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Analyst: Why E3 2019 Missed The 'Whoa' Factor

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Analyst: Why E3 2019 Missed The 'Whoa' Factor

Video game trade event E3 had a new console rollout from Microsoft Inc. (NASDAQ: MSFT), tons of upcoming game previews and even an appearance by Keanu Reeves, both in a game and on stage. But Wedbush said that with the industry in flux and uncertain exactly where it’s going, this year’s show didn’t have the “whoa” factor that some may have hoped for.

Wedbush’s Michael Pachter wrote an industry overview note to investors following E3, wrapping up thoughts on several covered companies and the industry as a whole.

Streaming Is Big Industry Topic

If attendees were hoping to be wowed by a big reveal on exactly what the video game industry will look like in a couple years, they may have been disappointed. There’s no question the industry is on the precipice of change, but E3 didn’t make it any clearer how much or how quickly games will move into streaming, and what exactly that might look like or cost.

“E3 2019 did leave some investors with a sense of unease,” Pachter wrote. “There is a palpable level of concern that the traditional $60 upfront price for video games is looking a bit long-in-the-tooth given changes in how people now choose to consume music and television, with all-you-can-consume subscriptions becoming the dominant forces in those markets.”

But while the means of delivering games may be changing thanks to new technology, “it remains to be seen which dominant distribution model will emerge and how the economics for publishers and platform operators will ultimately play out,” he said.

Netflix Of Games?

While consumers have shifted much of their entertainment to subscription models, it remains to be seen whether most gamers, who don’t play as often as they watch things on TV, for example, will move that way.

“We are skeptical that a Netflix-like service will emerge with thousands of choices at a low monthly price, and think investor concerns about the erosion of the current business model are unfounded,” Pachter wrote.

Other disappointments from this year’s E3 included Sony Corp. (NYSE: SNE) not participating, and Activision Blizzard Inc. (NASDAQ: ATVI) passing on "Call of Duty: Modern Warfare," Pachter said.

The biggest excitement at E3 this year probably was from the Polish video game developer CD Projekt, which is traded publicly, but on the Warsaw Stock Exchange. The publisher’s "Cyberpunk 2077" features Reeves in the action-adventure game which comes out in 2020, and the actor was at the show to plug it.

Microsoft also got some buzz for its new console, Project Scarlett, which will replace Xbox One in 2020, and its announcement that gamers will be able to stream games from Xbox One starting in October.

Related Links:

Microsoft's Project Scarlett, EA Updates To 'Apex Legends' Highlight Opening Of E3

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Latest Ratings for MSFT

DateFirmActionFromTo
Jul 2019MaintainsOutperform
Jul 2019Initiates Coverage OnOutperform
Jun 2019MaintainsUnderperform

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Posted-In: E3 2019 Keanu Reeves Michael PachterAnalyst Color News Events Analyst Ratings Tech Best of Benzinga

 

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