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PS5 A Major Catalyst For This Small Cap Video Game Stock; Could Xbox Be Next?

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PS5 A Major Catalyst For This Small Cap Video Game Stock; Could Xbox Be Next?

Small cap Immersion Corporation (NASDAQ: IMMR) is rising as its haptic technology could be added to a second major gaming console after its success with another.

What Happened: Immersion has a royalty deal with Sony Corporation (NYSE: SNE). The deal allows the company to use Immersion’s haptic technology in gaming and VR controllers, including the strong selling PlayStation 5.

After the success of the PlayStation 5 and the strong reviews for the controller, Sony’s gaming rival Microsoft Corporation (NASDAQ: MSFT) is considering adding haptic technology to controllers.

Microsoft sent an Xbox console experience survey to its users that asks questions about the controllers. Questions ask if the Xbox Series X feels next-gen and if users are aware of features on Playstation controllers that they wish were on Xbox controllers, according to TechRadar.

“I applaud what they did with the controller. I think for all of us in the industry, we should learn from each other and the innovation that we all push on, whether it’s distribution of business model like Game Pass, or controller tech,” Microsoft Vice President of Gaming Phil Spencer told The Verge.

Related Link: Immersion: The Thing Behind The Thing For Playstation 5

Why It’s Important: Xbox has a history of adding well-received features on other console controllers to its own, IGN points out. The gaming publication has called the PlayStation 5 controller one of the most impressive features of the new console from Sony, scoring it a 9 out of 10.

“Microsoft’s interest in these questions would suggest that they’re at least thinking about upgrading the next-gen controllers in the future, to line up with Sony’s offering in the current-generation,” writes IGN.

Haptic technology could be a major theme for video games going forward as it connects users to the games and makes a more interactive experience.

Several 2021 games like “Returnal” and “Deathloop” are taking advantage of the haptic technology of the PS5 controller and making the game more interactive for users.

Immersion has hinted throughout 2020 that the new controller for the PlayStation 5 could lead to additional demand for its patents and products.

“We believe Sony’s new controller will catalyze increased market demand for advanced interactive haptic experiences and this may lead to additional opportunities for Immersion in the future,” the company said.

What’s Next: Immersion is expected to announce fourth-quarter earnings in March. The earnings should provide a better look into the revenue generated from Sony and could provide more color on how much Immersion gets as a royalty for each PlayStation 5 controller sold.

Immersion reported revenue of $7.6 million versus street consensus of $7.45 million for the third quarter. The fourth quarter of the last fiscal year was the largest for the company in terms of revenue.

Benzinga’s Take: We highlighted Immersion in July and December and mentioned how important the PlayStation 5 inclusion was for the company. The deal with Sony was a major catalyst and adding Microsoft to the fold could be just as valuable.

Shares of Immersion closed Thursday up 9.5% to $12.08. Shares were up 46% in the last 52 weeks.

 

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