Welcome to “Game On,” The Fly’s weekly recap of the stories powering up or beating down video game stocks. NEW RELEASES: Among the notable releases this week are Nintendo’s (NTDOY) “Kirby Star Allies,” the latest in the series of 2D sidescrollers, coming out on Switch consoles on March 16. Also rolling out this week is “The Cure of the Pharaohs,” a downloadable expansion pack for Ubisoft’s (UBSFY) open-world role-playing game “Assassin’s Creed Origins.” The expansion is available for PlayStation 4 (SNE), Xbox One (MSFT), and PC starting today. TRUMP MEETING: Last Thursday, U.S. president Donald Trump met with various representatives from the video game industry to discuss the potential impact of violent games on real-world violence. Present at the meeting were Entertainment Software Association CEO Mike Gallagher, ESRB president Patricia Vance, Take-Two (TTWO) CEO Strauss Zelnick, and Bethesda parent Zenimax CEO Robert Altman. According to media reports, the meeting began with an 88-second reel of footage from violent video games, including Bethesda’s “Wolfenstein” and “Fallout 4” as well as Activision’s (ATVI) “Call of Duty.” The conversation, which also included several Republican lawmakers and representatives from the Parents Television Council and the Media Research Center, lasted for nearly an hour and was “vigorous” but “respectful,” with the president appearing interested in hearing from all sides, according to Melissa Henson of the Parents Television Council. The video game industry maintained its stance that there is no evidence of a connection between its products and violent actions, according to ESA spokesman Dan Hewitt. BATTLE ROYALE NOTE: In a research note to investors, Morgan Stanley analyst Brian Nowak said that games in the “Battle Royale” space, including Epic Games’ “Fortnite” and PUBG Corporation’s “PlayerUnknown’s Battlegrounds,” have left investors in Activision Blizzard, Take-Two, and Electronic Arts (EA) concerned. Free-to-play “Fortnite” and early access “PUBG” remain “top of mind” for investors, as their quick growth and users bases of 45M and 30M, respectively, are increasing investor worries that the competitive moats of the established brands may not be as deep as hoped and that these new franchises may cannibalize the leading content of the “big three” game makers, according to Nowak. The analyst noted that industry data estimate that “PUBG” and “Fortnite” generated over $200M of digital revenues combined in January, or 8% of the fragmented global digital gaming spend. The analyst said this is impressive, but noted that not all or even most of the dollars moving toward battle royale games are leaving the big three publishers. All that said, if “Fortnite” and “PUBG” affect in-game monetization by 10%, the firm estimates the EPS impact of Take-Two to be 5%, Activistion Blizzard to be 3%, and EA to be minimal. Nowak expects large publishers to capitalize on player interest in the genre and to incorporate it into their 4Q18 game releases. ‘SMASH BROS.,’ ‘BLACK OPS 4’ ANNOUNCED: Major publishers announced big upcoming releases last week, with Activision confirming that “Call of Duty: Black Ops 4,” the next game in its “Call of Duty” franchise, will launch worldwide on October 12 for the PlayStation 4, Xbox One, and PC. In addition, Nintendo announced that it plans to bring the next iteration of its popular fighting game “Super Smash Bros.” to the Nintendo Switch in 2018.
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