Beyond Take-Two and Electronic Arts: Video game stock roundup

As an investor in video game stocks, I'm beginning to worry that consolidation will remove pure-play opportunities for trading in my favorite sector. Activision (ATVI) got bought (sort of) by Vivendi, and now Take-Two (TTWO) is probably going the way of Electronic Arts (ERTS). The TTWO buyout is not all that surprising--I first speculated ERTS would take them over back in December on my personal blog. Lucky guess, even an amateur surfer catches a wave now and then. But the question now is what to do with an industry that's changing rapidly.

Let's start with the good. Nintendo (NTDOY) and Activision are the clear winners this time around. Nintendo looks attractive again after a pullback, and I wouldn't underestimate the realease of Wii Fit. The biggest headwind I see is that NTDOY has been trading with the Yen (Yen goes up, NTDOY goes down). As for Activision, they were gaining market share even before the addition of Blizzard. Everyone knows about World of Warcraft, but I don't think the Street is pricing in another Blizzard game: Starcraft II. The first Starcraft popular in South Korea, to the tune of professional tournaments being played in front of huge audiences and broadcast on TV. Starcraft II could be equally huge, and not subject to Korean writers' strikes! I own ATVI and NTDOY, proudly.

Does acquiring Take-Two make ERTS look more attractive? Find out here.

by Hillary Mark |  03/03/08