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Michael Murdoch  

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  • The Warcraft Movie Is Vital For Activision [View article]
    Look at video game movies. More than $100m is pushing it. $200m is wishful thinking. The budget is too large. Should've been no more than $30m on a new IP.

    Unlike Pacific Rim, which you mention, this Warcraft movie also doesn't have Academy Award nominated writer/director Guillermo Del Toro, Academy Award-winning cinematographer Guillermo Navarro, actors like Charlie Hunnam and Idris Elba, and several high-powered producers.

    The Warcraft director/writer Duncan Jones isn't bad. He did the medium/low-budget Source Code which made money (not a bad movie either, though nothing great) and Moon, which did $10m on a budget of $5m.

    Giving the kid a $100m budget is a bit ridiculous, though. I've never heard of any of the actors either. Jones and Leavitt wrote. The latter is all over the place and wrote the critically acclaimed Blood Diamond and the critically panned K-Pax (awful, don't watch it). The former, this is the second feature he's writing after Moon, I think.

    For $100m you'd think they could attract some AAA talent.
    Nov 19, 2015. 12:53 PM | Likes Like |Link to Comment
  • The Warcraft Movie Is Vital For Activision [View article]
    I don't know about huge reward, but risk is overstated, esp. with the Hollywood accountants from Lion's Gate on task.

    You should see some of the stuff they do in Hollywood accounting. Good God, some of this stuff makes Lehman Brothers and Enron look honest by comparison.

    I wasn't familiar with films, at all, so I thought this fellow was kidding. Then I read some movie financials. It's a miracle they don't indict half of LA's CPA firms.
    Nov 19, 2015. 12:25 PM | Likes Like |Link to Comment
  • The Warcraft Movie Is Vital For Activision [View article]
    I think low risk, low reward is more like it, to be honest. I don't see any benefit to this given there's no new Warcraft products coming out. I think Blizzard just got Hollywood fever and bamboozled by someone very, very clever at Lion's Gate.

    I do think their stock is overpriced relative to the broader market even if it's 100% fine for the sector and NASDAQ. I have placed my money elsewhere, but may alter my position after DCFing them post-KING. Probably not in the immediate future though.
    Nov 19, 2015. 12:16 PM | Likes Like |Link to Comment
  • The Warcraft Movie Is Vital For Activision [View article]
    Prince of Persia was the most successful video game adaptation. It did @$300m on a budget of @$125-150m. Nothing else has even come close.

    Even the Resident Evil films, very popular, were mostly in the $100m range, but their budgets were $30-65m.

    Successful video game films are mostly films with budgets of $20-30m that do about $50-60m. And for every one of those there's 10 Uwe Boll movies that lose $10m on a $20m budget (though he allegedly makes many of his movies as part of some tax scheme).
    Nov 18, 2015. 11:00 AM | Likes Like |Link to Comment
  • The Warcraft Movie Is Vital For Activision [View article]
    It really does look awful. When I heard the fellow they were interviewing say it was "like a cross between Game of Thrones and Avatar" I briefly thought about dashing my head out against a wall.
    Nov 18, 2015. 10:53 AM | 1 Like Like |Link to Comment
  • The Warcraft Movie Is Vital For Activision [View article]
    Kumquat Research, while you make some strong points, I'm inclined to disagree somewhat.

    Financially speaking, the movie is largely irrelevant. Brand-wise sure, it could serve as a great ad for (the declining) Warcraft franchise if it succeeds. If it fails, which I think is likely given the track records of video game IPs at the box office and what I've seen of the trailers, which look terrible, it's still not even vaguely catastrophic.

    I'm in the middle of doing a DCF of them post-King. Estimated budget is $100m. It's a co-production, so I have no idea how much of that ATVI is footing.

    Let's say it's all of it. And let's say it, somewhat inexplicably, the movie in a spectacular turn of events loses all of it. Just for the sake of argument.

    Their revenue in 2014 was $4.41b. Net income was $817m. $100m here or there might make for an ugly quarter, but in the big picture? I don't think it does much. I'm not recommending you throw $100m into a black hole, mind you, but I don't think this movie's (likely) failure will matter much, especially if it makes some money worldwide, if their part in the co-production is less than $100m, how they expense it, etc.

    Also, my friends in Hollywood tell me that the the real creative people out there are the accountants, so I think we should be OK.

    Allegedly, Spider-man lost money on the net so they wouldn't have to pay Stan Lee, so I'm sure someone who could figure out how to do that, can figure out some way to tax loss harvest, etc across multiple quarters.
    Nov 18, 2015. 10:52 AM | Likes Like |Link to Comment
  • Activision Blizzard's Purchase Of King Digital: Take The Money And Run [View article]
    I'm inclined to agree.

    I tend to think it's a great company, and while cheap for the sector, somewhat overpriced relative to the broader market. Considering there are certain other companies in the tech sector right now that are very, very cheap (<15 P/E), I have my money in them.

    I'm waiting until the Warcraft movie and planning to add to my position when its opening box office figures are reported. Watch the trailers. You'll see what I mean. I could be wrong though, stranger things have happened, but video game movies do not have good track records.
    Nov 18, 2015. 10:35 AM | Likes Like |Link to Comment
  • Activision Blizzard's Purchase Of King Digital: Take The Money And Run [View article]
    King's a cash cow.

    They have 8 million paying customers. I could run through some of their figures that I have handy, but long and the short of things is they have substantial revenue. I don't remember their net is off the top of my head.

    ATVI may have paid too much (all the mobile gaming companies are overvalued right now) but ATVI needs to adapt to the non-core gaming market and China. They have "Hearthstone" which is a bona fide hit (it's a card game for iOS/android), but their other mobile ventures have largely been failures.

    Zynga (another stock I called when everyone else loved it for no reason) was a dog from the get go. The options clawbacks and rapid acquisitions were giant red flags. This isn't that. A more relevant comparison here would probably be EA's acquisition of PopCap.

    Bobby Kotick is among the Street's best CEO's and he was initially sour on mobile like you are. You should read some recent interviews with him. He makes a lot of sense.

    Will this be a success? Who knows. I think King was probably a good acquisition. But if it's a failure (it certainly might be). It won't be for the reasons you described, it'll be from difficulties in integration (something ATVI is substantially better at than EA, Blizzard essentially does its own thing, for instance) or IP problems.

    Personally, I'm on the fence on ATVI right now, to be honest. I'm writing an article on it. Should be out in a day or two if their investor relations people get back to me on some things regarding the 8-k re: King Digital acquisition so I can do a proper DCF analysis. Otherwise, I'm going to have to guesstimate some things and it'll be a week or so.
    Nov 18, 2015. 10:09 AM | Likes Like |Link to Comment
  • Electronic Arts Upcoming Games And Buyout Rumors Bode Well For Company [View article]

    EA's Dragon Age games are pretty much fantastic. Except 2. Which was terrible. The first one played like a lot of previous Bioware games like Star Wars: Knights of the Old Republic, Neverwinter Nights or a more modern Baldur's Gate. If you like RPG's you'll like it. PC version was superior to the console one.

    The new one, Dragon Age: Inquisition, actually plays a lot like Mass Effect (it's more action-y than Dragon Age 1) if it was in a medieval/open world. The fact this franchise is so consistent leads me to believe EA won't mess with what's not broken if they acquired CDPR and why I think it'd be great should the rumor prove true.

    They run sales on the DA games a lot on EA's and You can get Dragon Age: Origins (part 1) with the expansion Awakenings and all the DLC for $10 or so when they do. It's 100+ hours.

    DA:I (part 3) is actually currently on-sale for $30 in several of the versions, or if you prefer digital, you can have Cheapshark notify you of a price drop


    P.S. Humble Bundle is great for cheap college students who like video games. A portion of their proceeds benefit charity, too. No affiliation.
    Sep 15, 2015. 10:41 PM | Likes Like |Link to Comment
  • Electronic Arts Upcoming Games And Buyout Rumors Bode Well For Company [View article]
    Thank you for your comment usafl.

    You sound like an enterprising young man. I'm sure your parents must be proud. Finance is a great interest to have. I hope you pursue it further as you continue your Education.

    If you're under 18, remember to ask your parents' permission before investing in anything. Additionally, remember any investment in equities has a risk of loss of capital and that may not necessarily be appropriate depending on your financial status. In short - if you can't afford to lose it, you can't afford to invest it.

    In addition to Seekingalpha, be sure to check out for further information on new topics and areas that interest you.

    I would also recommend reading either Benjamin Graham's "The Intelligent Investor: Revised Edition" or Greenwald, et al's modernized "Value Investing" for an excellent introduction to Finance and Security Analysis written by some very highly respected professionals. Benjamin Graham is the fellow who taught Warren Buffet (perhaps the world's most famous investor). Both books are available for less than $20 USD on and most booksellers.

    The only drawback to these books is since they are from the "Value Investing" school of thought that they do not discuss "Technical Analysis", which is also important, but I'd focus on reading Financials first then read more about technicals on Investopedia later.

    Have a pleasant day,

    P.S. Feel free to PM me if you'd like any more book suggestions on a particular area of interest in Finance or the business side of the video game industry, as well, if you'd like. I've read a bit of both.
    Sep 15, 2015. 10:16 PM | Likes Like |Link to Comment
  • Electronic Arts Upcoming Games And Buyout Rumors Bode Well For Company [View article]
    I agree almost completely.

    On the other hand, I thought that EA would dilute the Bioware brand during the Bioware acquisition, but to be honest, I don't think it really has.

    Look at the post-EA quality of the games. Dragon Age 2 is really the only one that's been bad. Dragon Age: Origins, ME 2, 3. Dragon Age: Inquisition is probably the best one yet. If you haven't played it, do so, it's great! I'm not just saying that because I own EA stock. It's really good. It sold well, too.

    Mass Effect 2 and 3 (ending aside) were both good. They even fixed that when EA/Bioware responded to widespread complaints over ME3's ending by releasing an extended cut showing they were still listening to fans.

    I think the DLC issue is probably overblown because the only game it really seemed to impact negatively (sales-wise) was Dead Space 3, a game which effectively killed the brand. From that, I tend to think EA has learned ridiculous amounts of DLC in a non-freemium single-player game just does not work.

    The platform and client has better design and netcode than Origin too, so that would be a nice bonus.

    Is the rumor true? It's uncertain, but its truth or falsity will prove interesting for gamers.
    Sep 15, 2015. 04:36 PM | Likes Like |Link to Comment
  • Electronic Arts Upcoming Games And Buyout Rumors Bode Well For Company [View article]
    Thank you for your comment Tom.

    If you look at the previous Star Wars films, they all did very well at the box office. The movie would have to be astonishingly awful not to be popular, given its pre-existing worldwide fanbase, budget, and the talent involved. It would be hard for all this publicity not to rub off on the game, too.

    Plus the Star Wars: Battlefront sub-brand is itself popular and has sold well in the past.

    Additionally, as I mentioned, the new game is also supposed to be good according to industry sources, which certainly helps matters. I've watched gameplay footage and personally, I think it will be good. I may be somewhat biased as I rather like video games, but I don't think we're getting a shovelware license title.

    At E3 it won best multi-player and best action title. It's built on the latest DICE engine Frostbite 3, which powers the successful Battlefield franchise (like the recent and hugely successful Battlefield: Hardline).

    A good game is good, but a good game + a license/brand with as much cross-promotion and fanbase as the Star Wars Franchise has the potential to be great and start an entirely new franchise well past the new film.

    Have a pleasant Day,
    Sep 15, 2015. 04:11 PM | Likes Like |Link to Comment
  • Electronic Arts Upcoming Games And Buyout Rumors Bode Well For Company [View article]
    Thank you for your comment, Jeremy.

    I mention Marcin Momot's denial in the article, specifically. The co-founder has not actually publicly commented. Marcin Momot related speaking with him on twitter. I also linked what I believe is the source of what you provided from Gamespot (they usually aggregate).

    You can read this in the section marked "CD Projekt SA Representative Denies Rumor" as well as further on why Mr. Momot's credibility has been questioned as a result of his recent denial of downgrades of The Witcher 3's graphics which subsequently occurred in the provided passage and hyperlinks.

    Realistically, I believe there are 3 possibilities:

    1. There is no merger.

    2. There is a merger - in which case, It is not uncommon for companies to deny a merger before it occurs for various legal reasons.

    3. CDPR wants a merger - it's not uncommon for companies to leak "merger" rumors to attract buyers.

    It's vaguely possible EA leaked buyout rumors, but I doubt it.

    Have a pleasant day!
    Sep 15, 2015. 03:54 PM | 1 Like Like |Link to Comment
  • Videogame sales down 2%; new 'Madden NFL' tops chart [View news story]
    You linked NPD's brick and mortar sales chart on venturebeat. Not to be a nuisance, but most games are sold digitally now.

    I first pointed this out years ago.

    It's how I picked EA (who sell a lot of their games via their Origin digital distribution platform, Steam digital distribution and others) as a triple bagger (maybe more, IDK, I don't really count money) way before everyone else due to doing a projected CF based on that knowledge - when "everyone knew" that Star Wars: The Old Republic would bankrupt them. "Everyone knew" that their Non-GAAP financials (which are more accurate than their GAAP ones to to problems in recording the sale of digitally distributed software) were borderline fradulent, too. Needless to say, if you look at the stock price, you can see I was 100% right.

    If I had any sense, I would probably just thank you and everyone else who keeps quoting B&M NPD sales since if people keep using those stats, it's more easy money for me as one of the half-dozen or so people accurately predicting DCF's on these companies, but unfortunately my dedication to truth is just too strong not to. God help me. I'll have to get that fixed at some point.

    Sep 15, 2015. 01:50 PM | 1 Like Like |Link to Comment
  • Though Electronic Arts' (EA) Star Wars: The Old Republic has received more hype (and probably a much larger budget), Sony's (SNE) Star Wars: Clone Wars Adventures, a more casual, kids-focused game, might prove a bigger hit. Sony boasts Clone Wars Adventures, which has both free-to-play and subscription options, now has over 10M registered users. EA, meanwhile, claims to have 1.7M paying subscribers for The Old Republic.  [View news story]
    EA has no new content until next month, its massive overhaul. Most people have played through the entire game 2-3 times.

    Senticar, eyeballing the various servers' gaming hubs (called fleets), I'd say it's closer to 500-600k subs based on attrition relative to the numbers I jotted down when it started, which is still profitable, though not a rip-roaring success. I have no idea why EA can't just release honest conversion numbers, they're respectable.

    The conversion numbers will be further skewed by "friend invites", which are passes for a month of free play.

    SWTOR is performing middle of the road. April is make or break. Most likely, the game will continue to perform at its current level.

    Syndicate and Kingdom of Amalur sales and budgets are what interest me at the moment. Mass Effect 3 is obviously a major hit.
    Mar 13, 2012. 03:14 PM | Likes Like |Link to Comment