Majesco's New Basketball Game Diversifies The Company

| About: PolarityTE, Inc. (COOL)

Majesco Entertainment (NASDAQ:COOL), the small video game company behind the Zumba Fitness video game franchise, reported some details of its newest offering coming in 2012. NBA Baller Beats will be released by Majesco Entertainment and HB Studios. The game will combine motion based game play and be sold exclusively for the Microsoft (NASDAQ:MSFT) XBOX 360 system and its Kinect software.

NBA Baller Beats will track player's body and ball movement to provide an in game experience. With this game, Majesco Entertainment enters the high-selling sports video game market. The question remains whether or not NBA Baller Beats can compete with the NBA2K franchise from Take-Two Interactive (NASDAQ:TTWO) and the returning NBA Live franchise from Electronic Arts (NASDAQ:EA). Here is a look at sales from some recently released NBA video games:

  • NBA 2K 2011 PS3 1.32 million copies North America, 1.68 million copies total
  • NBA 2K 2011 Nintendo Wii 0.43 million copies North America, 0.47 million copies total
  • NBA 2K 2012 Nintendo Wii 0.20 million copies North America, 0.23 million copies total
  • NBA 2K 2012 XBOX 360 1.86 million copies North America, 2.11 million copies total
  • NBA 2K 2012 PS3 1.34 million copies North America, 1.68 million copies total
  • NBA Live 2009 XBOX 360 0.48 million copies North America, 0.67 million copies total
  • NBA Live 2009 PS3 0.45 million copies North America, 0.50 million copies total
  • NBA Live 2010 PS3 0.45 million copies North America, 0.49 million copies total
  • NBA Live 2010 XBOX 360 0.38 million copies North America, 0.41 million copies total

I'm not sure what analysts will be predicting when it comes to sales expectations for the new NBA Baller Beats game. The game will be similar to games like Just Dance and Zumba, with its motion capture technology. The game combines motions of a person and a basketball to create the game play. The game may sound like a bad idea up front to some, but I am curious to see what actual game play looks like.

The soundtrack for the game will feature Kanye West, Run DMC, Gorillaz, and Common. Majesco Entertainment will unveil more information on game play and the soundtrack listing at the Electronic Entertainment Expo. The expo will be held in Los Angeles in June, and will also allow visitors to take part in game demos. Game demos will also be featured at basketball camps around the United States in the summer. A trailer for the upcoming game can be found here.

The game will diversify Majesco Entertainment among games sold and platforms utilized. With the majority of its sales coming from the Zumba franchise, the NBA game could provide a nice break from the reliance on one game. The majority of Majesco's sales come from the Nintendo Wii platform, so the exclusive XBOX 360 game could help to maintain diversification across platforms as well.

I am hoping that Majesco Entertainment packages the games with a Spalding basketball, so it can enjoy a higher price point. The Zumba Fitness games come as individual video games and accessories are sold separately. The company could have been packaging games with roll-up exercise mats or small weights to enhance the games.

First quarter sales were reported for Majesco Entertainment recently. I wrote an article about the stock price not reacting positively to earnings. The earnings per share of $0.18 fell $0.02 shy of analysts' targeted earnings. Shares have traded down since the earnings and now sit at $2.43. Full year earnings are expected to be $0.25-$0.30. I don't know what the company is hoping for in terms of units sold of NBA Baller Beats. This means there will be a chance for an earnings beat or a raise in projected earnings before the year. Therefore, the release of NBA Baller Beats has a large impact on the share price of Majesco Entertainment.

A new Zumba game is being developed for a holiday 2012 release. Majesco will also release a Harley Pasternak fitness game later in 2012. The company appears to be smarter in its decision to release fewer games each year and focus on the titles it is releasing. NBA Baller Beats strengthens the release schedule for Majesco Entertainment. The company is also actively expanding its social games and mobile games base.

Shares were trading around $3 before the last quarterly earnings were reported. Shares are down 7.6% since the beginning of 2012. I have wrote several articles about Majesco Entertainment and continue to own shares in real life. I have a $10 price target on shares of Majesco and believe it is a strong buyout target in 2012.

Disclosure: I am long COOL.

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