Activision Blizzard (NASDAQ: ATVI) published third-quarter results on Thursday after the bell. I can't say I was wholly taken with them. I know the best is probably yet to come once the Christmas shopping season really gets under way, but I was a little disappointed that the company saw a decline in adjusted profit.

Excluding items, Activision Blizzard made 4 cents per share this quarter versus the 7 cents per share made in last year's similar period. Well, did I say I was a little disappointed? Make that a lot disappointed. After all, this is supposed to be the publisher with the best pipeline on the block, the one with the Guitar Hero franchise and a great portfolio of licensed intellectual properties.

"The video game industry was once thought to be virtually recession proof; unfortunately, recession reality has intruded," notes Geoffrey Seiler, who adds, "Boosters, however, are pointing to new games scheduled for release later this year as a reason for optimism."

In his always-informative BullMarket.com, the advisors offers an in-depth review of the sector, highlights potential opportunities in GameStop (NYSE: GME), Electronic Arts (NASDAQ: ERTS), and Activision Blizzard (NASDAQ: ATVI).

"When you get right down to it, success in the video game business isn't much different from the movie business: developers are only as good as their last hit game.

Well, it's been an exciting month for the video-game industry. Viacom (NYSE: VIA) and Electronic Arts (NASDAQ: ERTS) released The Beatles: Rock Band to the market. Nintendo (OTC: NTDOY) cut the price of the Wii in an effort to better compete with Sony (NYSE: SNE) and Microsoft (NASDAQ: MSFT). And rumors of consolidation in the industry are getting heavy. The buzz on some corners of Wall Street is that perhaps a major media conglomerate might want to take over THQ (NASDAQ: THQI).

According to The Wall Street Journal (subscription required), either Viacom or Time Warner (NYSE: TWX) might be interested in the publisher. There are plenty of reasons to believe this would be a logical move for either of those two. And there are plenty of reasons to suggest that buying THQ wouldn't make sense. I mean, take Viacom: wouldn't it rather concentrate on the Rock Band franchise? As for Time Warner, does it truly desire the hassle of integrating THQ? Right now, Time Warner's stock is in an upswing, and I don't think shareholders would want to ruin such momentum with the purchase of a software company that has been experiencing growth problems.

Activision Blizzard (NASDAQ: ATVI) remains confident in its guidance for full-year earnings. According to StreetInsider.com, management is still looking for sales of $4.5 billion on the top line and adjusted earnings of 63 cents per share on the bottom line.

The publisher, which competes with Electronic Arts Inc. (NASDAQ: ERTS), should benefit from recent hardware price cuts made by Sony Corporation (NYSE: SNE) and Microsoft Corporation (NASDAQ: MSFT). With more units in the field, there most likely will be higher demand for Activision Blizzard's awesome pipeline, which includes Call of Duty.

According to GameSpot, execs at Viacom (NYSE: VIA) are pleased with the initial acceptance by consumers for its high-profile game The Beatles: Rock Band. The company said that expectations for the title, which is distributed by Electronic Arts (NASDAQ: ERTS), have been surpassed, and that a quarter of the inventory has already moved off retail shelves. Impressive.

Recently, I wrote an article about The Beatles game and how it might impact the Guitar Hero franchise from Activision Blizzard (NASDAQ: ATVI). I'm a shareholder of the latter, so I'm obviously biased on the subject. I want Rock Band's competitor to win the battle, no question.

The news for video games isn't improving, I'm sorry to say. My colleague Mark Fightmaster recently discussed the disappointing industry sales results observed in the month of August. As he pointed out, total revenues for the sector have now dropped six times in a row.

Oh, that doesn't feel nice at all. I own shares of Activision Blizzard (NASDAQ: ATVI), and I have to admit, the trend does send an icy chill down my spine. But I'll bet shareholders of Electronic Arts (NASDAQ: ERTS) feel even worse. August, of course, is a big month for them. The latest version of the Madden football franchise is released during the latter part of summer. Unfortunately, this year's game seems to have been a disappointment in terms of units sold.

So much for the notion that video game sales would turn around in August. Slumping sales pushed the slide for video game sales to six straight months. During August, 15% fewer games were sold than a year earlier, and the drop was more than industry analysts expected.

Just because the overall sales dropped, it doesn't mean that some companies didn't turn in a good month. Sony (NYSE: SNE) saw sales increase, thanks to the company's decision to slash the price of its wildly popular PlayStation 3.

The Guitar Hero franchise is one of the reasons why I keep holding the stock. I figure a lot of units tied to the brand will be sold this holiday season. However, there is a looming threat. Viacom (NYSE: VIA) and Electronic Arts (NASDAQ: ERTS) are set to release The Beatles: Rock Band. The street date is September 9, and analysts will be watching the early sales very carefully to see how the dynamic shapes up.

Fair or not, Take-Two Interactive (NASDAQ: TTWO) has a reputation for a shallow pipeline of shareholder-enhancing software. It is known simply as the Grand Theft Auto publisher. There's more to Take-Two, of course. There are sports titles, for example. There's BioShock. How about the big hit for the Nintendo (OTC: NTDOY) Wii, Carnival Games? What about Borderlands?

That's all well and good, but if you look at the company's latest earnings report, you'll have no choice but to conclude that the one-game reputation is firmly intact.

Take-Two's top line plummeted 68% during the fiscal third quarter. Net loss on an adjusted basis came to 66 cents per share. There was a huge profit of 93 cents per share in the year-ago period, driven by the fourth edition of Grand Theft Auto. Not a great comparison. At least the performance was a little better than expectations. According to Earnings.com, Wall Street was calling for a loss of around 68 cents per share.

Monday, August 31, 2009, will go down as one strange trading day. Disney (NYSE: DIS) buys Marvel (NYSE: MVL). BloggingStocks reported the details of the deal here.

As a long-time shareholder of Disney, I have to ask: Does CEO Bob Iger know what the heck he's doing anymore? I thought the news was quite surreal. I suppose we all knew that Marvel would be a takeover target someday but, honestly, I thought some other media conglomerate, like maybe News Corp. (NASDAQ: NWS), would do a deal before the Mouse would.

So you've heard the news I'm sure. Microsoft Corporation (NASDAQ: MSFT) is not standing still in the video-game wars. It recently reduced the price of the Xbox 360 Elite system by $100. We now have parity between an Xbox 360 unit and a Sony Corporation (NYSE: SNE) PlayStation 3 console.

It's going to be interesting to see how hardware sales perform in the coming months. Intuitively, one would have to expect a bump in the number of units sold for both companies. But which one will win out?

Here are some highlights from last week's earnings coverage from BloggingStocks:

• American International Group Inc. (NYSE: AIG) said its earnings report would not include a conference call.
• Caterpillar Inc. (NYSE: CAT) shares rose after it reaffirmed the 2009 outlook and forecast further growth.
• Cisco Systems Inc. (NASDAQ: CSCO) said its Q4 numbers tumbled despite cost-cutting efforts.
• Comcast Corp. (NASDAQ: CMCSA) posted strong Q2 results, though its cash flow was flat.
• Crocs Inc. (NASDAQ: CROX) reported better-than-expected Q2 results and forecast a return to profitability.
• Electronic Arts Inc. (NASDAQ: ERTS) revenue surged in Q1 and its narrower loss beat expectations.

Oh, I am so depressed! I was thinking of buying Activision Blizzard (NASDAQ: ATVI) for an earnings trade, but unfortunately never got around to it. Those who did are pretty happy. The publisher released second-quarter results on Wednesday after the bell, and investors bid the stock over 10% higher today.

Adjusted revenues came in at a little over $800 million. Management's previous guidance called for $775 million to be booked. Adjusted earnings were 8 cents per share, 2 cents ahead of company expectations. According to Reuters, this was a penny better than what the actual analysts were forecasting.