Bodes Well for Outlook for 2013 and 2014
Bottom Line: Results from our proprietary consumer survey point to stronger-than-expected demand for new video game
consoles, particularly the yet-to-be announced next Xbox and PlayStation device. While ultimately we expect sales to
depend on the level innovation in these new devices, this indication of interest bodes well for the'13/'14 outlook as new
products are introduced, after several difficult years in the industry.
Key Investment Highlights:
Recent industry weakness may reflect both cyclical & structural issues, not just structural.
Gaming ecosystem is becoming more complex, but consumers are not planning to abandon consoles.
Solid demand for new consoles, including the next Xbox or PlayStation, which have not been announced yet, while demand
responses for the recently launched Wii U seem lukewarm.
The ability to play used games remains a must-have for many consumers, a positive for GameStop.
How to Play This:
GameStop (GME, Outperform, $29 TP)
Activision (ATVI, Outperform, $16 TP, Credit Suisse US Focus List)