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GameStop wants Sony to play ball -- will Sony do it?

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GameStop (NYSE: GME) is probably the best friend to gamers who fall somewhere in between the casual and hardcore demographic. That's because CEO Dan DeMatteo has been quoted in reports as being very desirous of a price cut for the Sony (NYSE: SNE) PlayStation 3. If I read between the lines a bit, I get the feeling as if he almost wants to demand that Sony do something about its high-priced machine.

Thing is, though, he isn't in Sony's corporate shoes. Cutting the price of the PlayStation 3 is an event that I think is sure to come to pass in the next few months, but it's going to be very difficult on the company's bottom line.

Once it happens, though, GameStop will exploit it for all its worth. Indeed, the retailer will move more systems off its shelves, but more importantly, it will move a higher amount of high-margin software and accessories to go along with the new purchases. And that makes GameStop an interesting investment idea.

The CEO also grumbled about Nintendo (OTC: NTDOY). He thinks that company should perhaps consider a price cut for the Wii. Wow, this guy isn't selfish or anything, is he? It's okay, I understand where he's coming from. It looks like we're at that part of the cycle where the market really wants to get the installed user base increased as fast as possible via new pricing strategies. Happens every single time. Activision's (NASDAQ: ATVI) CEO Bobby Kotick has also publicly stated that it is time for Sony to make its system more affordable. Again, this is self-serving.

I'm not sure if the Wii's price will be reduced just yet, but investors in video-game companies will be looking forward to any and all reductions. I, for one, would love to see any catalyst that will get Activision Blizzard's stock past its current resistance level. If Sony's eventual change in PlayStation 3 pricing encourages Microsoft (NASDAQ: MSFT) to also alter its pricing strategy, then investors who own publishers (and/or GameStop) should prosper.

As far as I'm concerned, though, the best name out there in the publishing space is Activision Blizzard. Even with that dreaded technical resistance. I think names like THQ (NASDAQ: THQI) and Electronic Arts (NASDAQ: ERTS) just aren't as fundamentally interesting right now (I do readily admit, however, that the stocks of both those companies have done very well as of late).

Disclosure: I own Activision Blizzard, Microsoft; I have covered calls written against the Microsoft position; holdings can change without notice.

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Last updated: November 24, 2009: 01:48 PM

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