2010 was a year of extremes for the video game industry with software either
breaking sales records or performing so badly that some analysts considered
gaming retail dead. Just look at Electronic Arts (NASDAQ: ERTS ) and Take-Two
Interactive (NASDAQ: TTWO ), publishers whose NBA-licensed software handily
demonstrated that dichotomy. Take-Twos NBA 2K11 was one of ten best-selling
games of the year. EAs NBA Elite 2011 meanwhile was plagued by delays and bad
reviews until the company killed the game altogether over quality concerns, a
move the preceded a fresh round of layoffs as the company consolidated its EA
Sports label. The games industry has been so volatile not just because of
decreased consumer spending but the rise of new platforms and sales models. The
Apple (NASDAQ: AAPL ) iPad and iPhone 4 further established mobile gaming as the
business of the future, with games like Rovios Angry Birds the new model.
Instead of a $60 product you buy at the store, video games are now more commonly
a 99-cent purchase made with the swipe of your index finger. The proliferation
of connected handhelds and the shift towards digital distribution has some
wondering if the days of a title like Activision Blizzard (NASDAQ: ATVI ) Call
of Duty: Black Ops selling 8 million copies in 24 hours are over. But since
these hard copies are such big money makers, you can bet video game software
stocks are doing their best to ensure that big sales stick around at least for
another few years until they can find a different model. Whats more, with
Nintendo (PINK: NTDOY ) and Sony (NYSE: SNE ) releasing new portables, the
Nintendo 3DS and Sony NGP respectively, and the home console market showing new
vigor thanks to the Microsoft (NASDAQ: MSFT ) Xbox 360 and Kinect, the old guard
of the games market will be able to hold their own in the coming year. There are
also sequels to some popular games to keep the gravy train running, with a
number of traditional big budget games on the horizon that will perform well. So
which titles will be the big winners and which stocks will win out? Here are 5
that will easily sell more than 5 million copies: Nintendogs + Cats The only
Nintendo (PINK: NTDOY ) produced game that will release alongside the Nintendo
3DS in March is the only software that device needs to guarantee its success.
The original Nintendogs , made in 2005 by Super Mario Bros. creator Shigeru
Miyamoto, was almost single-handedly responsible for the Nintendo DS handhelds
early success. It has sold around 23 million copies over the past five years.
The sequel will release in a market more receptive to portable gaming than ever
before and should distinguish itself from cheap mobile alternatives thanks to
the Nintendo 3DS glasses-free 3D effects. L.A. Noire Take-Two Interactive
(NASDAQ: TTWO ) had only one major 2010 success besides NBA 2K11 in Red Dead
Redemption , an adventure game set in the wild west made by Grand Theft Auto
creators Rockstar Games. 5 million copies of Red Dead were sold within two weeks
of its May 2010 release, leading Take-Two to raise its guidance for fiscal 2010.
CEO Ben Feder said at that time, [Take-Two has proven it can] be profitable in a
fiscal year without a major multi-platform Grand Theft Auto release. Hell prove
it this year when Rockstar Games finishes its follow up to Red Dead , L.A. Noire
. An open-ended adventure like its other games, Noire trades the open range for
cops and robbers intrigue in 1947 Los Angeles. The companys pedigree and the
untapped potential of games in the mold of films like L.A. Confidential should
guarantee that Take-Two has another record breaker on its hands. Halo: Combat
Evolved Remake September 2010 was bittersweet for Microsoft (NASDAQ: MSFT ).
Halo: Reach sold 3.3 million copies in its first 24 hours on shelves (and went
on to be the third best-selling game of the year), but it was also the last
title to be made by series creators Bungie. Microsoft wont be mourning the end
of its relationship with Bungie for long. While the company has yet to confirm
the report, AOL blog Joystiq reported last Friday that Microsoft will be
releasing a remake of the original Halo: Combat Evolved on that games tenth
anniversary, November 15, 2011. The remake, made by studio Saber Interactive,
will feature online multiplayer, HD graphics, and support for 3D televisions.
Halo games always sell well, but the nostalgia factor should push this one over
the top. Call of Duty: Modern Warfare 3 Activision Blizzard (NASDAQ: ATVI ) has
fallen into a steady routine with its monumentally successful military shooter
series Call of Duty , with development studios Treyarch and Infinity Ward (the
series creators) alternating releases each year. While the game hasnt been
officially announced yet, Los Angeles Times blog Company Town reported on
January 20 th that Infinity Ward will be keeping with the schedule, releasing
Call of Duty: Modern Warfare 3 one year after Treyarchs Call of Duty: Black Ops
. Having sold 20 million copies in its first six months on shelves, some
industry followers wondered if 2009s Modern Warfare 2 marked the limit of the
series popularity. Black Ops put that theory to bed, and Modern Warfare 3 should
be a sure thing for ATVI. Untitled Bungie/Activision Project There are other
games that will sell multiple millions of copies in 2011 Electronic Arts
(NASDAQ: ERTS ) game Madden NFL 2012 due in August will undoubtedly perform
well, as will new shooters Dead Space 2 and Bulletstorm —the new, unnamed
title from Halo creators Bungie will be the game that has the most potential to
be one of the best-selling games of all time. The studio announced last April
that it had signed a 10-year deal with Activision Blizzard to bring a new
franchise to multiple platforms. It is expected to debut at the Electronics
Entertainment Expo in June. As of this writing, Anthony John Agnello did not own
a position in any of the stocks named here.
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