Nintendo Co., Ltd. (ADR) (OTC: NTDOY)'s Wii game console continuet to burn up the sales charts, selling hundreds of thousands every month. In fact, the lower-priced and graphically-inferior Wii has blown through almost every sales expectation since its release nearly two years ago. Last month, the Wii was responsible for 49% of all game consoles, and it's sold nearly 30 million since its November 2006 launch. Wow.

But, with success comes a large target on the back. Nintendo has been named in a patent lawsuit claiming the Japanese gaming company. Hillcrest Technologies says that Nintendo has violated various patents it holds dealing with the wireless, dimension-aware gaming controller that ships with every Wii console.

The "Wiimote," as it has been dubbed, uses gyroscopes, Bluetooth wireless technology, and is incredibly simplistic on the surface (there are a minimum of buttons, unlike the competition). But inside the Wiimote, the technology making it possible to swing it like a tennis racket is quite complex. Hillcrest's claim rests primarily on wireless technology it invented to allow the physical motion of a controller to select items on a viewing monitor. Hillcrest has already licensed its technology to several gaming companies, but the question remains: why did it take almost two years to bring the lawsuit against Nintendo? Something smells here.

Microsoft (NASDAQ: MSFT), a competitor of IBM (NYSE: IBM) and Google (NASDAQ: GOOG), will report its earnings for the fourth quarter on Thursday. According to Trey Thoelcke's earnings summary, the software giant will be expected to produce sales of about $15 billion on earnings per share of 47 cents. These numbers would represent double-digit growth rates for each metric.

According to this estimates page at AOL Finance, Microsoft has cultivated a reputation for being reliable when it comes to delivering on Wall Street expectations. It certainly has the assets to keep this trend going. The company's operating-system monopoly, as well as its incredible success with the Office suite of products, guarantees a steady stream of cash flow and bottom-line predictability. Other investments, such as the Xbox 360 and the company's various Internet properties, aren't as guaranteed. In fact, Microsoft has engaged a very strange battle (strange to me and others, at least) to buy Yahoo! (NASDAQ: YHOO) to bolster its future prospects on the 'net.

So, here's what investors should be looking for. I will be very interested in what management has to say about its thoughts regarding Yahoo! and its utility for Microsoft. Is it an absolute necessity? I doubt it, and I really do hope that shareholders will finally get some closure on this subject. The best thing would be for Microsoft to announce that it is done with the portal. And in terms of the Xbox 360, I would be interested in hearing any new marketing strategies being readied for the holiday season and if the current recessionary environment will have any effect on sales. Microsoft recently reduced the price for one Xbox 360 model as a way of increasing that system's value proposition in relation to the Sony (NYSE: SNE) PlayStation 3 and the Nintendo (OTC: NTDOY) Wii. The company also has entered partnerships with General Electric's (NYSE: GE) NBC Universal and Netflix (NASDAQ: NFLX), according to Variety, to make its Xbox Live asset even more attractive to users looking for cool content such as movies and TV shows.

Activision closed on its transaction with Vivendi Games Thursday and officially became Activision Blizzard (NASDAQ: ATVID), according to an article at SmartMoney.com. And I am pretty excited at the prospects for the new business (I am a shareholder). It's going to be a tough competitor against Electronic Arts (NASDAQ: ERTS) and Take-Two Interactive (NASDAQ: TTWO). (Of course, the latter two might merge at some point.)

Activision is riding high with its Guitar Hero franchise, and Vivendi Games brings an incredible asset to the table in the form of online gaming sensation World of Warcraft. I can't say I know much about World of Warcraft the game itself, but I know it has a huge following. What else do I need to know, right? For 2009, management at Activision Blizzard expects pro-forma operating income of over $1 billion and perhaps $1.20 or more in terms of earnings per share. That puts the stock, which rose over 5% on Thursday and closed with a price of $31.77 per share, with a P/E ratio a little over 26. That isn't too bad a valuation considering the growth potential. And when the holiday season comes around, I'm sure people will still be buying the publisher's software for gifts, recession or not. Whether it's the Sony (NYSE: SNE) PlayStation 3, the Microsoft (NASDAQ: MSFT) Xbox 360, or the Nintendo (OTC: NTDOY) Wii, gamers will be buying the company's products for these platforms in droves.

The stock has retreated from the highs it reached back in June when I wrote about it, but I am still bullish on the thesis here. Activision Blizzard should do really well, but with the markets in turmoil, you can probably wait for a pullback before buying.

Disclosure: I own Activision Blizzard; 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.

The video-game sales report for the month of March is in. The NPD Group, a market-research company, said that sales of hardware and software jumped 57% compared with March of last year, coming in at $1.7 billion. Hardware revenue grew 46%, while software sales leaped by 63%. One of the best analysts of the video-game sector, Michael Pachter of Wedbush Morgan, thought that software sales might increase 47% from last year.

That's okay, though -- video games certainly have the right, as well as the ability, to surprise to the upside, especially when Nintendo (OTC: NTDOY) released the incomparable Super Smash Bros. Brawl for the Wii in March. I don't think there's one soul on the planet that didn't expect that title to be tops in March -- it sold 2.7 million units. Seriously, many gamers are addicted to this. I know one individual who still plays several rounds of smash-brawling antics twice a day! The title definitely drove Wii sales -- the console sold 67% more units in March than it did in the previous month.

The data continue to show that video gaming is hot, and that quality publishers such as Electronic Arts (NASDAQ: ERTS) and Activision (NASDAQ: ATVI) should be investigated as potential ideas on pullbacks. However, I think Nintendo is the bigger one to look at now since the Wii continues to do well and since it has an interesting putative catalyst coming up in May with the Wii Fit exercise system. Of course, you may just want to look right now. 'll like Nintendo's stock a whole lot better if it gets below $60 per share. No matter what, though, the company is still giving Sony (NYSE: SNE) and Microsoft (NASDAQ: MSFT) a nice run for their collective money. With the DS, the Wii, Mario, etc. -- Nintendo certainly commands respect, I'll say.

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

Best Buy, Inc. (NYSE: BBY), always the one to capitalize on unique marketing opportunities at every chance it gets, sees another one coming down the road very soon. The upcoming Nintendo Wii gaming title Wii Fit, which is to be released on May 17, should be one of Nintendo's hottest gaming titles of this year.

The Wii has made its mark using interactive and physical gameplay, requiring the physical involvement of the players instead of the couch potato thumb involvement of regular competitive game consoles. For that reason alone, the Wii has become immensely popular, outselling both the Sony Corp. (NYSE: SNE) Playstation 3 and the Microsoft Corp. (NASDAQ: MSFT) Xbox 360.

Best Buy's marketing angle with the Wii Fit release happening in over a month includes some teaser ads near fitness DVDs that use Nintendo's catchy Wii slogan: "how will it move you?" The new Wii Fit game, which will include a "balance board" to help those playing the game to interact as much as possible physically, needs to have a "best outlet" for sales here in the U.S. due to its existing mass population appeal, and if Best Buy can ramp up anticipation correctly, it may become the outlet to buy the Wii Fit game title come the third week of May. That is, unless competitor Circuit City Stores, Inc. (NYSE: CC) becomes aggressive on its Wii Fit marketing -- and I don't see that happening.

THQ (NASDAQ: THQI) is not casual when it comes to casual gaming. What is casual gaming, you ask? It is a genre of videogaming for people who don't want to learn a bunch of button combos for a complex first-person shooter or don't possess the desire to spend fifty hours winding their way through a vast role-playing universe. And it just might be an important avenue of growth for the videogame industry, since it opens up new markets beyond the hardcore gamer. Publishers such as Activision (NASDAQ: ATVI) and Electronic Arts (NASDAQ: ERTS) know that casual-gaming strategies are important these days, as do console makers Microsoft (NASDAQ: MSFT) and Sony (NYSE: SNE). Heck, Nintendo's (OTC: NTDOY) overall strategy is arguably completely casual in nature, considering the appeal of the Wii.

THQ announced the other day that it would buy Elephant Entertainment and enter into a publishing deal with Oberon Media. Both of these companies are purveyors of casual-gaming entertainment and they are meant to broaden the scope of THQ's offerings in this area. Expectations are for casual games to grow significantly over time.

It may be a smart thing for THQ to grow its casual-gaming business, but it needs to focus right now mostly on getting its main pipeline back in order. Recent delays for certain titles, as well as sagging sales of games that were supposed to do well, have caused THQ's stock to fall; in fact, THQ's recent quarter was kind of bad, in my opinion. So, yes, go after the casual market -- but remember the less-than-casual and hardcore players as well, as they are major drivers for the success of a gaming slate.

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

If I had a dime for every time a person asked me "Is Rock Band ever coming out for the Nintendo (OTC: NTDOY) Wii?" I'd have more money than Electronic Arts (NASDAQ: ERTS) and Viacom (NYSE: VIA) combined. Seriously. Now, though, Wii fans can see the light at the end of the tunnel because Rock Band debuts on the popular platform on June 22 of this year. I don't think any gamer on the planet expected the title to not come out for the Wii.

Not only is this great news for Wii users, but it's also excellent information for shareholders of EA and Viacom. As Richard Driver pointed out, the game is a valuable asset for Viacom. EA benefits because Rock Band is the publisher's answer to Activision (NASDAQ: ATVI)'s Guitar Hero franchise. In fact, Nintendo really stands to benefit this summer from both Guitar Hero and Rock Band because a version of the former will be coming out for the Nintendo DS handheld. There's definitely going to be a rock rumble happening when the dog days are upon us, although I'd expect that Rock Band for the Wii will have a much bigger impact. That doesn't seem too hard to predict considering that music games of these types work better on consoles, in my opinion.

This is going to be one hell of a test for Activision, EA, Viacom and the Wii. Will users adopt Rock Band in droves? Will the Guitar Hero franchise be threatened? In theory, the Wii is a console for casual gamers who just like to play some tennis or a few of the extremely fun midway diversions that can be found in the awesome title Carnival Games -- will they go for something more expensive and more involved? My prediction -- Rock Band will be a hit, but it won't sell a ton of units until the holiday shopping season is upon us. Can't wait to see what happens come June. Till then, rock on, my friends!

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.

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.

Although consumer electronics retailer Circuit City Stores, Inc. (NYSE: CC) is teetering on the brink of a buyout or doomed to failure, at least some areas of it appear promising. This time around, the company has announced that it will get involved with the used video game industry. You heard that right.

Instead of focusing efforts on trying to improve its retail competitive position and somehow out-maneuver competitor Best Buy, Inc. (NYSE: BBY), Circuit City will position itself as a sort of flea market. It's true that the used video game industry is chalked up at a $1.5 billion-a-year industry, that's a niche currently being filled by game specialty retailers like GameStop Corp. (NYSE: GME) and eBay. But this move is a sign that Circuit City is willing to do something -- anything -- to revitalize any product category that it can.

If Circuit City can really make this effort stick, then it may succeed in actually getting more shoppers in the doors. But video game buyers and traders are a fickle lot and will instantly sense if the retailer's pricing, availability and breadth of titles are going to give the competition a run for the used-video-game money, or if this is just another ploy to improve traffic numbers (as some of these customers will invariably shop for more than video games).

Steven Spielberg is, let's face it, one of the most creative guys on the planet, and he's been responsible for some of my most treasured memories at the local multiplex -- who didn't love watching Indiana Jones ride off into the sunset at the conclusion of Indiana Jones and the Last Crusade or viewing couch-jumping Tom Cruise race through a futuristic setting to prove his innocence in Minority Report? The guy is a genius; he also loves videogames. And Electronic Arts (NASDAQ: ERTS) has teamed up with him to develop entertainment software in a bid to differentiate its lineup from the competitive likes of Activision (NASDAQ: ATVI), THQ (NASDAQ: THQI) and Take-Two (NASDAQ: TTWO).

I just read the press release announcing the game he helped create for the Nintendo Wii. It's due out this summer, and it's called BOOM BLOX. I have to be honest and say that I'm not sure exactly what to expect. It has something to do with puzzle combinations, building block structures up and then knocking them down, crazy characters like monkeys who throw baseballs around for one reason or another, etc. Oh, and there are chickens and haunted places, and there are hundreds of levels. Sounds confusing?

I'm confused, but I'm sure if I do a little Googling, I can figure out what's up with this title. The Nintendo Wii is pretty hot right now, as if I had to tell you, and I think a game with the Spielberg brand may sell well for EA. Spielberg is due to deliver two more games for EA. There's no guarantee they'll move copies just because he's involved in their development, but EA having access to his intellectual artistry certainly can't hurt. The publisher will definitely have to do some savvy marketing to ensure that not-with-it folks like myself know exactly what to expect from this game -- the press release claims I'll be addicted, and who's to say I won't be?

Disclosure: Steven Mallas owns Activision and Take-Two, and is looking at a possible buy of Nintendo after this post. Believe it or not, he actually owns the E.T. game for the Atari 2600 (how old-school is that).