Gaming Console Combat: Who Will Win?

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Nov. 15 (Bloomberg) -- BMO Capital Markets' Edward Williams, Stutland Volatility Group's Joe Tigay and Bloomberg's Jon Erlichman discuss the gaming console wars with with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Into your portfolio?

Jon erlichman with the story.

Joe with the trade.

Is this a make or break launch for sony e on some levels, it feels that way.

Devices like this one are the new key to the living room.

You can say what about sony tvs, but you think about where we are going and the ability to not just keep gamers happy, but people using services like netflix.

The devices are incredibly important.

Sony does not put them out too frequently.

In the last six or seven years.

The sales could be in the neighborhood of $3 million -- 3 million consoles as we get into the holiday season area once you add the japanese market, another couple of million.

Tablet sales are climbing.

Only so many devices can be purchased.

You really want to get your fair share of the pie.

Class there are only so many devices that can be purchased and there is only -- only so much time people have.

It is amazing the multitude of different things on so many different platforms commanding for people's entertainment time -- seeking entertainment time right now.

Keeping this in mind, what is the better play?

Which will be more successful?

Is it sony or microsoft gekko what we're hearing anecdotally is a lot of people talking about moving from xbox to the playstation.

I think what will be critical with this holiday season is to see if the migration actually comes true and the guys big in xbox live actually make the switch over to playstation.

You are not so certain they will?

There is a lot of talk more so than reality behind it.

If i were to look at it and take a guess as to how they would perform relative to last jen, i think playstation will do better than it did, but i am not sure we will see sony surpass xbox.

What are your thoughts right now?

Ea is good.

It has a strong portfolio.

If you look at battlefield for, it is getting solid reviews.

We are hearing anecdotally it is selling well.

There is a lot of noise around the stock and the category right now as you look at the legacy sales.

And the falloff we are seeing on playstation three.

I think that is what is driving ea's performance right now.

What about the retailer?

Gamestop?

Gamestop -- it benefits from the traffic in the consumer coming into trade in old systems, and they benefit from either someone buying playstation or xbox.

They do not care which one as long as they're buying one of them.

The beauty of the gamestop in the short-term is you get improving store traffic trends but in the long run, the value for the players participating in the category, the value will fit more with publishers than the retailer.

Part of the key for gamestop is having this constant new con -- contact in new games.

Jon erlichman, you are signaling yes?

100%. it is the key strategy to selling more of these devices.

This is a short game and a long game.

Short game is that sony and microsoft will sell a lot of these devices out the gate to hard-core gamers, but you have to keep people interested longer-term.

The only way you do that is continue to have fresh game titles.

It is the reason to want to play and spend time there.

The service businesses is where sony -- for sony, a lot of the money is made.

I do?

What is the trade?

I agree in the short term that gamestop will benefit.

In the long term, i disagree.

New councils are moving more in the way of pc.

Online will be the future of game purchases.

No one will be going to the store and buying games.

There would be no hard copies of the game to resell clear that is a significant challenge for gamestop going forward.

Gamestop reports earnings next thursday.

We are seeing increased call activity.

Short-term bullish, investors looking at 65, paying one for that in december.

I want to take advantage of the increased volatility to finance.

I will own the april 50 put.

Next week, 2.5 put for a dollar 05. then i will pay 324 the strategy.

Then i will finance it with the

This text has been automatically generated. It may not be 100% accurate.

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