Ubisoft has a price?

Ubisoft can't seem to be able to shed the image of being a game stock. Game stock in a sense that they are a catalyst in coming game industry reorganization. Electronic Arts has been mentioned more than once, because they own that strategic 20% of Ubisoft.

Ubisoft itself hints that they would prefer some big media company as their partner in acquisition...

The latest development in this industry drama are the innuendos of Chinese game companies having their eyes on Ubisoft. It doesn't take but an ounce of imagination to put that just-acquired IPO capital into use.

Don't you think it's just so ironic that American capital could still be used to buy Ubisoft off the market?

Eidos management thrown out

It didn’t go exactly as the title says but it wasn’t far from it. Eidos shareholders sealed the fate of top management by voting in favor for the SCi offer. Board members made their own conclusions of the situation. It was out with the old in with the new. Now three persons from SCi govern Eidos. Another chapter has been written in British video game industry.

Ubisoft considers media concerns

This twist has been widely distributed, La Tribune, Market Watch, GamesIndustry.biz, Ferrago etc. Yves Guillemot commented that it could be interesting to team up (merge or something like that) with sizeable media company (Walt Disney or Time Warner) or with an equal game company.

To me it is quite strange how he wants to team up with big media company. Ubisoft would not be in balanced relationship in such a deal. Media giant would just absorb them and turn this little puppet into content transformer - let's make every popular series and movie into a video game...

I would be looking into arena of innovative and technologically advanced companies like Pixar, DreamWorks or maybe some special effects companies. This match would create (well, sure it is only my opinion) very interesting talent pool that could be sold for even higher bundle of money or that could function as an innovative industry leader. In this respect, a merger with a smaller video game company could be the most logical solution as there are no special needs to integrate operations and find special synergies.

Eidos deal locking on

Shareholders of Eidos approved the offer of SCi to purchase the company. Now it seems like there is very little room for any competing offers. Eidos is a goner and SCi is the taker. Great move guys. I hope Brits manage to keep this industry alive as so many others have gone under or been sold.

Game industry stocks fumbling

Electronic Arts, Activision, and THQ have shaken investors expectations for the future. This shows in the stock price of above-mentioned companies. It is especially the short-term expectations, which are rather depressing.

If the giants of the field are shaking, smaller competitors catch the cold in no time. No matter what is the situation of an individual game company, the valuation of these companies is going to fall. Luckily, many companies in the game industry are not public and therefore outside of these short term price fluctuations.

There are three companies that come in mind especially: Infogrames, Vivendi and Eidos. Because of their financial situation, these game companies will have trouble every time when somebody in the game industry sneezes. For example, as SCi’s price has been dwindling, the rumours for new offers on Eidos start to circulate.

Game companies that are working in the area of mobile games are whole different matter. Market size is growing at staggering speed. Development costs, although rising, are quite low. Game development cycle is short so companies are better able to manage revenue flow. Furthermore, just one mobile hit can bring lot of cash for the company.

Electronic Arts is in trouble

Lately we have been reading about the difficulties that Electronic Arts faces. Company seems to have taken the wrong off-ramp and is now stuck in competition and lack of demand for their games. Earnings have plummeted and there does not seem to be much to rave about in their present product slate. Shift to next generation video game consoles will just devour money and the company has also pushed very hard to invest into franchises. Bringing their game titles up to speed with content and technological development.

The problem for Electronic Arts is temporary. In relation to revenue its stock is expensive and near-future development looks dim so expect further decline in the price of the stock. Competitors like Activision and Take Two Interactive are cheaper and smaller. These smaller competitors now have good chances to score big growth with couple of successful games. Expect investors to make some changes in their video game company portfolios. Short-term prospects are appalling for EA, but it will get better just wait and see.

video game ads are coming again

Troy Wolverton wrote for TheStreet.com about advertising in video games industry and inside the games. He concluded that in-game advertising could bring extra one billion USD for the industry that now makes ten billion USD turnover per year.

He goes on and writes about the difficulties the industry is facing with the introduction of next generation game consoles. With next generation comes extensive network connectivity and there is some market speculation that business model will break out from the box. How fitting, because for the moment that model is solely based on retail box sales.

Anyone can see that this is quite a chuck of extra income for the industry. Given the challenges and possibilities of the future, it is quite likely that this new possible source of income will be embraced. As usual, it is likely that money talks or maybe even shouts and ads populate our beloved games.