Man, it stinks to be Sony (NYSE: SNE). According to Forbes, the media company has lost $3.3 billion on its PlayStation 3 console so far. Wow. When the mighty fall, they fall hard. The PlayStation 3 is a heck of a powerful system, but the Nintendo (OTC: NTDOY) Wii has captivated players not only with its innovative nature, but with its affordable price. Right from the start, Nintendo decided to go with less costly components so that each console sold would generate a profit. Its retail price of $250 is a lot better than $500 to a consumer's wallet, especially when a cheaper system is also a lot of fun.

And talk about a hit to PlayStation's brand equity. Here's what most people think about the third PlayStation (from my experience at least): it doesn't have a lot of games available, there aren't many kid-friendly titles offered, I don't want to pay that much for a PlayStation system so I'll just wait for further price cuts. Boy, imagine if Sony has to cut the price even further. Sony already loses a bundle on each system.

Not only is Nintendo hurting Sony, but Microsoft (NASDAQ: MSFT) and its Xbox 360 is also out there causing damage. You can pick up a low-end version of the Xbox 360 without a hard drive for around $280. Too bad Sony decided to incorporate Blu-ray and hard drives into its business model for the PlayStation 3. Admittedly, I thought it was the right thing to do at the time as well, but I guess Sony and I have been proven wrong.

Take-Two Interactive's (NASDAQ: TTWO) Grand Theft Auto IV game stole the number-one position on the software sales chart for May, according to data from market research firm NPD. It sold over 1.3 million copies last month, and it has moved over 4 million since it hit the street. I figured Take-Two would be taking the top slot here, but the big question on my mind pertained to how Nintendo's (OTC: NTDOY) Wii system would do in May. After all, the fad has to wear out at some point, right? At some magical juncture, either Sony's (NYSE: SNE) PlayStation 3 or Microsoft's (NASDAQ: MSFT) Xbox 360 will displace the Wii and become the top-selling system of the month.

Well, that hasn't happened yet. The Wii sold the most, moving 675,000 systems. That was more than three times the amount of consoles sold by PlayStation 3. And as for the Xbox 360, that came in dead last, moving only 187,000 units. All told, total video-game sales, including hardware and games, increased 37% year-over-year. Yep, video games are still hot.

I'm going to predict that the Wii Fit will be the top-selling game package for the month of June. This thing is flying off the shelves in my area, even at $90 (apparently, high fuel costs aren't hurting Nintendo's clientele). Does that mean that Nintendo might make for a good short-term trade? Maybe, but I'd prefer buying it safely below $60 per share. As of this writing, it's trading well above $60 per share. I continue to hold Activision (NASDAQ: ATVI) as my play on video games, and will be keeping Electronic Arts (NASDAQ: ERTS) in the back of my mind as August approaches, since that will be when the new Madden game arrives in stores. Not sure if that's worthy of a trade yet.

Disclosure: I own Activision; positions can change at any time.

Was it any surprise that Take-Two Interactive Software, Inc. (NASDAQ: TTWO) beat expectations for the second quarter? Not a chance. That's because Grand Theft Auto IV stole a lot of hardcore-gamer hearts when it made its eagerly anticipated debut back in April. Net revenues more than doubled to nearly $540 million in Q2, and adjusted net income came in at $1.52 per share. Briefing.com says that the bottom-line results were $0.39 ahead of analyst expectations. Again, we saw this coming.

Take-Two opened Grand Theft Auto IV on the Sony Corporation (NYSE: SNE) PlayStation 3 and Microsoft Corporation (NASDAQ: MSFT) Xbox 360 platforms with excellent fanfare and brilliant marketing, taking full advantage of the brand equity intrinsic to the title. An impressive 8.5 million discs of the title have been sold so far. Job well done. Plus, BioShock is coming to PlayStation 3 later this year. That's going to be a major franchise in the years to come.

Yet, I will not buy the stock. With the arbitrage battle surrounding Take-Two and its takeover dance with Electronic Arts (NASDAQ: ERTS), I simply am discouraged from stepping in and adding the company to my portfolio. I owned Take-Two at one time, but I'm not interested in getting back in. Besides, the news is out on Grand Theft Auto, so who knows if this would have been much of a trade right now, even if the EA deal wasn't on the table. Great quarter, excellent future guidance, but I just don't see the value of playing the buyout-game here.

Disclosure: I don't own any of these companies, but positions can change at any time.

Another month has gone by, and in the world of video games, the story remains the same. I have been very impressed with the resilience of the Nintendo (OTC: NTDOY) franchise. This Wii "fad" just continues on and on. According to data from marketing-research firm The NPD Group, last month, the Wii system sold over 714,000 units, and the Nintendo DS moved over 414,000 units. Game systems by Sony (NYSE: SNE) and Microsoft (NASDAQ: MSFT) were left far, far in the dust. The Associated Press said all other major systems couldn't even reach 200,000 in terms of unit sales.

And now, this week will bring a potentially big catalyst for the Wii. The Wii Fit device, which is an electronic exercise program designed to take full advantage of every innovative nuance offered by the console, is expected to be a huge hit. I can almost guarantee that it will be, as I personally have heard a lot of buzz over it and, on an anecdotal level, I know a lot of people intend to pick it up when it is released. I don't think it's going to fail, even at the relatively high price point of around $90.

I'm not, however, going to buy any Nintendo stock based on the coming excitement this week, even though I think the shares have a great chance of popping. I've owned Nintendo in the past and made money on it, and I'm always thinking about when to re-enter, but for now, I am staying on the sidelines. For me, it feels like too much of a risk in terms of investors selling on the news once the Wii Fit is out. I could be wrong, of course; in fact, Nintendo's ADR's closed up a buck to settle at $72.50 per share on Friday. That puts it not too far away from the 52-week high. But, as much as I love the video-game sector -- I own shares of Activision (NASDAQ: ATVI), in fact -- and as much I recognize Nintendo's dominance over the PlayStation 3 and the Xbox 360, I'm going to sit this one out.

Disclosure: I owns shares of Activision; positions can change at any time.

THQ's (NASDAQ: THQI) Q4 results were not good at all. Revenues were up over 8% to $187 million, but the software publisher lost an adjusted $0.37 per diluted share from continuing operations. Last year at this time, THQ generated positive adjusted net income of $0.13 per diluted share from continuing operations. The full fiscal year was no better -- revenues were basically flat at $1 billion. The company lost an adjusted $0.23 per diluted share from continuing operations during the year compared to an adjusted profit of $1.20 per diluted share from continuing operations in 2007.

This publisher is no Activision (NASDAQ: ATVI) or Electronic Arts (NASDAQ: ERTS) right now. Its slate is performing poorly, and the company's stock is likewise in the dumps. But what about the future? A few years back, THQ wasn't a bad investment decision. I have a feeling that THQ will rebound as the current console cycle continues its forward path, especially when further price cuts in hardware make their way to market.

THQ, however, needs to get its slate back on track, and to really go after the Sony (NYSE: SNE) PlayStation 3 and Microsoft (NASDAQ: MSFT) Xbox 360 players. It seems to be doing OK with the Nintendo (OTC: NTDOY) Wii platform in terms of revenue mix. Perhaps the deal struck with DreamWorks Animation (NYSE: DWA) for a video game based on the animation company's 2010 feature Master Mind will help.

Nevertheless, there is nothing exciting in the earnings release, nothing that makes me think that THQ is out of the dark woods yet. Again, though, I would expect the publisher's stock to rebound in the future. Question is, how patient will investors be?

Disclosure: I own shares in Activision; positions can change at any time.

So Take-Two Interactive (NASDAQ: TTWO) is about to have one heck of a week. Tell me if I'm wrong, but I'm willing to bet everyone reading this knows that today is launch day for Grand Theft Auto IV on the Sony (NYSE: SNE) PlayStation 3 and Microsoft (NASDAQ: MSFT) Xbox 360 consoles. And I'm sure there were many hardcore fans at Best Buy (NASDAQ: BBY) and GameStop (NYSE: GME) today, ready with cold-hard-cash in their hands to snag the software; in fact, this article talks about how some stores were open at midnight to satisfy the pent-up demand (remember, this title was delayed). And Douglas McIntyre discussed the game earlier today as being a potential barometer in terms of consumer confidence.

With all this incredible buzz, with the projection that GTA IV might move close to 10 million discs this year, should you be interested in taking on some Take-Two stock for your investment portfolio? The answer for me is no, Take-Two is not a buy here. Remember that we still have the whole arbitrage game going on with it since Electronic Arts (NASDAQ: ERTS) wants to buy the publisher; also recall that Take-Two is gunning for a higher offer and purposely delayed further negotiations until after the release of GTA IV. I sold my position when the whole buyout offer was made a while ago, and I'm still glad that I did -- for me, the trade was over at that point, and I was happy to simply own my Activision (NASDAQ: ATVI) shares.

I'm not a huge fan of Blockbuster (NYSE: BBI), but I do concede that I think the movie renter is on to something with its latest move. According to this brief AP piece, Blockbuster wants to leverage the current video game console cycle to add value for its shareholders. Management intends to increase its presence in this sector by adding more hardware, software and accessories dedicated to consoles from Sony (NYSE: SNE), Microsoft (NASDAQ: MSFT) and Nintendo (OTC: NTDOY) to its locations.

This would be wise. I think all retailers should have a comprehensive and well-defined strategy when it comes to video games -- why let GameStop (NYSE: GME) have all the fun? Blockbuster should really go all out on this form of leisure entertainment and aggressively pursue this potential area of growth. Kids -- and teenagers and adults, for that matter -- love to try before they buy when it comes to game software.

Management has to realize, however, that it's not enough to just expand its video game sections; oh no. Indeed, some heavy branding and promotional initiatives are definitely required to convince consumers that Blockbuster is a go-to place for rental/buying needs related to PlayStation 3, Xbox 360, Wii and the Nintendo DS. I haven't thought of Blockbuster as a place to rent video games for a long time now (I also haven't thought about Blockbuster in general, since there aren't any close to me anymore).

So, yes, Blockbuster should do what it can to hitch onto the hot video game growth curve. This is a much, much better idea than buying Circuit City (NYSE: CC), I can tell you that. (For more on that debacle, check out Zac Bissonnette's recent post on the subject.)

Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.

I'd like to own Nintendo (OTC: NTDOY), but there are a couple things that bother me about the current chapter of its amazing story. First, let me take a look at a report about the video-game juggernaut's earnings.

According to The New York Times, Nintendo's profit number was one for the record books. Sales soared to the sky, rocketing 73% to over $16 billion. Net profit also went ballistic -- in a good way -- by about 48%, coming in at $2.5 billion. Yeah, the Wii console was a big driver, but don't forget that little handheld wonder called the Nintendo DS -- people sometimes miss that part of the tale, and they shouldn't. The DS sold over 30 million units on a global basis during the fiscal year, while the Wii sold over 18 million units. Yep, Sony (NYSE: SNE) and Microsoft (NASDAQ: MSFT) still have something to worry about, as the Wii has taken the shine away from the PlayStation 3 and the Xbox 360. The company's position in the current gaming cycle is strong, no question. And publishers like Activision (NASDAQ: ATVI) and Electronic Arts (NASDAQ: ERTS) all strive to be big supporters of Nintendo's systems.

Here are the problems, though, that I alluded to at the opening. First, as of this writing, the ADR's are, according to AOL Finance, priced at $71.14 (the ADR's don't change during the day on this quote system, as they update after the close; I'm seeing a current bid on my brokerage's quote system of $68.50, so the shares might possibly go lower tonight). This represents something of a recent run-up, so I'm not interested in chasing the stock at these levels (last time I was interested in Nintendo, there was a price drop). But, there could be a more pressing issue -- on an anecdotal level, in my area, the Wii's are currently plentiful. Has the system peaked? Hey, don't go by my anecdotal observations, but I'm just saying that, for me personally, buying Nintendo at this time is something I'd have to consider very, very carefully.

Disclosure: I own shares of Activision; positions can change at any time.

I don't have to tell you how utterly, unbelievably, unequivocally popular Activision's (NASDAQ: ATVI) Guitar Hero game is. It's currently selling tons of units on the Nintendo (OTC: NTDOY) Wii, the Microsoft (NASDAQ: MSFT) Xbox 360 and the Sony (NYSE: SNE) PlayStation platforms. It's too tough for me to play, but legions of others are having a grand old time living out their rock-and-roll fantasies.

I've been wondering for a while now if the DS would ever get a Guitar Hero game. Let's be honest -- all of us know several kids and/or adults who own one of these handhelds; they're like everywhere (and, yes, I want one too, to be frank, although I hate small game devices). I was thinking that Activision was leaving a lot of money on the table by not programming a version for Nintendo's handheld. But then I thought that a DS version would be like an insult to the image of the franchise -- how could a developer possibly capture the feel of the console iterations on the little DS? Didn't make sense to me, so I figured we'd never see a DS version.

Sony (NYSE: SNE) is still in the game, and it wants competitors Microsoft (NASDAQ: MSFT) and Nintendo (OTC BB: NTDOY) to know about it. The latest move by the company might not be extraordinary or anything like that, but it nevertheless shows a console maker that believes its product is worth something to living rooms across America (and the world, for that matter).

According to the following article from The Wall Street Journal (subscription required), Sony is injecting some new bells and whistles into the PlayStation 3 unit. Via a system update called Blu-ray Disc Profile 2.0, Sony users will be able to do neat things like transfer images and song playlists to the company's handheld PSP system, invoke a resume-play feature for Blu-ray films even once the disc has been taken out of the system, and download streamed content. Yep, these are neat things, all right -- but will they make people suddenly say to themselves, "Oh man, I have to get a PlayStation 3 over a Nintendo Wii or a Microsoft Xbox 360 for sure now!!!"

Well, it's hard to say that someone would say that exactly, but Sony is doing the correct thing here by adding functionality. And there are some who will indeed care about this stuff, and enjoy it. So it's important to have two minds about this as shareholders -- it isn't mindblowing news, but it shows that Sony is out there promoting. Anything helps. Plus, I like how Sony is yet again highlighting the Blu-ray capability -- that is a big distinction between its unit and the Xbox 360/Wii platforms. Blu-ray, as we all know by now, is the winner of the new format war, and Sony should gloat about that fact at every conceivable juncture.

So, again, I'm not saying this particular update will by itself turn the tide or anything -- price cuts would be more effective -- but I think it will help the brand equity of the PlayStation 3. As for me, I'm not running out to buy Sony -- I'm still happy playing the video-game revolution via my Activision (Nasdaq: ATVI) shares.

Disclosure: I own shares of Activision; positions can change at any time.

As I've said before, I love reading the monthly videogame sales stats from marketing research outfit NPD. February was yet another nice month for the industry. Software continues to move off retail shelves at a robust clip; sales in this department were up 47% year-over-year last month.

Activision (NASDAQ: ATVI) and its incredible Call of Duty 4 title -- yes, I am an Activision shareholder and will probably promote any of its games to my friends and acquaintances, but if you think I'm wrong on this one, go check it out for yourself, it does rule something fierce -- continued its reign at number one, selling 296,000 discs. Activision also did well with Guitar Hero III for the Nintendo (OTC: NTDOY) Wii, selling 222,000 copies of the game. Rock Band, the music game from Electronic Arts (NASDAQ: ERTS), did well on Microsoft's (NASDAQ: MSFT) Xbox 360 -- over 160,000 rockers heeded the call to play some classic tunes.

As one might expect, the Wii sold the most consoles in February. Sony (NYSE: SNE) came in second with its PlayStation 3 unit, and the Xbox 360 was third. Microsoft says a shortage of systems hurt the company; I don't doubt that claim, the 360 did seem a bit hard to come by at some retail channels last month. But it'll be back in competitive mode in the coming months, I'm sure, making certain that Sony doesn't rest on its laurels. I expect sales for software to continue doing well, and just wait till the next holiday season -- I agree, it's too early to be talking about that, but it'll be here before you know it., and I expect it will be another banner selling period. And I can't wait to see what software title will be on top for the current month -- Super Smash Bros. Brawl for the Wii came out this past Sunday, keep in mind. If you told me you haven't heard of this title, I'd be surprised -- it really was the story of the week (or, should that be wiik; stupid pun, gotcha). A couple of GameStop (NYSE: GME) locations in my area held some tournaments, and from what I heard, they were quite lively.

Disclosure: Steven Mallas owns shares of Activision; positions can change at any time.

Midway Games (NYSE: MWY), a competitor of videogame publishers such as Activision (NYSE: ATVI), Electronic Arts (NASDAQ: ERTS), THQ (NASDAQ: THQI), and Take-Two (NASDAQ: TTWO), reported earnings on Thursday for the fourth quarter. They weren't good. Net revenues went down by 20%, and the loss widened to 33 cents per share versus a loss of 2 cents per share in the year-ago period. For the full year, net revenues declined 5%, and the loss widened to $1.07 per share versus a loss of 86 cents per share in 2006. Even on an adjusted basis, the losses were larger than before.

I've been following Midway for a long time, and I have to say that I just don't think the publisher's stock is worth anyone's time right now. Sony (NYSE: SNE), Microsoft (NASDAQ: MSFT), and Nintendo (OTC: NTDOY) all have their new consoles out -- PlayStation 3, Xbox 360, and Wii, respectively -- so Midway, if it were executing properly, should have been able to take advantage of them. It hasn't.

I see nothing in the release that indicates a positive catalyst is on the horizon for Midway and/or its stock. It's a cool publisher with some fun games, but I won't be buying its thesis -- if there is one -- anytime soon. I'll stick with my Activision shares, and I'd urge others to look at an EA, or even a THQ, for possible value.

Disclosure: Steven Mallas own shares of Activision; positions can change at any time.

Videogame sales data are in for the month of January. I love it when we get the monthly numbers on electronic gaming; it's always fun to see which of the big three -- Microsoft (NASDAQ: MSFT), Sony (NYSE: SNE), or Nintendo (OTC: NTDOY) -- are on top.

Well, as you can guess, the Nintendo Wii was number one yet again, selling 274,000 consoles last month, according to data released last week by marketing research firm NPD. The PlayStation 3 wasn't far behind with 269,000 units sold. The Xbox 360 was in the undesirable third position, moving only 230,000 of its next-generation system. Microsoft has stated that shortages of its popular product contributed to the disappointing showing. On an anecdotal basis, I know that the Xbox 360 with the hard drive, at least in my area, was indeed absent from many retail shelves as of late.

It was nice to see the PlayStation 3 have a good month. And you have to wonder how long the Wii will stay on top -- there seems to be no end to its momentum, but everyone really wants to see how it performs when there's finally enough supply of the fun devices in the marketplace (if you've never played the Wii, take my word for it -- it really is fun). Plus, what happens when all three of the new consoles move toward price parity? Will the power of the PS3 suddenly trump the innovative DNA of the Wii? Watching the evolution of the sales dynamic of all three systems will be almost as diverting as shooting up the mutant beasts in Resident Evil 4.

This post was part of AOL Money & Finance's Best & Worst of 2007 feature. The voting has now closed and readers have chosen Apple's iPhone as the hottest gadget of the year. Be sure and let us know in the comments if you are pleased with this result.

2007 was definitely the year of the gadget. Every year, personal electronics get sleeker, attain more cutting-edge technology and functionality, and make their way into the the pockets and homes of millions of consumers. So, let's decide on which one was the biggest hitter this year, shall we?

First up, the Apple iPhone. Arguable the largest and most anticipated cell phone launch in history was in the news constantly form its January announcement until its June launch with partner AT&T Inc. (NYSE: T). Apple Inc. (NASDAQ: APPL) shined again as a marketing machine and hyped the iPhone as much as it could while tech blogs and the news media seemed to have a lust for the device months before it ever hit a single hand. What the iPhone lacked in features it made up for in style and user experience. The device sold more than a million units in the first three months it was sold, and has helped Apple maintain its aura as the coolest tech company on the planet this year.

Next, we have the Nintendo Wii. This $250 gaming system is the size of a large hardback book but has great graphics and a whole new way to play games. It's not nearly as cutting edge as the Sony PlayStation 3 or Microsoft Xbox 360, but that's not what it's about. The Wii was meant for everyone (not just gamers), and the way it makes players physically interact with games has been hailed as brilliant. Consumers think so too, as the Wii has outsold the Xbox 360 almost every single month in 2007, and is way ahead of the more expensive PlayStation 3 in unit sales as well.

Microsoft Corp. (NASDAQ: MSFT)'s release of the gaming title Halo 3 is what I consider to be the last stand for the software company to make just a single penny of profit on its billion dollar-losing Xbox gaming division. For years now, we're heard from J. Allard and other Microsoft execs that the software sales would make money for the division while the company continued to sell Xbox hardware at a loss just to get it into the hands of customers. Ditto for Sony Corp. (NYSE: SNE), which reportedly takes a large hit on each PlayStation 3 sale. So far, Microsoft hasn't made anything from the sale of Xbox machines.

Microsoft even cinched up its position to make the profit in video game sales by purchasing Bungie Studios years ago, makers of the Halo game franchise. The Halo games have been crucial to Microsoft's Xbox success in sales (reportedly over 8 million consoles), because without it, the company would have to seriously be thinking about exiting that piece of the entertainment biz.