Electronic Arts (NASDAQ: ERTS) issued Q4 and full-year numbers on Tuesday. The competitor of Activision (NASDAQ: ATVI), THQ (NASDAQ: THQI) and Take-Two Interactive (NASDAQ: TTWO) reported adjusted fourth-quarter revenues of $919 million, which was good for a 50% increase. Earnings per diluted share were $0.09 on an adjusted basis, also representing a 50% jump. For the full year, adjusted revenues jumped 30% to $4 billion and earnings per diluted share rose 36% to $1.06. Not too bad.

EA, according to Briefing.com, also beat Wall Street's expectations by quite a bit. EA was forecast to only break-even on a non-GAAP basis, so the difference was a nice $0.09. In terms of operational cash flow, EA increased the metric by 33% during the fourth quarter, but for the full year, operational cash flow decreased 15%. Ah, such is life, I guess. Nevertheless, EA produced 27 titles that sold over a million units this year -- three more than in the previous year. Fifteen of its titles sold over 2 million units -- five more than the last fiscal period. Titles such as Army of Two and Rock Band, as well as various sports franchises, drove the results.

Things sound pretty good, don't they? EA is definitely a major force on the Sony (NYSE: SNE) PlayStation, Microsoft (NASDAQ: MSFT) Xbox 360 and Nintendo (OTC: NTDOY) Wii platforms. But EA has had some challenges during this console cycle, and there is the perception that it needs a major merger to combat the threat posed by the Activision and Vivendi Games transaction. And let's not forget that Activision is on fire all on its own. That's what the whole attempted takeover of Take-Two is all about.

In a column in Barron's (subscription required), analyst Todd Greenwald provides a bullish outlook for the video game industry, macroeconomic trends be damned:

We believe that this industry is virtually recession-proof and will be driven almost entirely by the release of new games, and continued hardware sales, rather than any macro-level consumer spending trends.

Last year's momentum has continued into the first half of 2008; year-to-date software sales are up 41% in the U.S., following 34% growth last year. Furthermore, this will likely accelerate in the coming months, driven by the releases of Grand Theft Auto IV, Nintendo's Mario Kart Wii and Wii Fit, and Konami's Metal Gear Solid 4.

I tend to agree with the notion that video games should be pretty recession-resistant -- they just aren't that expensive for the amount of time that so many young, male hardcore gamers spend with them. There's an argument to be made that a $50 video game actually provides a positive return on investment to the consumer because a night at home playing PlayStation in your underwear is cheaper than a night out on the town.

But one word of caution: Much of the growth, especially in more casual games like the Nintendo Wii, is being driven by a growing number of non-hardcore gamers. People who don't consider video games their main hobby may be more likely to give them up if things get tight.

Another problem to keep in mind: the Associated Press recently reported that teens are having a tough time procuring summer work in light of the struggling economy. That means less spending money for video games. But teen-oriented fashion retailers are more likely to be the victims of that.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

The Nintendo Ltd. (OTC: NTDOY) Wii and Sony Corp. (NYSE: SNE) PlayStation 3 were released within two weeks of each other, in November of 2006, as the latter two of the three "seventh generation" home video-game consoles, with the Microsoft Corp. (NASDAQ: MSFT) Xbox 360, released a year earlier, being the third. Now, a year and a half later, let's review how the two gaming machines stand up to each other.

Out of the gate, the Wii was a hit. It broke sales records, led by its revolutionary controller and Wii Sports, a silly mini-game compilation that came packaged with the console. The focus of the system was more on its unique game play, which Nintendo hoped would draw casual gamers, than its intense graphics abilities. The gamble paid off, as the Wii surpassed the Xbox 360, which was released earlier, as the top-selling console in September 2007.

The PlayStation 3 had no such luck at the start. The console's strategy, like the Xbox 360's, revolved around graphics, which made the system more expensive -- $499 for the basic PS3 at launch was double the Wii's $249 launch price. Sony also decided to intertwine the fate of the console with that of the next generation DVD technology the company backed, the Blu-ray disc. However, the release of the PS3 slightly predated the high-definition craze, and so having a Blu-ray player was not an important enough selling point to help the console at launch. Another issue for the PS3 at launch was the lack of a cornerstone franchise for the system. Xbox had Halo, and Nintendo, with its deep video-game roots, had Zelda, Mario, and Metroid. Without a "must buy" game or franchise, Sony was left out, and its PlayStations stayed on the shelves.

Mother's Day has finally gotten out of hand and may now be more commercial than Christmas. Wal-Mart (NYSE: WMT) has decided to promote the Nintendo Wii Fit as a better thing to give mom than flowers. It is certainly more expensive.

According to Reuters, "the Walmart.com homepage will be dominated by the Wii Fit -- a physical exercise program that uses a pressure-sensing board as a controller -- including a link to order the product now, ahead of its May 19 U.S. launch."

The world's largest retailer hopes the promotion will bring store and online traffic during a tough economic period. Even with a recession here or coming, video games are still selling well.

The question is, even with a good market for game consoles, is this something that mom wants on her big day? Flowers and clothing may have done well over the years because women actually like them.

But sonny boy can go online and get that Wii Fit for himself and call the florist at the last minute. It is Mother's Day.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

The theory makes sense. As the economy softens, Sony (NYSE: SNE), Microsoft (NASDAQ: MSFT), and Nintendo will cut the prices of their game consoles to keep sales volumes up. The CEO of game publisher Activision (NASDAQ: ATVI) has stated as much.

According to Reuters, "With the rising costs of fuel and food and housing, it is more difficult to go out and buy a $399 console, and I think it's going to put pressure on the console manufacturers to reduce their prices," Bobby Kotick said.

The problem presents a delicate balance for the console makers. Nintendo's stock has soared because of the popularity of the Wii. Microsoft just began to make money in its device division in the first quarter of the year. After a number of quarters of losses, it looks like the PS3 may start to contribute to the Sony P&L.

Holding prices may keep margins high, but drop unit sales.

There are two factors that work in favor of the console producers. The first is that, as their manufacturing volume has gone up, component prices have come down. That means if retail prices are lowered, the companies can still make money.

The other factor is that all three companies get licensing fees from each video game that is sold to run on its platform. With new offerings like Grand Theft Auto IV on the market, those fees should soften the blow of lowering hardware prices.

Watch for the price of game consoles to be dropped -- and soon.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

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.

Take-Two Interactive (NASDAQ: TTWO), the troubled video game company, is releasing the new version of its popular game Grand Theft Auto IV. The product is expected to set all-time records for the sales of a single video game title.

The Wall Street Journal writes that one analyst "predicts first-week Grand Theft Auto IV sales could be more than $400 million. On Metacritic.com, which compiles game-review scores from dozens of publications, the PlayStation 3 version of the game had a 100 out of 100 score." In other words, it will sell like hotcakes.

Leaving aside the hostile takeover offer by Electronic Arts (NASDAQ: ERTS) to buy Take-Two, the potential sales of the game raise an interesting question.

Consumers pocket books are tight. A larger and larger portion of their income is going to food and gas as the price of those staples rises. Eating out and buying clothes from retailers has clearly dropped off. Many people don't have the money to buy the basics.

In the face of all that, Grand Theft Auto IV is expected to sell extraordinarily well. Microsoft (NASDAQ: MSFT)'s Halo 3 has already set sales records. Game consoles, the PS3, Xbox 360 and Wii are all setting sales records.

Either the consumer has a little more money than most analysts think, or the only thing they have money to do is sit for hours in their darkened homes and play video games.

Douglas A. McIntyre is an editor at 247wallst and the author of Ten Stocks Under $10.

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.

Sony (NYSE: SNE) is building a virtual community for video-game players who buy its PS3 video-game console. It has been delayed again, which may say something about why the Microsoft (NASDAQ: MSFT) Xbox 360 and Nintendo Wii tend to thrash it in the sales department.

According to The Wall Street Journal, "The service will let users create avatar characters, decorate homes and interact with other users in a virtual world." It was supposed to come out in 2007, and now it may be out late this year. Microsoft has had an interactive aspect to the Xbox for more than two years. It allows game-players to compete against each other over broadband connections. The Microsoft product also facilitates online chat and downloads of video games and movies.

Electronic Arts Inc. (NASDAQ: ERTS) shares are trading higher today on a bunch of varied news items. First, the company announced a launch date for is popular "Rock Band" game for the Nintendo Wii. Second, the stock was added to Goldman Sachs Conviction Buy list. Lastly, the company's Chief Financial Officer Warren Jenson will resign at the end of the month. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ERTS.

After hitting a one-year high of $61.62 in October, the stock hit a one-year low of $43.62 in February. ERTS opened this morning at $50.33. So far today the stock has hit a low of $50.00 and a high of $51.08. As of 12:30, ERTS is trading at $50.31, up $0.62 (1.3%). The chart for ERTS looks neutral and improving, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $40 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in just two months as long as ERTS is above $40 at May expiration. Electronic Arts would have to fall by more than 20% before we would start to lose money.

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.

Imagine if the Sony (NYSE:SNE) PS3 actually came out of the shadow of the Nintendo Wii and Microsoft (NASDAQ:MSFT) Xbox 360. During 2007, PS3 ran in third place in sales in most regions and most months. The machine was viewed as too expensive and did not have enough new games to run on it.

There is a case to be made that some of this could change. Production scale is moving up on the machine. That means lower component costs and another chance to cut prices. According to Reuters, "2008 will be a turning year for the PS3," said iSuppli analyst Pamela Tufegdzic. "Sony is offering a better forthcoming software pipeline with blockbuster titles like 'Gran Turismo 5,' which will boost PS3 sales this year."

Not so fast. Nintendo and Microsoft are not going to stand by and let their sales be stolen. Nintendo has already introduced a radical new platform called Nintendo Fit. It allows users to stand on a balance board and be physically involved in games that include things such as downhill skiing. Microsoft has its own arsenal lead by Halo 3.

Sony's PS3 may be in for slightly better times, but it is far behind in a race that it may never win.

Douglas A. McIntyre is an editor at 247wallst.com.

Whoever invented the Wii Fit, a virtual gym that can be used in conjunction with the gaming console, deserves a medal. Heck, he or she deserves a raise because it's going to be a huge seller for Nintendo Co. (OTC: NTDOY).

This game is perfect for someone like me who doesn't exercise as much as he should, which in my case means hardly ever. The Wii Fit, which will be available May 19, also will be useful for parents trying to get their children to exercise more. "Wii Fit is all about breaking the definition of video-gaming, about something that keeps you and your family fit and engaged," said Reggie Fils-Aime, president of Nintendo's U.S. division, in an interview with The Wall Street Journal.

Nintendo officially launched a game in the US which has a feature that Sony (NYSE: SNE) and Microsoft (NASDAQ: MSFT) have yet to introduce. The Nintendo Wii Fit is aimed at gamers who want a little exercise. The new product may speak volumes about why the Japanese company has a sales lead over its two rivals.

According to The Wall Street Journal, the new product "comes with a weight-and-motion sensing device called the Wii Balance Board." Nintendo is also launching a service that allows video games to be distributed over the internet.

The Wii Fit will be introduced with games including one that gives the sensation of skiing.

While products like the Xbox 360 and Playstation 3 are based largely on the old model of a console that the user operates from a fairly fixed position, Nintendo has moved in the direction of gaming that involves the user participating directly in the action on the screen. The Wii Fit has sold 1.4 million units in Japan in a little over two months.

Now Microsoft and Sony have something else to worry about from the market leader.

Douglas A. McIntyre is an editor at 247wallst.com.

I used to own some of the Nintendo (OTC: NTDOY) ADRs that trade over-the-counter. I bought them last summer ahead of the holiday season at around $62 a share and sold the position last month for about $67 a share, intent on raising some cash in one of my accounts for better buying opportunities. I should have sold when the shares hit their 52-week high of approximately $78, but I didn't -- kills me, but I've moved on (I think).

But with the recent sharp drop in the shares, should investors be taking a look at Nintendo? I know I've been keeping an eye on the price action. Nintendo is definitely a major player this time around in the console cycle; Sony (NYSE: SNE) used to be king of the gamers, but now the sales/cultural buzz is definitely in the Mario-maker's court. Not only is the Wii a major catalyst, but you have to respect the incredible popularity of the DS handheld system.

My gut is telling me that Nintendo hasn't yet bottomed out. Identifying a bottom is a fool's game, of course, but I'd like to see Nintendo develop a more stable base before I buy in again. For now, I own Activision (NASDAQ: ATVI) and Take-Two (NASDAQ: TTWO) as plays on the videogame growth story, but I am interested yet again in Nintendo.

Disclosure: Steven Mallas owns Activision and Take-Two, and is mulling a purchase in Nintendo.