Wednesday, June 16, 2010

Choosing my 3 stocks

Note to Professor Blundell:  This post is still in progress!

There are many different video game companies out there.  What helped to narrow my search down, however, was that most of them are NOT publicly traded.  In fact, most of the companies I had an interest in working for were private subsidiaries of a diversified blanket company.

I want to follow the software development industry as opposed to hardware.  Some of the most well-known companies distribute both (such as Nintendo).  Why software?  I think it's more valuable; liquid, adaptable to change.  (Perhaps I'm wrong in assuming this?  I will have to find out!).  I'm also interested in working for markets that deal almost solely with intellectual property, and am concerned with its future amid threats such as much easier file sharing.

So one of my stocks was Electronic Arts.  They haven't been doing so well lately, partially as a result of being too conservative with their platform support, and narrowing their possible user base because of it.  So I would consider this almost a "control" stock, one that I'll use to reference the (hopeful) growth of the others.
Their company description is:
"Electronic Arts Inc. develops, markets, publishes, and distributes video game software and content. The company’s games include a range of categories, including action-adventure, casual, sports, family, fantasy, racing, music, massively-multiplayer online role-playing, simulation, and strategy. Its portfolio of properties includes various brands, such as Need for Speed, The Sims, Spore, Dead Space, Mass Effect, and Battlefield; and EA SPORTS Active, Dragon Age, Origins, and Dante’s Inferno. The company’s portfolio of games based on licensed intellectual property includes sports-based titles, such as Madden NFL Football, FIFA Soccer, and Tiger Woods PGA Tour, as well as titles based on brands, such as Harry Potter and Hasbro. It also co-develops, co-publishes, and/or distributes video games that are developed and published by other companies, including the MTV Games/Harmonix series Rock Band and the Crytek series Crysis. The company’s games are played on various platforms, including video game consoles, personal computers, handheld game players, and mobile devices. It offers its products for videogame consoles, PCs, and handhelds on physical media, such as disks and cartridges that are sold at retailers; and game content and services online. The company provides its products through mass market retailers, electronics specialty stores, game software specialty stores, and online stores. It has operations in North America, Europe, Australia, Asia, and Latin America. Electronic Arts Inc. was founded in 1982 and is headquartered in Redwood City, California."

My next stock is Activision Blizzard Inc. [ATVI], and has been doing quite well.  I initially was interested because Blizzard entertainment, the creator of the very successful "World of Warcraft"

Here is the company description:
"Activision Blizzard, Inc., through its subsidiaries, publishes online, personal computer (PC), console, and handheld games worldwide. The company develops and publishes PC-based computer games and maintains its proprietary online-game related service, It publishes interactive software products and peripherals. Its products cover various game categories, such as action/adventure, action sports, racing, role-playing, simulation, first-person action, music, and strategy. Activision’s products comprise Monsters vs. Aliens, Guitar Hero, X-Men Origins, PROTOTYPE, Transformers, Ice Age, Wolfenstein, Marvel Ultimate Alliance, Bakugan Battle Brawlers, DJ Hero, Band Hero, Call of Duty, Tony Hawk, Guitar Hero, Three map packs for Call of Duty, True Crime, Spider-Man, Bakugan, Blur, and Singularity. Its customers include retail outlets and distributors, including mass-market retailers, consumer electronics stores, discount warehouses, and game specialty stores. Activision Blizzard, Inc. is based in Santa Monica, California."

Finally, I'm also going to follow Shanda Interactive Entertainment Ltd. (SNDA).  I think this would be an interesting one, because it focuses mainly on online games in the Chinese market, which is supposedly booming!
Here is the company description:
Shanda Interactive Entertainment Limited, an interactive entertainment media company, operates online games in the People’s Republic of China. It offers a portfolio of entertainment content, including massively multi-player online role playing games (MMORPGs), which comprise Latale, Dungeons and Dragons Online, Fengyun Online, and World Hegemony. These MMORPGs are action-adventure based, and draw upon various themes, such as martial arts, combat, fantasy adventure, and historical. The company’s portfolio of entertainment content also includes Kung Fu Kids, Tales Runner, Push Push Online, and Popland casual games; Chinese language original literature portals consisting of Qidian, Jinjiang Literature City, and; and online chess and board games. In addition, its portfolio of entertainment content includes a network personal computer (PC) game platform, which allows users of PC games to find and connect through the Internet with other players of the same PC games; and mobile games, including the mobile versions of Woool and Magical Land. The company offers Shanda Online (SDO), a community and an online entertainment content e-commerce service platform, which consists of an online payment and billing system, a distribution network, and a marketing platform, as well as a customer relationship management system, including a customer information management system and customer service center; EZ Center interactive entertainment platform; and EZ Pod hardware product. It markets its games through traditional and online marketing programs and promotional activities comprising in-game events, in-game marketing, peer user recommendation program, open beta testing, and offline efforts, as well as through word-of-mouth. The company has strategic cooperation agreement with Kingsoft Co., Ltd. and collaboration agreement with Zhejiang Satellite Television. Shanda Interactive Entertainment Limited was founded in 1999 and is based in Shanghai, the People’s Republic of China.

I initially had chosen NCsoft [036570.KS] instead of Shanda Interactive.  However, NCsoft is part of the Korean stock exchange, and was not recommended by my professor due to unpredictability of that kind of investment.  Also currency conversion is annoying!

(A stock I'm not going to "officially" follow is eGames, Inc.  (EGAM.PK)  This is a company that makes mild, e-rated games for children.  .  It has become much more socially acceptable to allow young children to play games, probably due mostly to the first gaming generation reaching the early parenthood age.  Perhaps these new parents, who are still gamers themselves according to polls, resent their parents, who didn't understand video games and limited them?  However, I still wouldn't put this in the same category of what I'm looking at.)

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