We certainly have no problem getting caught up in the fun of playing games, but the people who create them have their pocketbooks to worry about, too. In this column, finance expert and GameSpy contributor Chris Morris guides you through the tricky corridors the gaming industry's financial side, touching on big-time business decisions and how they matter to the common gamer.
Winners and Losers
At this point, we've all heard a lot of talk about who and what "won the show" at E3 Expo 2011 earlier this month. It is, in fact, one of the most common questions attendees ask each other. But in the big picture, it's a question that's a little shortsighted.
The video game industry is undergoing such a seismic shift these days (in terms of its fundamental business model), that focusing on a single company or title doesn't give anyone an adequate look into the future. A hit game is nice, but long-term, publishers need to have a broader plan -- and they need to have that on display.
With that in mind, I've decided to call out some of the winners and losers of this year's E3 from a financial standpoint. It's worth mentioning that this isn't necessarily a reflection of each company's overall state, but rather a look at how they positioned themselves in investors' eyes for the next year-and-a-half to two years. And yes, many more companies were out on parade -- but I'm using this space to focus on the "big five" (you know, the guys who throw the crazy press conferences leading up to E3 proper).
Nintendo: Loser. Show attendees were eager to get hands-on time with the Wii U, but the world outside of the Los Angeles Convention Center gave the system a big raspberry. Nintendo's stock is down more than 12% since the unveiling -- taking it to a low it hasn't seen since September 2006.
The flat reception to the new console, along with a drought of titles for the Wii (beyond The Legend of Zelda: Skyward Sword), shook investor confidence that the company could return to its glory days. And even a solid lineup of games for the 3DS (which should help solidify sales going into the holiday period) wasn't enough to soothe them. Nintendo's global president, Satoru Iwata, acknowledged that the company could have better presented the Wii U... but downplayed the investor reaction.
"[This happens] whenever we come out with something brand new and try to do something unprecedented," Iwata said. "People have never had this kind of experience before [and] they cannot completely appreciate it. … It reminds me of the situation in 2006, when for the first time, we showed the Wii system. At the show, people were excited and enthused about the prospect of the Wii at the time, but as soon as I returned to Japan, I noted the [reaction] there was much different. There was so much skepticism surrounding Wii at the time."
EA: Winner. Overall, no one had a more impressive lineup than EA. While the spotlight shined brightest on Battlefield 3 and Star Wars: The Old Republic, plenty of other games that had people interested, including Mass Effect 3, FIFA Soccer 12, and SSX.
EA has been a company in transition for a while now, but it seems to have finally turned the corner and found the path back to being a solid player in the industry. And investors have been expressing ample confidence: Since early May, the company's stock has climbed over 16%.
Microsoft: Winner. The heavy emphasis on Kinect titles might have made the core audience cringe, but investors were hearing cash registers ring in their ears. Kinect is a bona fide hit -- and Microsoft is wise to capitalize on that excitement. Sure, few core gamers will use the functionality shown off in E3's various Kinect demos... but those features might convince people who normally wouldn't buy these games to give them a try.
The integration of live television (and Bing search for entertainment programming) was also applauded. The console wars are dead; these days, the real fight is for people's time, and if Microsoft can have people watch TV through their Xbox 360s, it wins -- since it's still able to serve ads and functionality, while easily convincing folks to ditch that Doctor Who marathon for a few rounds of Black Ops, with an integrated friends list that alerts you instantly to game requests.
Sony: TBD. If any company straddled the line between success and failure at E3, it's Sony. Investors are still wary, given the ongoing security problems at the company. And while the PlayStation Vita price was encouraging, skepticism runs rampant about whether any dedicated game device will be able to make a lasting impact these days.
On the other hand, the holiday lineup of exclusive PlayStation 3 titles is incredibly strong. And the introduction of Sony's PlayStation-branded 3D monitor could prove to be a major catalyst to help further the adoption of 3D gaming and TV.
Ubisoft: Winner. Try, if you can, to forget about that asinine "Mr. Caffeine" emcee from the company's press conference. His annoyance factor was so high, it nearly overshadowed the games -- but Ubisoft had a very strong lineup on display.
Assassin's Creed Revelations will undoubtedly be a hit. The Raving Rabbids Kinect game looked fun. Just Dance 3 will continue to serve the music audience. And the trailer for Far Cry 3 was one of the best of the show. And, perhaps most importantly of all, Ubisoft's stock is up 4% percent since E3 started.
Who do you think had the best E3 2011 showing?
Chris Morris has covered the video game industry since 1996, offering analysis of news and trends, and breaking several major stories, including the existence of the Game Boy Advance and the first details on Half-Life 2.