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Wall Street Transcript Interview with Neil Doshi, Senior Equity Analyst for the Internet and Video Game Sector at Citi Investment Research: Low Investor Interest Ahead of Next Gaming Console Cycle Could Create Opportunity

67 WALL STREET, New York - November 13, 2012 - The Wall Street Transcript has just published its Entertainment, Toys and Games Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Cable Subscription Rates - International Paid Television Growth - Digital Advertisement Trends - Mobile Device Gaming Prospects - Content Quality

Companies include: Google Inc. (GOOG), Amazon.com Inc. (AMZN), eBay Inc. (EBAY), Activision Blizzard, Inc. (ATVI), GameStop Corp. (GME), Best Buy Co. Inc. (BBY), Wal-Mart Stores Inc. (WMT) and many others.

In the following excerpt from the Entertainment, Toys and Games Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Would you begin with a brief introduction to your coverage, including some of the specific names you follow?

Mr. Doshi: I work at Citigroup (C). I am the Internet and video game analyst. Companies that I cover include Google (GOOG), Amazon (AMZN), eBay (EBAY), Activision (ATVI), Electronic Arts (EA) and Zynga (ZNGA).

TWST: What are some technologies or offerings that are currently emerging or in development that aren't yet having an impact on the video game sector, but you believe may be significant in the next year or two?

Mr. Doshi: There are platforms and technologies that are changing the video game industry. Clearly, over the past couple of years, we've seen a lot of disruption from new platforms, including social, mobile and tablets. Now, I think one of the biggest challenges for developers will be to decide which platforms to go after. Especially on the mobile side, you have iOS, and then you have Android, and then within Android there is a lot of fragmentation.

On the actual technology side, there remains hope that developers could build on one Web-based platform and have it run smoothly across different devices. This is HTML5. But there are still some challenges with HTML5, and over time, resulting in suboptimal performance. I think the challenges will be overcome in time, and we can get to a point where developers can really just develop in HTML5 and be able to spread their games and apps out across to a whole host of different devices and operating systems. So I think those are some of the big challenges from a development and from a technical standpoint for developers.

TWST: What do you believe are some of the most common misconceptions about the video game sector new investors should try to more thoroughly understand?

Mr. Doshi: I think there are five big misconception and concerns. First, the biggest misconception is that the video game industry is dying and that people don't want to play games anymore. In fact, we are seeing quite the opposite. I think social and mobile gaming have really expanded the scope of the industry and really opened up the market for casual gamers.

Also, the new platforms have really democratized the ability for developers to create games - they need relatively little capital and get to build pretty compelling games. And I think that's led to very big opportunities, potentially on the online side, where you don't need a lot of money to develop a game. You don't need a big team, you don't need to work with traditional publishers to get your game out there and distribute it. You can literally use $50,000 to $100,000 to come up with an app or a game, put it on iTunes, and it could potentially become the next number one selling game. We expect the overall industry to grow in the mid-single digits over the next few years, with online/mobile growing in the 20% range.

Second, I think there is a lot of concern around NPD Data. And in terms of software side, we have seen year-over-year decline since Q1 2009, and I think this gets a lot of investors worried that people just aren't buying games anymore. But when you peel back the onion, there are several layers. Publishers are rationalizing titles. And for example, EA in 2008 published around 66 titles. Today, this year, they are probably going to publish around 14 titles. So we have seen publishers go from broad and many to bigger, fewer and better games. Also, I think there has been an impact on catalog titles, which are titles that are older, and I think people aren't buying catalog as much due to the used games market, where people might wait to buy big games for significant discounts from stores like GameStop (GME) and Best Buy (BBY) that sell used games.

Third, there is concern about disintermediation of the traditional gaming market through the new platforms like social, mobile and tablets...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.