Delays and hefty costs disrupt game industry
The video game industry has been taking a beating.
While air has seeped steadily from the stock market, it has poured from
the four major publicly-traded game publishers in the United States.
Since May 1, they have lost a collective $6 billion in market
capitalization, a drop of about 25 percent, steeper than declines of
8.3 percent for the Nasdaq and 4.2 percent for the Standard &
Poor's 500-stock index.
The sharp decline reflects a realization among investors that the game
industry will recover more slowly than expected from the transition to
a new generation of consoles, the Xbox 360 from Microsoft, the Sony
PlayStation 3 and the Nintendo Wii.
Furthermore, analysts said, the game publishing industry is being
disrupted by the growing cost of development, as well as by uncertainty
amid the growing popularity of online game play.
"There are more industry concerns than ever, and that's what you're
seeing in the stock prices," said Justin Post, an industry analyst with
Merrill Lynch.
And yet, underscoring the complexities of assessing the industry, Post
has a buy rating on shares of two of the major publishers, Electronic
Arts and Activision. Like many stock analysts, he argues that given
long-term trends, the game business is destined to boom, and that the
only question is when.
Read the rest of the article...Matt Richtel
June 19, 2006
Source: New York Times, International Herald Tribune