The Digital Media Age is Upon US

January 9, 2009

The United States has entered the digital age of information and media. You can reach all sorts of media legally now on the internet. The Apple (AAPL) iTunes store now sells music without digital rights management. Before you were restricted on how you could use your music since they restricted it to your iPod and the number of copies you could make. Now you actually own the digital copy to do whatever you please with it. If you wanted to watch TV shows on the internet, you were in shaky territory unless the show’s website happened to put up their episodes. Now there’s Hulu where you can watch old episodes, new episodes from NBC, FOX, Comedy Central and other networks. For a while you could stream sports games with paid online subscriptions. The rest of television has caught up. The US also has access to international television too with crunchyroll for Japanese animation and dramafever for Korean dramas. Of course these are subtitled in English soon after they are aired in their respective countries. These were available illegally and in the gray area of the law before, but now they will be completely legal with these new services. Right now, you can get all sorts of media all at your fingertips legally.

The digital TV switchover in February is only a month away with Obama calling for an extension after the switchover has already been delayed many times already. My take on it is that those people who aren’t ready now will never be ready until their TV goes out. When it goes out they will ask other people who can help them.

In the near future, I foresee you being able to tell your Sony (SNE) Playstation 3 to record TV and play it back anywhere with your Playstation Portable anywhere you have internet access. There are already computer programs that let you record TV and watch it anywhere, but having this on the Playstation 3 will make it accessible to the mainstream market. Right, now you can stream Netflix videos with the Microsoft (MSFT) Xbox360. The Nintendo (NTDOY.PK) Wii in Japan also has video streaming.

In the not too distance future, I see people going back to televisions or display devices after they become internet enabled. It will be like having cable television on-demand service for everything. Maybe buying stuff on the home shopping network from your television or researching more about something mention on the news.

Disclosure: I have current ownership in Nintendo.

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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.


Piracy and the Economy

November 16, 2008

Pirating may cause the Nintendo (NTDOY.PK) Wii to be in short supply for Europeans this year. This is not bootleg kind of piracy, but the kind where sailors board ships with guns in hand to hijack your ship. I’ve heard of piracy and kidnapping reports off the coast of Africa for a long time, but they haven’t taken center stage till the MV Faina was hijacked. The mass media and governments don’t mind when rich luxury yachts and ordinary cargo ships get hijacked, but the MV Faina was not any old cargo ship. It was loaded with tanks and ammunition for more killing in Sudan. NATO and Russia responded by spending more military ships to patrol the area, but as I’m writing this article, there was news of another hijacking. Even with all of our modern technology, the seas are still vast expanses of water. When I think of pirates, Spanish galleons filled with gold doubloons and talking parrots fill my head. Why are we hearing about pirates now?

According to the pirates, they were forced into piracy by illegal fishing. Some may think pirating is confined to Somali, because they lack a stable government, but there are also pirates in South East Asia. Their reason is also economic. Pirating is an easier way to make a living. As long as the is an incentive to pirate, there will be pirates.

Economic Impact

Shippers wishing to reach Europe from Asia are considering going pass the southern tip of Africa through the Cape of Good Hope instead of the Suez Canal to avoid pirates. This longer journey will add 3 weeks to the trip and increase the fuel surcharge. The increased patrolling will incur addition costs to NATO and Russia. Shippers are also equipping their vessels with additional anti-pirate equipment, such as security personnel and water hoses keep pirates from climbing on board.

I predict that in the near future, pirating will cease to be an important issue. As the economy is going south, it makes no sense to export goods halfway across the world. Then the pirates will have nothing to loot. Thus, the global financial crisis affects everyone.


Application of Stock Picking Basics (1)

October 6, 2007

I personally abide by buying what I know when purchasing stocks as mentioned in Stock Picking Basics (1). For illustration I will apply specialized knowledge in addition to exposure to the products and services of those companies. I like to play a lot of video games, so I visit gaming websites that have articles, news and reviews like 1up, ign, and gamespot. Each year there is an expo called E3 where big announcements are made. In 2006, the Nintendo (NTDOY.PK) Wii was announced with actual playable systems on the show floor. The writers of the gaming websites wrote extremely favorable reviews of the gaming console. At this time, the Nintendo DS was sold out and proved itself over the initial skepticism. Since the DS already illustrated what a little creativity can do, the Wii had untapped potential. The expo was in May and the Wii would come out in November. Another factor in Nintendo’s favor as a profit making entity is that they never lose money selling a game console unlike Sony (SNE) and Microsoft (MSFT). The successful games are mostly games made by Nintendo too. They make money selling the console and the associated software. All of this information would lead one to believe that Nintendo was a good investment. Indeed it was.

Buying a stock is only half of the work in investing. The other half is knowing when to sell. How would I know when to sell Nintendo? One indicator is the software sales and quality of software. If they continue to make good games, people will continue to buy them. Another indicator is when it stops being sold out at all retailers. Since the Nintendo Wii is in such scarce supply, there is a website called wiitracker that displays if the Wii is in stock at a number of retailers. It also tells you how fast the Wii sold out. If you buy what you know, you will always have a gauge on the company performance. It beats reading financial reports that are read by thousands of other people.

I happily own Nintendo (NTDOY.PK).


Electronic Entertainment Expo (E3) Recap

July 28, 2007

This year’s E3, the video game industry’s annual convention, has come and gone. Even though it took place at a smaller venue (Santa Monica instead of Los Angeles), the big three still made important announcements.

Microsoft (MSFT)

They unveiled some type of kiddie remote which had big buttons. This is part of their effort to appeal to the casual gamers and bring younger children on to the Xbox360 platform. Other than that they only showed games in development. Considering what they showed the company is in cruise mode; just allowing developers to create more content and tweaking the cooling of their hardware. A price cut may be in store before the holiday season. The switchover from 90-nm to 65-nm allows them to make more chips on the same area, reducing costs. I’m personally waiting for these new chips before purchasing an Xbox360, because the Xbox360 is known to be noisy due to the cooling fans. The price drop, improved aesthetics, and plentiful content will help drive sales Holiday 2008. Their blockbuster game, Halo 3 will be ready in time for the holidays. This improved hardware will also reduce the losses incurred by repairing broken consoles, which has cost more than a billion so far. The games in development are for hardcore gamers and ones that hardcore gamers can play in front of their kids.

Nintendo (NTDOY.PK)

At the beginning of the press conference, they announced that they had won this generation’s console war. They are indeed in a position to be envied with hardware and software flying off the shelves. The most important announcement was the new peripheral, the Balance Board and its accompanying game, Wii Fit. The Balance Board senses your weight distribution on a board placed on the ground. By shifting your weight, you can interact with the character on the screen. Initial reports from the show floor indicate that the concept works and is fun even for hardcore gamers. The main target of Wii Fit is perfectly clear when you start seeing the yoga poses. Soccer moms will eat this up. They are ensured to sell millions of copies. Another peripheral announced was the Wii Zapper, a plastic case to put the WiiMote and Wii Nunchuck in to create a light gun for only $19.99 including game. This is perfect for simulating the guns at arcades and for killing zombies in Resident Evil: Umbrella Chronicles. The first party line up of (Super Smash Bros. Brawl, Super Mario Galaxy, Metroid Prime 3: Corruption, and newly announced Mario Kart Wii. Although the bulk of the announcements were for the Wii, the DS Lite handheld is also doing well with The Legend of Zelda: Phantom Hourglass. If all this wasn’t enough, Nintendo is now the 5th largest company in Japan.

Sony (SNE)

One thing I was extremely happy about was the redesigned PSP. I broke mine, so I was waiting for their new and improved version. The new PSP has longer battery life, is thinner and lighter. The game lineup is still lacking, but the PSP’s sales are starting to increase. I know people who have bought it and keep it in their drawer.

The PS3 underwent a pseudo-price drop. They are shifting around the prices and configurations by putting new models with bigger hard drives and bundled games at the $599 price point and pushing down the older configurations to $499. When those older configurations sell out, they will not be replaced. There are 2 killer applications that will drive the sale of the console. They are Metal Gear 4 and Gran Turismo 5. Unfortunately both of them will not make it for the holidays. Gran Turismo 5: Prologue, a stripped down version will come out in October in Japan to wet racer’s appetites. Their online experience called Home is shaping up to integrate games and a virtual 3D-world together. In the online arena, NCSoft, the makers popular of MMORPGs will make the PS3 their sole console platform since it has a hard drive. One thing that Sony does right is push upgrades that enhance functionality of their machines.

Outlook

MSFT is still having trouble penetrating the Japanese market. I know two people with an Xbox360. I own a Wii and NTDOY. My male friends have their own Wii. My female friends own DS Lites. My rich friends have PS3s. The PS3 has a lot of momentum with the brand, but they need to get the ball rolling. By end of 2007 if not sooner, the Wii will be the dominant platform.