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.

Activision Inc. (NASDAQ: ATVI) doesn't want to let Rock Band have all the fun. According to Reuters, Activision wants to turn its Guitar Hero platform into a truly direct competitor to its colleague. Come the fall, the publisher will release Guitar Hero World Tour, a package that will include a guitar, a microphone, and a drum set. There will be online capability; players will also be able to create their own tunes via a suite of digital-music tools. And all the major platforms from Sony Corporation (ADR) (NYSE: SNE), Microsoft Corporation (NASDAQ: MSFT), and Nintendo Co., Ltd. (OTC: NTDOY) will be getting this game.

Rock Band, which is developed by Viacom, Inc. (NYSE: VIA)'s Harmonix and sold by Electronic Arts (NASDAQ: ERTS), is no longer unique now that Activision has expanded the depth of its famous brand. Indeed, Guitar Hero still thrived even in the face of Viacom's music game, but it looks like Activision is taking no chances; the publisher obviously realizes that, as time goes on and upgrades to Rock Band come along, the Guitar Hero franchise might see eventual erosion of its fan base as the fad matures. Evolution would certainly be justified at this point.

Yet, I am of two minds about this move. On the one side, I can understand why this had to be done. And I can see why it should work out; after all, Activision's brand equity when it comes to this Guitar Hero game is incredible. Seriously, if you don't know, a lot of players out there, both hardcore and casual, love this platform. However, there's another side to me that wonders if traditionalists won't necessarily enjoy the aspect of the additional instruments. Do they add value, or do they now make the brand seem clunky and complicated? On a gut level, I always theorized that those who chose Guitar Hero over Rock Band relished the fact that it was just one guitar. Then again, going back to the brand-equity thing, maybe current players will now want to try out a more complex musical-gaming experience since the Guitar Hero name is attached.

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.

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.

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.

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.

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.

MTV, a part of Viacom, Inc. (NYSE: VIA), revealed to Billboard Thursday that the digital stores for the popular video game Rock Band saw the number of downloadable songs ("levels") more than double in the last two months. The more than 6 million downloads easily beats the 2.5 million that were purchased between the release of the game in November and when MTV last reported download figures in January.

In an effort to streamline the purchasing process, MTV will also be releasing a new software update to the game this week. The new update allows players to purchase downloadable songs from within the game itself, versus exiting the game and using the platform marketplaces. According to Billboard, "the new Rock Band Music Store feature instead allows gamers to browse, preview and purchase tracks through an interface included in the game" and "will be available as a free download later this week."

Rock Band has enjoyed quick success in the last four months, and with the large sales figures and new changes, the video game indicates a new market the music industry should be able to tap into. The online community within the game can only help spur greater sales as well, with players hoping to connect with new songs that can be added to the store and the game. Another doubled increase may be too much to look toward in the next period, but more growth is certainly bound to happen.