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.


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.


Cashing in on the Digital TV switchover

April 6, 2008

For more information visit www.dtv.gov.

If you haven’t been watching TV, you may not know about the digital TV switchover. If you have been watching TV, you may still not know what the digital switch over is or why it is important. On February 19, 2009 TV stations will longer broadcast analog TV, which people have been using these last decades. All the TV stations will switch to digital broadcasting.

The previous standard NTSC is capable of 1525 lines at 29.97 frames per second, while the new standard, ATSC is capable of up to 1080 lines at 60 frames per second. This means the pictures are more detailed with more fluid motion. Also, the information is digitally encoded, so you’re either going to see a clear picture or no picture at all if you can’t get a signal. Fortunately this means that most of us will get a clear picture. I have personally bought a TV converter box and it is definitely an improvement. You may also ask why 29.97 frames per second. The answer is because they didn’t know about color when they made the standard. Television has been long overdue for an update.

Where do I get a digital converter box?

You can get a digital converter box for your old TV at any electronics store, but you should take advantage of a government program that provides $40 vouchers for converter boxes. I was surprised when the BestBuy (BBY) employee there asked me where I got my coupon. She asked for the website, but I did not know it off hand. My receipt however had the website printed on it. You can get up to 2 coupons per household at www.dtv2009.gov. The converter box I purchased was $60, so it was $20 + tax out of pocket expense.

What is spectrum?

Electromagnetic waves come in many frequencies ranging from gamma rays to radio waves with visible light (red, orange, yellow, green, blue, indigo, violet aka ROYGBIV) sitting in the middle. The government regulates and licenses certain ranges of frequencies, so you don’t have different people interfering with each other. Since the analog television frequency band is no longer in use, the government auctioned it off with Verizon Wireless (VZ) and AT&T (T) among the winning bidders. One use of the extra bandwidth is to provide more wireless data services, which has also garnered the interest of Google (GOOG). This will advance the trend of mobile devices using more data services like the iPhone from Apple (AAPL).

How do I invest in the digital TV switchover?

Instead of buying a converter box, a significant amount of people will finally make the switch by buying a new HDTV. Television manufacturers are sure to sell many new televisions in the near future. A quick look at BestBuy and you’ll see television sets from Sony (SNE), Samsung (005930.KS, 005935.KS), Sharp (SHCAY.PK), LG (LPL), Insignia and others. All of these different HDTVs share some common components such as the digital TV tuner and decoder chips from Microtune (TUNE), Texas Instruments (TXN), Maxim Integrated (MXIM.PK) and Analog (ADI). Looking at a technological standpoint, Texas Instruments also provides its DLP technology in affordable rear projection screens and high end digital projectors.

There are many ways to invest in the digital television switchover, but it is hard to see who will come out ahead since there are so many players in the game


Blu-ray wins High Defintion Battle

January 19, 2008

Blu-ray has been declared the winner of the high definition video disc format wars after Warner jumped ship to become exclusively Blu-ray. The war is not over, but since many people are declaring it over (including me), it only puts more nails in HD-DVD’s coffin. When you go to the store or ask your technically inclined friends, they will steer you in Blu-ray’s direction because HD-DVD can is perceived as inferior since there are less studios supporting it and the premium cable effect. When makers of some cables raised their prices, they sold more cables, because their product was perceived to be better since it was more expensive. Since the United States has not switched to digital versus over the air broadcasting, many homes including mine have yet to purchase a HDTV, which is needed to enjoy high definition video. From an investor’s standpoint, the switch over to digital broadcasting represents a good opportunity.

Sony (SNE) has much to gain with the success of Blu-ray since they are the ones who created the format plus provide the content and the hardware. The Sony Bravia LCD line is doing exceptionally well, enough to even dampen losses from the Playstation 3’s development costs. Sony’s Playstation Portable actually sells better than its state-of-the-art Playstation 3. The Playstation 3 is also seeing a pickup in sales after price cuts, which will only get better when Metal Gear 4 and other platform exclusive games come out.


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).


Stock Picking Basics (1)

October 1, 2007

With the advent of “systems” for investing and a new wealth of information about companies, it can be hard to figure out which stocks you want to invest in. While many commentators will tell you about a lot of different companies from a variety of industries, sometimes it helps to just simplify. One of the most basic stock picking adages is to buy what you know. There is also the corollary to buy what you buy. Now how do you put these sayings into practice.

If you are just starting out in the world of investing and have your strategy and comfort with risk evaluated, the next step is to start looking into companies you wish to invest in. Before looking for exotic companies with high returns, you really don’t even have to go to far to find successful companies that have had great returns already. For the poor college student/new college graduate that’s too lazy to cook, there are plenty of fast food restaurants that have been returning greater than 10% over the past few years. Companies like McDonalds (MCD), Wendy’s (WEN), Jack in the Box (JBX), and YUM Brands (YUM) which owns KFC, Taco Bell, and Pizza Hut are all strong companies with a lot of growth potential in the near term. When you go to these places for lunch or dinner then you’ll just be putting your money back into your investments. Plus, if you goes to these restaurants and watch how brisk business is at times, then you already have a bellweather into the health of the company’s performance. If you find you’re the only one in there, then perhaps it’s time to pull out of fast food restaurants.

Not one to partake in fast food, how about consumer electronics? Still seeing lots of iPods or hearing about all the new TV’s people are buying? Companies like Apple (AAPL), Research in Motion (RIMM) the maker of the Blackberry, Sony (SNE), or Philips Electronics (PHG) are all good places to start if you also plan on upgrading a few of your electronic toys in the near future.

So what are you spending your money on every week? Why not invest in the companies that are going to be getting your money anyways. The gas companies are not a bad idea if you have a favorite gas station to fill up your car. Ask yourself some of these questions when brainstorming about which companies to invest your money. Where are you getting your food from or what kind of drinks are your favorite? What about the clothes you buy or even the bathroom products you use? This is why the adage of investing in what you know and what you buy is such an easily understood idea that can be oft overlooked. Plus, you get the advantage of seeing how the company is actually performing without having to wait for its financial reports every quarter.

As of this writing, I currently own shares of YUM Brands (YUM).


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.