Will It Be 'Game Over' for Videogame Makers This Holiday?
Special to CNBC.com
While the videogame industry relies heavily on the holiday period to help boost publisher profits, some companies may find coal in their stocking this year.
Some titles are sure to be certain hits, but the evolving nature of players and some less-than-stellar lineups could leave some publishers who are typically strong holiday performers out in the cold.
The biggest catalyst this year, of course, is the release of next-generation hardware from Nintendo. The Wii U will be the first new console system on the market in six years and should re-energize gamers, who have grown weary of the constant parade of sequels.
The Wii U is expected to be a hot holiday item that is widely sold out throughout the season and into the New Year. That could work out well for publishers like Ubisoft, who have several Wii U games lined up. Top titles for new consoles, in fact, can keep selling for seven or eight months — or even a year, in some cases — since there's generally a limited lineup of games in the first year. (Read More: Nintendo's Wii U Already Selling Out)
"I think the Wii U will be sold out for a long time," said Tony Key, Ubisoft senior vice president of sales and marketing. "I think you're going to have to run to the store every Saturday to be one of the people who grabs it. I don't know how long that lasts, but the longer it lasts, the better it is for Ubisoft and the better it is for industry."
Activision-Blizzard should have another big holiday, led once more by its multi-billion dollar "Call of Duty" franchise. "Call of Duty: Black Ops II" launches Nov. 13 with the series shifting into the near future, showcasing weapons that are just starting to be used in the battlefield.
Analysts are expecting another monster hit — and say strong sales could give the aging series a shot in the arm.
"We expect 'Call of Duty: Black Ops 2' to sell roughly 20 million units this holiday (generating $1.2 billion in retail sales) making it one of the largest entertainment brands of all time," said Colin Sebastian of R.W. Baird. "Importantly, we believe a strong performance by 'Call of Duty' would improve sentiment on the game, which now expects some fatigue to pressure sales of the franchise."
Microsoft is also in a position of strength, with the release of "Halo 4." Since its debut in 2001, the "Halo" series has generated some $3 billion in revenue for the company and sold more than 46 million games.
The latest installment will see the return of series hero Master Chief, who hasn't been in a "Halo" game for five years.
Other titles expected to be big hits this year include Ubisoft's "Assassin's Creed III," Activision's "Skylanders: Giants," and Disney's "Epic Mickey 2: The Power of Two."
Not every company seems positioned to benefit this holiday season, though.
Analysts are most concerned about Electronic Arts . "Medal of Honor: Warfighter," the company's biggest fourth-quarter title was released in late October and landed with a thud, only garnering a Metacritic score of 56. And the looming launch of "Black Ops II" and "Halo 4" threaten to completely overshadow the game.
Meanwhile, for the third consecutive year, EA Sports failed to ship a NBA game, despite a long development window to complete the game. That further opens up the market for Take-Two Interactive Software, which has seen its "NBA2K" franchise become stronger each year.
"The weak reviews for 'Warfighter' and cancellation of 'NBA Live 13' suggest that quality has remained elusive for certain franchises," said Wedbush analyst Michael Pachter. "As the importance of each release to financial results is heightened by this strategy, a handful of misses can have a large impact on top-line growth and profitability."
However, analysts note, EA seems to be positioning itself for growth in the long term.
THQ, meanwhile, doesn't seem likely to turn its fate around, with no major holiday releases on the books, other than its annual WWE game. Its next big releases are scheduled for the first quarter of 2013 and analysts said it can't afford any misses. (Read More: The Most Anticipated Videogames of 2013)
"The company remains in a precarious position, in our view," said Edward Williams of BMO Capital Markets. "In order for it to survive, and hopefully thrive in the next console cycle as well as in the still-emerging social/casual world dominated by mobile platforms, we believe [the holiday quarter and first quarter of 2013] are crucial, especially with respect to its new titles."
-By Chris Morris, Special to CNBC.com
Questions? Comments? Email us at email@example.com.