial arts brand.

We're now getting an even bigger taste of just what this franchise can do.

The UFC held its landmark UFC 100 event Saturday night, which likely sold over a million pay-per-view buys - a huge success in a hard recession. The company also put together a Fan Expo which included a Q&A session with Lorenzo Fertitta, a UFC owner who was also a head honcho at Station Casinos.

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THQ (THQI) is surging 11% today to $5.87 on heavy volume today in reaction to a slate of positive reviews of its new title UFC 2009: Undisputed, which is based upon the Ultimate Fighting Championship mixed martial arts organization.

UFC 2009 has been widely anticipated as the first high-quality MMA video game, with analysts expecting the game to sell 2 million units or more this fiscal year.

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