Video game sales off in March -- should investors panic?

I'm pretty frustrated myself, considering that Activision Blizzard (NASDAQ: ATVI), a company that I own in one of my portfolios, didn't score in the software chart. Capcom's Resident Evil 5 for the Xbox 360 was the number-one game. Nintendo captured second place with Pokemon Platinum for the Nintendo DS handheld device.

Nintendo really has an interesting near-term future. It will be fascinating to see how sales of the new Nintendo DSi fare over the coming months. But there have been concerns about slowing Wii sales. In fact, I recently wrote about this issue in terms of how sales of the Wii were doing in Japan. So there will be a lot of press devoted to the new handheld hardware as the quarters go by since the market will want to know if the DSi can help to alleviate the potentially slowing Wii.

As far as the sales decline in March goes, I wouldn't worry too much over it. Simply put, we're still in a tough economic time, and video-game investors have to expect bumps in the road. With the new DSi in the market, and with the buzz of price cuts for hardware in the air (particularly when it comes to PlayStation 3), I think the industry will be okay. You just have to pick your positions carefully. For me, that means continuing to hold Activision Blizzard and keeping an eye on Nintendo, which would be more interesting to me after a big pullback.

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