Thursday, March 31, 2005
SCi on the way to get Eidos
SCi is tightening its grip over Eidos as it got Merrill Lynch and Gartmore Asset Management to support their bid. Now as SCi has over 25% backing, they can block the offer of Elevation Partners. There will be no lift off for Elevation unless they show much more money.
Electronic Arts recommendations
It has been quite a rollercoaster what comes to its share price. Before Christmas and after, analysts from several companies raised their recommendations and lifted Electronic Arts as an industry performer. Now we see similar trend taking place, but only reversed. Jyske Bank is refreshingly different, because they have maintained reduce recommendation all this time. It is quite an accomplishment in this hectic economy we live in, or are they sleeping there at Jyske?
Wednesday, March 30, 2005
Taiwanese Internet Cafes see ligth at the end of the tunnel
DigiTimes had a story about possible revival of Taiwanese online game industry. According to the article, Internet cafes in Taiwan have had troubled time for past few years. Regulations and home electronics have eaten the markets. Now there is a chance for growth again. New online games are bound to increase the demand for Internet cafes, because it is more fun to play games with friends than alone at home.
To my personal understanding, regulations that prevent opening a café near school seriously hamper the business because without good location user amounts drop remarkably and profitability takes a deep dive. On the other hand, I don’t believe that home electronics play especially big role in the demise of the Internet cafes. Chinese family environment can be quite pressuring for kids of all ages and therefore it is natural that they benefit from Internet cafes as they can have their personal space there. Just like the DigiTimes article said. It is more fun to play games with friends (outside home).
To my personal understanding, regulations that prevent opening a café near school seriously hamper the business because without good location user amounts drop remarkably and profitability takes a deep dive. On the other hand, I don’t believe that home electronics play especially big role in the demise of the Internet cafes. Chinese family environment can be quite pressuring for kids of all ages and therefore it is natural that they benefit from Internet cafes as they can have their personal space there. Just like the DigiTimes article said. It is more fun to play games with friends (outside home).
Eidos going for SCi?
In Eidos quarrel, the scale is tipping for SCi, which has already managed to secure about 26% of the ownership of Eidos. SCi is also softening up the management at Eidos as they met to discuss the situation. Elevation Partners must show lot more money to turn the heads of Eidos team.
Tuesday, March 29, 2005
EA hit with class action suit
Electronic Arts found out that shareholders do not have such patience as their game development workers. I took this quote from PR Newswire:
“A class action lawsuit was filed in the United States District Court for the Northern District of California on behalf of all securities purchasers of Electronic Arts Inc. between January 25, and March 21, 2005, inclusive.”
The complaint goes on and lists several points of information that should have been made into public. They claim that management of EA was misguiding investors by giving optimistic estimates.
To my opinion, Electronic Arts will not have any troubles winning this case. Management did not bail out by selling large chunks of shares, seems to me that they just simply made a mistake. A whole different thing is the publicity value for the company that is organizing this class action suit.
“A class action lawsuit was filed in the United States District Court for the Northern District of California on behalf of all securities purchasers of Electronic Arts Inc. between January 25, and March 21, 2005, inclusive.”
The complaint goes on and lists several points of information that should have been made into public. They claim that management of EA was misguiding investors by giving optimistic estimates.
To my opinion, Electronic Arts will not have any troubles winning this case. Management did not bail out by selling large chunks of shares, seems to me that they just simply made a mistake. A whole different thing is the publicity value for the company that is organizing this class action suit.
Monday, March 28, 2005
Game company valuations rise
Game industry is enjoying lot of interest outside its borders. Namely media companies are looking into expanding their reach into games. This will increase the prices of all game companies, because bigger companies are complete and easy to manage and small game companies, because they are the fuel for bigger companies to grow even bigger.
WHY BUY?
Game development is slow and there is always danger of flops. By purchasing smaller game developers with existing titles, the random market-testing phase for franchise and initial development cycle can be cut away and lot of time can be saved. Such a huge timesavings mean lot of dollars or euros.
WHY GROWTH?
Why the big players need to grow? Huh, beats me, I don’t really understand the logic of perpetual GDP growth, I need my basic stuff and I am not shopping for larger, bigger, better or more expensive. Uh, enough chatter, game industry just mimics other industries. Everybody wants to grow, because they think that their company is special and has the right to remain independent.
MONEY BUYS LOYALTY
If you are a small company and your company’s ownership is divided among several owners, there are going to be some disagreements if somebody introduces big take-over offer to the picture. There are always those who just take the money and run. So, here is answer to the growth. Bigger engine makes more money and if the growth is fast enough, everybody will be happy with the company. Growth means money for everybody in the picture and owners are just one big happy family.
VALUATION CYCLE
So the situation is like this:
The cycle raises the company valuations from the lowest level to the highest, even the original boost comes from the top. Is there a point that I am trying to make? Next post will tell...
WHY BUY?
Game development is slow and there is always danger of flops. By purchasing smaller game developers with existing titles, the random market-testing phase for franchise and initial development cycle can be cut away and lot of time can be saved. Such a huge timesavings mean lot of dollars or euros.
WHY GROWTH?
Why the big players need to grow? Huh, beats me, I don’t really understand the logic of perpetual GDP growth, I need my basic stuff and I am not shopping for larger, bigger, better or more expensive. Uh, enough chatter, game industry just mimics other industries. Everybody wants to grow, because they think that their company is special and has the right to remain independent.
MONEY BUYS LOYALTY
If you are a small company and your company’s ownership is divided among several owners, there are going to be some disagreements if somebody introduces big take-over offer to the picture. There are always those who just take the money and run. So, here is answer to the growth. Bigger engine makes more money and if the growth is fast enough, everybody will be happy with the company. Growth means money for everybody in the picture and owners are just one big happy family.
VALUATION CYCLE
So the situation is like this:
- Media companies want to buy game companies to strengthen their competitive position.
- Game companies want to remain independent and defend themselves by buying smaller competitors
- Small game companies fight back by loyal ownership or successful games.
The cycle raises the company valuations from the lowest level to the highest, even the original boost comes from the top. Is there a point that I am trying to make? Next post will tell...
Media companies get ready
The Washington Post has great article called “Media firms piece together new strategies” about media companies. In the article they go through different strategies that media companies are using to adapt present conditions. They shed light on following companies’ plans: Time Warner, Viacom, General Electric, Walt Disney, Sony and Comcast. I found the article from Florida Today some other sources were behind subscription.
Anyhow, the most interesting development from video game industry’s standpoint seems to concern Walt Disney, Viacom and News Corp. News Corp. was old news, but I was positively surprised to read that Viacom is also eyeing a video game company. Walt Disney is on the other hand trying to push their own game development and benefit from outsourcing to China and India.
What this means is that game company market values are going to remain high, because the purchase potential remains high. Media companies are not going after tiny companies but bigger, more established, preferably those game companies, which have their own publishing business. But smaller companies will see their valuations go higher too. Next post is about the reasons why this happens.
Anyhow, the most interesting development from video game industry’s standpoint seems to concern Walt Disney, Viacom and News Corp. News Corp. was old news, but I was positively surprised to read that Viacom is also eyeing a video game company. Walt Disney is on the other hand trying to push their own game development and benefit from outsourcing to China and India.
What this means is that game company market values are going to remain high, because the purchase potential remains high. Media companies are not going after tiny companies but bigger, more established, preferably those game companies, which have their own publishing business. But smaller companies will see their valuations go higher too. Next post is about the reasons why this happens.
Sunday, March 27, 2005
Kingsoft maybe listing
According to Pacific Epoch, possibility that Kingsoft is mulling a listing to overseas stock market is growing. They are said to be negotiating with several investment banks. They aim to get 240 million USD from going to public. There have been rumors about this all winter and spring and these rumors just won’t die, I guess there is something in the air.
I wonder, how much money States has for such enterprises? Who keeps buying all that stock? It’s not that these companies are so big that they can get into indexes and therefore into pockets of big investors. It has to be smaller players that are biting into Chinese online game companies. Chinese market is mushrooming competition and margins are dropping, there can’t be basis for sound development for all of these game companies, but maybe investors are banking on proposal that companies with foreign capital are stronger and therefore will survive.
I wonder, how much money States has for such enterprises? Who keeps buying all that stock? It’s not that these companies are so big that they can get into indexes and therefore into pockets of big investors. It has to be smaller players that are biting into Chinese online game companies. Chinese market is mushrooming competition and margins are dropping, there can’t be basis for sound development for all of these game companies, but maybe investors are banking on proposal that companies with foreign capital are stronger and therefore will survive.
Wednesday, March 23, 2005
Eidos SOLD, not yet
Surprise, surprice, SCi decided to get into the bidding game in the end. Damian Reece from The Independent wrote a story covering the new development. Some general themes form the article:
Eidos owner Schroders is backing SCi’s offer and that has caused some tension between Eidos management and ownership. Eidos CEO Mike McGarvey expressed his concern over SCi’s ability to manage such a large operation as Eidos is. This new offer from SCi is larger than previous offer, set by Elevation Partners and with at least partial backing of Eidos ownership, is likely to pass, if there will not be new offers on the table.
Market appears to have positive look towards the development as the price of SCi rose during the day. Of course it might just be so that Eidos management is afraid of loosing their positions, because at SCi management costs as compared to turnover are much lower than at Eidos. If SCi deal pushes through things are bound to change at Eidos, but if Elevation deal triumphs, Eidos management maintain operational control.
Eidos owner Schroders is backing SCi’s offer and that has caused some tension between Eidos management and ownership. Eidos CEO Mike McGarvey expressed his concern over SCi’s ability to manage such a large operation as Eidos is. This new offer from SCi is larger than previous offer, set by Elevation Partners and with at least partial backing of Eidos ownership, is likely to pass, if there will not be new offers on the table.
Market appears to have positive look towards the development as the price of SCi rose during the day. Of course it might just be so that Eidos management is afraid of loosing their positions, because at SCi management costs as compared to turnover are much lower than at Eidos. If SCi deal pushes through things are bound to change at Eidos, but if Elevation deal triumphs, Eidos management maintain operational control.
Tuesday, March 22, 2005
Eidos SOLD
A venture capital company, Elevation Partners, was the company to finally buy out Eidos. I didn’t speculate with this option, but it was in the end what happened. This means that the case of Eidos is not over yet. Venture companies are in the business of making money not in the business of creating games. Now what happens is that we will probably see that Eidos will focus on its best selling game franchises and tries to get rid of extra projects, which demand resources. It will be minimum personnel, more marketing and investment into distribution and finally the big pay off when somebody else is willing to buy trimmed Eidos.
Electronic Arts revenue estimates too optimistic
Lots of news came out today. In Bloomberg News, Jonathan Thaw wrote about sudden fall of revenue estimates in Electronic Arts. The game industry giant is not able to meet its projections. Reason behind this shortfall is the lackluster sales of their key titles, which were published for the Christmas season. Looks like the gaming engine ran out of gas before reaching the next quarterly checkpoint. Now we have an exciting play to watch as the situation unfolds. Is the hit towards EA a sign of general stalling of the industry or are competitors still doing strong? Personally I am betting that others are still doing fine and that the dip with EA is on the other hand, related to some public relations problems and on the other to misjudgments based on exceptionally well-sold Christmas season. So, I am guessing that this hasn’t tilted industry off the track, but soon this news is forgotten and the train pushes on. That’s a guess...
Monday, March 21, 2005
Yet another Eidos rumor, could it be true?
We are finally getting more news on possible Eidos bid, Bloomberg ran a story about new developments. This time the paper claim that it is SCi Entertainment Group, Eidos’s British competitor.
At last we have news that sound solid, with simple reasoning, this is the most natural way to integrate the game business on the isles. Most of us know what happened to British car industry, the British market is not big enough to support some of the local industries and competition abroad is fierce.
Together Eidos and SCi could fare much better. They would have better distribution to corner their home market and better outposts to conquer foreign markets, not to mention the combined talent that the companies have.
If this deal will go through, Eidos is saved, but the fate of SCi is not that certain. Although financially in better shape than Eidos, SCi is not loaded in cash. It is bit of a gamble from SCi’s part, which could have just waited Eidos to go under and then grab suitable coders from those laid-off former Eidos workers.
Now we can lean back and wait if there are any competing offers, if there are, we will have a bidding contest or maybe even a battle to follow.
At last we have news that sound solid, with simple reasoning, this is the most natural way to integrate the game business on the isles. Most of us know what happened to British car industry, the British market is not big enough to support some of the local industries and competition abroad is fierce.
Together Eidos and SCi could fare much better. They would have better distribution to corner their home market and better outposts to conquer foreign markets, not to mention the combined talent that the companies have.
If this deal will go through, Eidos is saved, but the fate of SCi is not that certain. Although financially in better shape than Eidos, SCi is not loaded in cash. It is bit of a gamble from SCi’s part, which could have just waited Eidos to go under and then grab suitable coders from those laid-off former Eidos workers.
Now we can lean back and wait if there are any competing offers, if there are, we will have a bidding contest or maybe even a battle to follow.
Thursday, March 17, 2005
Activision mulling game price hike
According to Chief Executive Officer Robert Kotick, Activision is mulling price increase for next generation console games. Kotick used movie industry analogy to make his point in interview with Investor’s Business Daily. Matt Saunderson was kind enough to post this news at Advancedmn. Movies still run the standard two hours but ticket prices have been increasing steadily, while the game industry has seen game budgets double while offering more content for players, despite these developments, game prices have remained steady.
I would say that until now game industry has managed to maintain this price level, because sales have more than doubled, therefore bringing in more revenue – Elementary, my dear Watson. It has been good time for players, better games at the same (high) price. With this evident development of increasing production costs and new generation consoles, well, I am not so certain that market would react to price hike positively. I could be wrong, but I think that raising prices will cut the amount of games that players are buying. This would further drive up sales of those popular and well-marketed games that are in the hands of major publishers. I see a spiralling vicious circle that creates mega franchises, which come out to the markets year after year and monopolize or at least oligopolize that specific genre.
I would say that until now game industry has managed to maintain this price level, because sales have more than doubled, therefore bringing in more revenue – Elementary, my dear Watson. It has been good time for players, better games at the same (high) price. With this evident development of increasing production costs and new generation consoles, well, I am not so certain that market would react to price hike positively. I could be wrong, but I think that raising prices will cut the amount of games that players are buying. This would further drive up sales of those popular and well-marketed games that are in the hands of major publishers. I see a spiralling vicious circle that creates mega franchises, which come out to the markets year after year and monopolize or at least oligopolize that specific genre.
Sunday, March 13, 2005
Eidos facing the deadline
Thursday BBC ran a story about the latest blight of Eidos. Share price plummets and deadline to satisfy the loan conditions is speeding closer. RBS bank wants to see an acquisition offer on a table by 25th of March. If Eidos passes this deadline without having a legitimate offer, the bank can force Eidos to start selling their property, in order to recover their loan. This is a binge in which I would not like to be.
Eidos claims to have an offer, but it has not been validated yet so it remains to be seen if the white knight rides to the game. The negotiating position of Eidos is horrible, titles have been postponed or failed and cash flow of the company is in almost as bad shape as the budget deficit of the States.
Situation makes and interesting case for game theorists. Is it better to buy Eidos now, before possible sale of assets, which will most definitely happen in auction style and accept the rather hefty debt load in which Eidos is sailing. On the other hand, one can wait until Eidos has to sell property and bid for those properties against tough competitors that could be expensive. Bigger companies should move in now, because that way they can have just the titles they want and sell the rest.
Two scenarios come to mind:
1. New company on the block - that means a company outside the game industry - comes and buys Eidos and secures good distribution and titles. Eidos continues as a publishing and development company. People rejoice, no matter who was the buyer.
2. One of the old competitors puts the money to the table, takes all the titles they want and sell the rest, which are not complementing their product slate. Eidos publishing arm will be disbanded, while some selected development studios might escape the axe. Proceedings form the sales will go to pay off as much of Eidos debt and then the buyer continues business as usual. People complain and nag on discussion forums and black paint the buyer.
Eidos claims to have an offer, but it has not been validated yet so it remains to be seen if the white knight rides to the game. The negotiating position of Eidos is horrible, titles have been postponed or failed and cash flow of the company is in almost as bad shape as the budget deficit of the States.
Situation makes and interesting case for game theorists. Is it better to buy Eidos now, before possible sale of assets, which will most definitely happen in auction style and accept the rather hefty debt load in which Eidos is sailing. On the other hand, one can wait until Eidos has to sell property and bid for those properties against tough competitors that could be expensive. Bigger companies should move in now, because that way they can have just the titles they want and sell the rest.
Two scenarios come to mind:
1. New company on the block - that means a company outside the game industry - comes and buys Eidos and secures good distribution and titles. Eidos continues as a publishing and development company. People rejoice, no matter who was the buyer.
2. One of the old competitors puts the money to the table, takes all the titles they want and sell the rest, which are not complementing their product slate. Eidos publishing arm will be disbanded, while some selected development studios might escape the axe. Proceedings form the sales will go to pay off as much of Eidos debt and then the buyer continues business as usual. People complain and nag on discussion forums and black paint the buyer.
Thursday, March 10, 2005
Electronic Arts pays overtime
Electronic Arts is planning to change its compensation policies so that it starts to pay overtime salary for some workers. However, Electronic Arts says that in the future those workers will not be eligible for bonuses or stock options. Compliance is a smart move, but then again, Electronic Arts is know of its excellent track record of smart moves.
This decision will fundamentally strengthen EA’s financial position against overtime claims, because people could be discouraged to make such demands now as they see that things are about to change. This could make those threatening clouds of workers’ legal challenges to go away, hence saving lot of money for Electronic Arts also the company avoids paying for past overtime, so this decision potentially affects only future personnel expenses. There are also added benefits to this decision, which relate to improved goodwill among workers and customers. At least for Electronic Arts it is a win situation.
This decision will fundamentally strengthen EA’s financial position against overtime claims, because people could be discouraged to make such demands now as they see that things are about to change. This could make those threatening clouds of workers’ legal challenges to go away, hence saving lot of money for Electronic Arts also the company avoids paying for past overtime, so this decision potentially affects only future personnel expenses. There are also added benefits to this decision, which relate to improved goodwill among workers and customers. At least for Electronic Arts it is a win situation.
Tuesday, March 08, 2005
Yahoo acquires Stadeon
Yahoo makes a push for mobile game industry by acquiring Stadeon a company that has the technology to turn internet-connected phones into game clients. People could be playing against other people connected to internet no matter mobile or fixed line.
Convergence is the everlasting rumor in the ranks of mobile devices. This plays straight into that pocket. Yahoo is already strong in internet content distribution, not that much in content creation. Sensible move from Yahoo as they now are able to strengthen their mobile front and take their net services increasingly to phones. Time schedule is very tight, since we can expect to have the Yahoo branded online mobile games by the end of the year.
Convergence is the everlasting rumor in the ranks of mobile devices. This plays straight into that pocket. Yahoo is already strong in internet content distribution, not that much in content creation. Sensible move from Yahoo as they now are able to strengthen their mobile front and take their net services increasingly to phones. Time schedule is very tight, since we can expect to have the Yahoo branded online mobile games by the end of the year.
Monday, March 07, 2005
WoW will also land on Taiwan
Taiwanese game company Soft World announced today that it had stroke up a deal with Blizzard to publish the World of Warcraft in Taiwan. Blizzard is blowing over all continents, is it the climate change or something?
How WoW will do in China?
Pacific Epoch is such a great source for news on Chinese online games. My Chinese is bit rusty (honestly I can speak and read it), so the fact that they have most of their content in Chinese and give out translated versions for fee is bit of a downer. Anyway, they once again delivered a sound article about online games in China. This time they talked with 64 Chinese gamers in Shanghai to get some first hand market information. Shang Koo wrote the article and it is called “Pacific Epoch WoW Survey”.
Shang Koo states some basic features of Chinese online game market. First, games are not as familiar for Chinese gamers as they are for their Western counterparts, so games that are bit simpler, like 2D “Legend of Mir 2” are doing relatively well. Another point that Shang Koo makes is the somewhat outdated hardware that Chinese gamers are equipped with. It is difficult to run the graphically rich games, a fact that will narrow down the potential user base to well-developed areas.
In the analysis, it was suggested that Lineage II would be the biggest looser as the “World of Warcraft” is launched. Both games require high performance computers so lower level games would not be affected. LAN gamers will also see the “World of Warcraft” as an interesting game, since they are familiar with the game world. However, the analysis suggests, that many LAN players prefer RTS and FPS games and are not attracted to MMORPG. Final results indicate that WoW will not be as popular as hyped and the success that it will get comes from cannibalizing the existing MMORPGs and later on the success of the game will be dependent on hardware upgrades.
Good article, Google it while it still is available somewhere.
Shang Koo states some basic features of Chinese online game market. First, games are not as familiar for Chinese gamers as they are for their Western counterparts, so games that are bit simpler, like 2D “Legend of Mir 2” are doing relatively well. Another point that Shang Koo makes is the somewhat outdated hardware that Chinese gamers are equipped with. It is difficult to run the graphically rich games, a fact that will narrow down the potential user base to well-developed areas.
In the analysis, it was suggested that Lineage II would be the biggest looser as the “World of Warcraft” is launched. Both games require high performance computers so lower level games would not be affected. LAN gamers will also see the “World of Warcraft” as an interesting game, since they are familiar with the game world. However, the analysis suggests, that many LAN players prefer RTS and FPS games and are not attracted to MMORPG. Final results indicate that WoW will not be as popular as hyped and the success that it will get comes from cannibalizing the existing MMORPGs and later on the success of the game will be dependent on hardware upgrades.
Good article, Google it while it still is available somewhere.
Sunday, March 06, 2005
Online game copyright case in China
JoongAng Daily, Cho Young-tak and Koo Won-mo as the writers, had a wonderful story about the deal between We Made Entertainment and Shanda. The story is called “China proves both profitable, perilous”, Google it while it still is available in the net.
Anyhow, these companies got together in July 2001 and in the beginning, everything went fine. What the deal was all about was that We Made Entertainment needed an operator partner in China for their online game “Legend of Mir 2” and Shanda wanted to have a quality game for distribution to compete against other Chinese online game operators.
The beginning was absolutely stunning, within a year after the market launch, this online game had become a massive hit, garnering about 65% of the market. With the help of this success, Shanda established more connections to Korean online game companies – soon Shanda had become the market leader in online games. However, problems between the two companies evolved from other basic settings. Whenever there was a technical problem, Shanda had to wait assistance from Korea while customer complaints poured in.
Shanda realized the awkward situation and slowly, with the help of substituting Korean titles, was able to diminish its dependence on We Made Entertainment. Finally Shanda published its very own online game called “The World of Legend” and surprise, surprise, We Made Entertainment thought that it reminded too much of their “Legend of Mir 2” online game. Dispute was laid to the table. We do not have the results of this copyright violation case, as it still drags on in Chinese court. This could be an interesting trend setting case that – I bet – many foreign online game companies are following.
Anyhow, these companies got together in July 2001 and in the beginning, everything went fine. What the deal was all about was that We Made Entertainment needed an operator partner in China for their online game “Legend of Mir 2” and Shanda wanted to have a quality game for distribution to compete against other Chinese online game operators.
The beginning was absolutely stunning, within a year after the market launch, this online game had become a massive hit, garnering about 65% of the market. With the help of this success, Shanda established more connections to Korean online game companies – soon Shanda had become the market leader in online games. However, problems between the two companies evolved from other basic settings. Whenever there was a technical problem, Shanda had to wait assistance from Korea while customer complaints poured in.
Shanda realized the awkward situation and slowly, with the help of substituting Korean titles, was able to diminish its dependence on We Made Entertainment. Finally Shanda published its very own online game called “The World of Legend” and surprise, surprise, We Made Entertainment thought that it reminded too much of their “Legend of Mir 2” online game. Dispute was laid to the table. We do not have the results of this copyright violation case, as it still drags on in Chinese court. This could be an interesting trend setting case that – I bet – many foreign online game companies are following.
China online game sheet
Pacific Epoch has put together a database of online games in China. All sorts of information and it goes with relatively affordable price, especially if you happen to be an analyst - 500 bucks for initial piece and from then on 100 bucks for monthly update.
This seems to be quite extensive and easy access to Chinese online game industry, so check it out. One thing that is especially interesting is that they promise to offer information on the status of specific online games - is it in commercial use or testing, is it any good etc. I know that I would go shopping if I would actually work for analyst company. Product goes with the name of "China online game sheet, February 2005", I suppose the next update will be called - this will stun you - "China online game sheet, March 2005".
This seems to be quite extensive and easy access to Chinese online game industry, so check it out. One thing that is especially interesting is that they promise to offer information on the status of specific online games - is it in commercial use or testing, is it any good etc. I know that I would go shopping if I would actually work for analyst company. Product goes with the name of "China online game sheet, February 2005", I suppose the next update will be called - this will stun you - "China online game sheet, March 2005".
Friday, March 04, 2005
Take-Two Interactive Q1 numbers spell trouble?
Take-Two Interactive had a windfall with the continuing success of Grand Theft Auto: San Andreas. According to the first quarter numbers, publishing increased its share as revenue bringer, compared to distribution. GTA is so hot that Take-Two Interactive suddenly has its pockets full of money, apparently not knowing what to do with it. Sure, they say that they are broadening their product portfolio and extending their market reach. All of these are good plans, but take lot of time to materialize. So, we have a situation, where investors are not willing to add the possible future valuation to the Take-Two Interactive share price (stock has gone up, but that is because of the GTA), because it takes more than just announcing the future plans and buying some talent to turn the future potential into reality. Situation has all the ingredients for hostile take-over. Well-managed company with good product slate and fat wallet, also future plans are mapped but still in such a state of infancy that they are easy to chop off if required. With market valuation of about 1,7 billion dollars, which is about half of Activision’s price tag, Take-Two is a snap for a predatory company.
Thursday, March 03, 2005
Play at work
I already wrote about Nexon, the South Korean online game company that is overshadowed by rival NCsoft. I took a note that Kart Rider is one of their strong titles. I went to their homepage and tried to gather some info from those Korean pages. Googling was tiresome and as I didn’t get lucky, I just gave up and concluded that Kart Rider must be pretty decent title.
Now, thanks to the IOL.co.za, I finally got the twist that this game has. Really, really cool it is... hope you don’t mind me writing poetically like this. They have this wonderful feature that allows player to shrink the game window in a flash. Now, if I could be playing online games at work with little help from my game system then I wouldn’t be surprised if my work efficiency would go down. Poor South Korean government, their domestic companies have innovated the work efficiency down the tubes. Nothing good will come from this. It wasn’t only Nexon that had such a handy feature to avoid working, company named CCR has actually applied patent for their “stealth” technology and plans to develop more titles for this new market segment. Hilarious, I must say.
Now, thanks to the IOL.co.za, I finally got the twist that this game has. Really, really cool it is... hope you don’t mind me writing poetically like this. They have this wonderful feature that allows player to shrink the game window in a flash. Now, if I could be playing online games at work with little help from my game system then I wouldn’t be surprised if my work efficiency would go down. Poor South Korean government, their domestic companies have innovated the work efficiency down the tubes. Nothing good will come from this. It wasn’t only Nexon that had such a handy feature to avoid working, company named CCR has actually applied patent for their “stealth” technology and plans to develop more titles for this new market segment. Hilarious, I must say.
Ubisoft at it again
I did say that Ubisoft needs to roll out news and announcements, in order to convince the investors that they still are a valid investment. But boy, is this getting ridiculous or what? Ubisoft has been pushing out something new every week, purchase this, acquire that, license something else. This time they announced that they are acquiring MC2-Microids' Canadian operations. I think that they just have to shop around to meet their ambitious plans of developing Montreal studios.
Taipei Game Show
Taipei Game Show has passed, but was a huge success. As ever, the show was packed with enthusiastic gamers and game companies. Taipei Times run an article, written by Gavin Phipps, on the show and I also checked some information from other sources, including the show’s homepage (outdated by the way). This game industry trade show is especially close to my heart because I have attended it twice. It is really quite remarkable happening and illustrates very clearly the market potential in Asia. Anyhow, let’s go to the issues, which were at the spotlight in Taipei, this year.
According to the Taipei Times article, this year’s domestic participation was higher than previous years. For long, there have been big local game companies like online game operator Gamania, but this year it was the local game developers, which managed to get publics attention. Two years ago, while I was there, aquarium screensavers seemed to be the brightest financial hope for local ”game” developers, not counting those local online game titles – RPG and RTS clones.
What comes to present trends, Gavin notes that while PC segment is still going on strong, the console market is the way of the future. Reasons are the same business related facts that can also be spotted on other markets – it is expensive to update computer, while consoles have much longer lifespan. Locally the additional advantage for consoles comes from increasingly localized content. Gamers can now get their hands on titles that are culturally closer to Asian mentality than your average Western title. Anime styled games have become more popular and the market has more variety than before.
According to the Taipei Times article, this year’s domestic participation was higher than previous years. For long, there have been big local game companies like online game operator Gamania, but this year it was the local game developers, which managed to get publics attention. Two years ago, while I was there, aquarium screensavers seemed to be the brightest financial hope for local ”game” developers, not counting those local online game titles – RPG and RTS clones.
What comes to present trends, Gavin notes that while PC segment is still going on strong, the console market is the way of the future. Reasons are the same business related facts that can also be spotted on other markets – it is expensive to update computer, while consoles have much longer lifespan. Locally the additional advantage for consoles comes from increasingly localized content. Gamers can now get their hands on titles that are culturally closer to Asian mentality than your average Western title. Anime styled games have become more popular and the market has more variety than before.
Slips and slops
It is an awful feeling to be wrong! I just got off from writing about some innovative distribution methods of independent game developers and used Laser Squad Nemesis from Codo Technologies as an example. Little did I know that Got Game Entertainment had already announced that they are going to co-publish the game with Merscom. What I can say, but smart move from Gollop brothers. They are going to get more subscribers for the game and possibly a nice share from retail sales, well that of course depends on their negotiating power.
Funny thing this blogging, one never has enough patience to do proper background check. It is all about putting out that one idea that is bouncing in your head. Another actor in industry that has been putting out is IGE that slipped into sloppily guarded fan community of Vanguard – Saga of Heroes. IGE made few juicy offers, which some fan site operators could not refuse. Other people did refuse and now the whole some-day-to-be-player community of this game is in turmoil. The game’s developer, Sigil Games Online, doesn’t want to have anything to do with IGE, but IGE just can’t pass any opportunity to grab more virtual goods market share.
Funny thing this blogging, one never has enough patience to do proper background check. It is all about putting out that one idea that is bouncing in your head. Another actor in industry that has been putting out is IGE that slipped into sloppily guarded fan community of Vanguard – Saga of Heroes. IGE made few juicy offers, which some fan site operators could not refuse. Other people did refuse and now the whole some-day-to-be-player community of this game is in turmoil. The game’s developer, Sigil Games Online, doesn’t want to have anything to do with IGE, but IGE just can’t pass any opportunity to grab more virtual goods market share.
Tuesday, March 01, 2005
UbiSoft sports up the game against EA
Troy Wolverton from TheStreet.com wrote an excellent piece, covering the slight setbacks that Electronic Arts has had lately – Ubisoft was one of those companies stirring the boardroom of EA. Ubisoft has signed a deal with Vijay Singh and is obviously laying plans to battle EA’s Tiger Woods franchise. Ubisoft also bought source code to NFL Fever from Microsoft. This is very innovative move from Ubisoft’s part. They take the old wisdom and turn in upside down – if you don’t want to join them, beat them.
Quick look to online game markets in Asia
Square Enix president Youichi Wada spoke about online game market in Asia. GameSpot run an article about it. It was interesting to notice that actual market values are pretty even among the three big areas – China, Japan and South Korea. Therefore the enthusiasm towards China is, as always, because of the huge market potential, well at least that is my observation. Mr. Wada also talked about their business models in China. Arcade income model seems to be perfect fit for China, because people there play the games in internet cafés.
Growing pains for Shanda
It is a great feeling to be correct on something. Just the other day, I speculated that Shanda might have some troubles ahead while trying to integrate all those soon-to-come acquisitions in the areas outside online gaming.
According to the Pacific Epoch, top officers from Shanda subsidiaries – QiDian, Digital Red and Holdfast – told to the press that there are some serious hurdles on the way to fully integrate these subsidiaries to the mother company. However, they all agreed that Sina acquisition would benefit them. I for one, am keeping my fingers crossed for successful integration, it would be a shame to waste shareholders money.
Shanda has been busy on another front too. According to the same source, Shanda is planning for a big announcement later this week. It is said to have something to do with IPTV project that they are in together with Huawei and UTStarcom.
I must once again stress that it is very difficult to be a modern day Leonardo. Company can excel on many fronts, given big enough resources, but with limited financial backing, in order to reach success, company has to insert the genius of the Leonardo into their work. Obviously I am not qualified to judge whether Shanda has that extra something, all I can say is that CEO Chen has lot of confidence on himself.
According to the Pacific Epoch, top officers from Shanda subsidiaries – QiDian, Digital Red and Holdfast – told to the press that there are some serious hurdles on the way to fully integrate these subsidiaries to the mother company. However, they all agreed that Sina acquisition would benefit them. I for one, am keeping my fingers crossed for successful integration, it would be a shame to waste shareholders money.
Shanda has been busy on another front too. According to the same source, Shanda is planning for a big announcement later this week. It is said to have something to do with IPTV project that they are in together with Huawei and UTStarcom.
I must once again stress that it is very difficult to be a modern day Leonardo. Company can excel on many fronts, given big enough resources, but with limited financial backing, in order to reach success, company has to insert the genius of the Leonardo into their work. Obviously I am not qualified to judge whether Shanda has that extra something, all I can say is that CEO Chen has lot of confidence on himself.
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