Hey everyone, after I got really pissed at the big dip from last quarter and I sold most of my stock, I've slowly started looking into purchases again, but I'm still pretty pessimistic for 2019.
Microsoft is a mixed bag. On the gaming front, I think they're gaining market share, they're investing in a shared ecosystem between Xbox and PC, in high-res streaming, in actual content (with studio purchases and the like), and in general the Xbox division seems to have reinvented themselves in the last three to four years in order to build momentum towards next-gen launch. I really think Xbox will offer much more serious competition in the gaming space, both on console and PC, when the next generation hits. However, Microsoft is much more than gaming, so this isn't relevant. Their non-gaming ventures have a lot more struggles and fierce competition, so it remains to be seen how they'll solve those problems. Not sure what to think about this stock.
As for AMD and Nvidia, when it comes to earnings releases, they'll have to compete with their past selfs. The crypto bubble is over, it's all back to gaming, but the newest graphics cards don't seem to be as mindblowing as some had hoped, new consoles aren't coming until late 2020, and 7 nm chips are still too expensive for mass adoption. So I'm not holding my hand in the fire for these two, and I don't expect much incredible from them until next year, which means I'll start looking into these two again at the end of the Summer.
Electronic Arts and Activision have a big problem as well. They're hitting a wall on console for their 'recurring revenue streams' (the wall is the audience size and the amount of money that can be squeezed out of a single user) and they're failing to increase their market share on mobile. EA is very dependent on their licenses, while Activision is basically Call of Duty + Candy Crush + Blizzard. They need to grow their catalogue of active IP and diversify in genres and audiences. With the loss of Destiny, the focus shifts toward Call of Duty even more.
NBA 2K is still growing for Take-Two, but they'll have the same problem as EA a couple of years later. At least they still have a huge 'different audiences' branch, which is the combined output of Borderlands, Bioshock, Mafia, etcetera under 2K, plus everything Rockstar. For 2019, it remains to be seen how Red Dead Online will evolve, but I'm confident. GTAO will continue to make loads of money. Take-Two also has Private Division, and they'll publish Obsidian's new RPG. There have been rumblings that the release of Borderlands 3 is coming closer as well, so Take-Two has put bets on more horses than just RDR and NBA 2K. I don't own TTWO stocks right now, but I'm definitely keeping an eye on them.
As for European stocks, I don't see too many problems for Ubisoft on the horizon. They keep creating new IP and have a very diversified output. It looks like Far Cry is going annual now, which is great for their earnings in the short-term, but could become a problem in the long term. They have had a similar problem with Assassin's Creed in the past, so hopefully they'll identify and solve such problems more effectively this time. I'm optimistic about their performance in 2019 and beyond.
CD Projekt's 2019 share performance will live and die with Cyberpunk's release. The market expectation is a release for Holiday 2019. A delay to next fiscal year would cause a big short term drop. If it does indeed come this Fall, I expect big hype and similar behaviour in the company's share price starting right before E3. In the long term, CD Projekt is definitely a company I consider investing in. Cyberpunk 2077 will be huge; I expect a cross-gen release, and they've stated in a previous annual report that they were aiming for another AAA game release before the end of 2021, which is most likely a new The Witcher game. They have expanded in 2018: they currently have two AAA teams and two smaller teams, as well as a
mobile games studio called Spokko. So I think we'll see a lot more from them in the coming five years than we've seen in the past five years.
THQ Nordic will have to prove itself this year. They acquired Koch Media in February, so they won't get free ~1000% YoY increases with their earnings this time around. In 2018, the publishing business was their main source of income. In 2019, software development should take a bigger share, as projects started in the year before the IPO should get announced and/or released and the Deep Silver branch will release multiple projects, such as Metro Exodus, Shenmue III, Wasteland 3, and potentially even Dead Island 2 or the unannounced Volition game. Those games are in no way comparable with whatever the THQ Nordic branch is putting out (although Biomutant looks awesome!) and should generate amazing revenues compared to what the company has shown so far. 2019 is the year of truth for this brand new European juggernaut.
What should I say about Starbreeze... I think it's better to not say anything and just pray they get out this situation alive. I'm pessimistic tho.
As for Paradox Interactive, I've never been a customer of theirs and I'm not as involved in following news around their products as much as other companies, but I think that they'll have a healthy year in 2019. Even in quarters without new releases, they have good revenue streams from selling expansion packs and such, so there's a good foundation. In 2019, they plan to release two new games, and they'll expand their console business further with console releases for Stellaris. I'd love to hear the thoughts of others on this stock tho, as I'm not well-informed myself.
There are also multiple British companies that have entered the Alternative Investment Market in the last two years. Sumo Digital and Team17 look the most promising to me, but they are very high risk, as they are not required to release quarterly reports, are of much smaller scale, and are more dependent on external partners. Codemasters keeps struggling.
Thanks for the compliment! :)
Welcome back! :D
While I don't think Apple and Nintendo would make a great partnership, I agree with you on your EA/ATVI story.
