Recession Durability: Video Games

December 8, 2008

I follow the video game industry intently from the small independent developers who make casual games to the AAA titles that make billions of dollars. This industry has surpassed the movie industry in terms of sheer revenue recently and continues to grows as the Nintendo generation ages and continues to buy games for themselves and their children. Finally, video games are considered mainstream entertainment. Games are everywhere from your mobile phone to your home entertainment system.

In this recession, people are turning to industries, which might weather the current storm. Walmart (WMT) has done rather well since the middle-class is cutting back and saving more money. Video games have been brought up as something that is resilient to a recession. Video games are very cheap on a per hour cost of entertainment. Some can be played over and over again. In the Great Depression people turned to cinema to escape their woes. Video games are the modern day cinema.

Video Game Tidbits

The major gaming console players are the Nintendo (NTDOY.PK) Wii with ~50% market share and the rest of the market split between the Sony (SNE) Playstation 3 and the Microsoft (MSFT) Xbox 360.

After many years of consolidation, Activision Blizzard (ATVI) and Electronic Arts (ERTS) are the two major publishers left. Take-Two (TTWO) is a smaller player, who dodged a hostile takeover from Electronic Arts.

Square-Enix (SQNXF.PK) and Konami (KNM) are a prominent Japanese publishers.

Korea’s NCSoft (036570.KS) specializes in online mulitplayer games.

Gamestop (GME) retailer wants to expand.

Casual gaming sites like BigFishGames and China’s 9you are getting large investments.

Apple’s (AAPL) iPod Touch and iPhone are growing gaming platforms, which might represent the future of gaming.

But not all gaming companies are prospering. Midway (MWY) is close to bankruptcy.

There are a few ways gamers can save money on their games.


Small Cap Talk: TransGaming

July 9, 2007

At the Apple (AAPL) World Wide Developer’s Conference in San Francisco on June 11, 2007, Electronic Arts (ERTS) announced that they would be bringing games to Mac computers. EA is one of the biggest game publishers with titles such as, The Sims and various sports games like Madden. EA now sees Macs as a viable market, but why now? The Apple iPod is one factor. One of the places that one can buy an Apple iPod is an Apple Store. These stores also happen to have Macs all over the place. The increased visibility of Apple computers, has helped the them gain market share. The market growth is greatest in the laptop market, because of Apple’s superior design of their laptops. As a software developer, I see many fellow developers programming on their MacBook Pro laptops. Additionally, the image of Apple computers has changed since they rolled out their OS X operating system which is based on rock solid FreeBSD operating system. Every group of friends has a computer person they go to for computer problems and recommendations. This computer person is now recommending the purchase of Apple computers. People are buying more Apple computers, so they might also like to play games on their computers too. This gaming need was recognized by EA.

What is the current state of gaming on the Mac?

There are few companies that make games for the Mac such as Blizzard, the publisher of the massive multiplayer online role playing game (MMOPG) World of Warcraft (WoW). One of the questions I get asked by people when I recommend a Mac is, “Does it play WoW?” The answer is, “Yes!” The Mac platform has been largely ignored because of its smaller user base. The majority of games developed are for Windows. For those Mac owners who cannot live without their games, there are several ways to play Windows games on Mac hardware. One way is to install Windows on your Mac and use Boot Camp to boot into Windows. Another way is to run Windows on a virtual machine using Parallels or VirtualBox. Boot Camp is inconvenient and Parallels suffers in performance. There has to be some easier way of playing games on the Mac.

What does this have to do with TransGaming (CDNX:TNG.V or TNSGF.PK)?

There are several ways for EA to bring games to the Mac. One way is to program a game from the ground up like with any other platform. Another way is to take an existing Windows game and port it, which takes time but not as much as writing a game from scratch. A third option is to use TransGaming’s Cider technology that acts as a bridge between Windows commands and Mac OS X commands. This allows EA to bring games quickly to the Mac with Cider as a translator for Windows games. Cider is based on TransGaming’s experience with WINE, a program that lets Windows programs run under Linux. TransGaming has an application called Cedega, which specially makes it easier to run Windows games on Linux.

What is the future state of gaming on the Mac?

As more people buy Macs, there will be more games on Macs, which will make more money for game studios, which will in turn make more games for Mac perpetuating the cycle. TransGaming’s Cider is a stopgap measure that allows Windows games to run on Mac. As more focus turns to the Mac, studios will write games specifically tailored for the Mac and thus will not need to use Cider technology to translate Windows games to run on Mac. Cider’s own success will be its downfall. Long term outlook for TransGaming is not amazing since they produce niche products to bridge platforms. Short-term outlook is good as more and more publishers sign on to use Cider technology to produce Mac games.

The price of TransGaming jumped from $0.50 CDN the day before the announcement to $0.69 CDN on June 13th. A nice 38% gain for 2 days, but the current price is at $0.60 CDN.