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Take Two's Second Take

Taylor is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

If you want to invest in gaming, I offer you two of several paths. One company comes with centralized community and fan base of daunting size. The other, well ... does not.

Today I will exult the virtues of the later because its stock is well into a healthy resurgence.

The first company would be Activision Blizzard (NASDAQ: ATVI), the giant publisher of such culture-shaping games as World of Warcraft, Diablo III, Starcraft II and most-recently Call of Duty: Black Ops II. All of these games are arguably the most successful titles in their respective genres ever. Black Ops II sales surpassed $500 million during its first 24 hours on the shelves. That's more than double what its frag-happy competitor Halo 4 sold. 

The second company is Take Two Interactive (NASDAQ: TTWO). Take Two doesn't have commercials featuring Chuck Norris and its games don't have all the social-media doohickeys some competitors often employ. It doesn't have a game that is South Korea's national sport. When game reviewers were foaming at the mouth, it's futuristic yet comedic sequel Borderlands 2 was called "mediocre" by the industry mavens at Penny Arcade. 

Shortly, the games Take Two and its subsidiaries are publishing aren't on the cutting edge. But they are selling with a "less is more" mentality. 

Assume Your Friends Don't Care

And now, God save us all, on the horizon is a long-awaited game that won't have any multiplayer to speak of. The newest and third installment of the dystopian first-person shooter Bioshock is due in stores Feb. 26, and we will have to play it alone. The first game under this name was loosely based on Ayn Rand's "Atlas Shrugged," and it, too, had no multiplayer. But it was a beautiful and haunting game that told the story of Andrew Ryan and his broken underwater city of Rapture. 

However beautiful it may be, today games, apps and websites are considered behind the times if they don't include some sort of way to broadcast your daily doldrums to the masses. It's a wonder museum exhibits don't have Instagram buttons so you can be the first of your friends to "re-discover" the already unveiled.

As far as we know, the upcoming Bioshock Infinte will have no such frills for friends beyond what online game retailer Steam offers. Players will be forced to communicate about their experience through other avenues. Facebook friends will not be automatically informed when "DystopiaVille has grown!"

This all sounds terrible, but there are some cold, hard numbers that should change your mind.

Don't Assume About Mobile Gaming and Social Media

With all of Activision Blizzard's success and record-setting sales, it has been overtaken in the markets. After bottoming out at $7.37 a share, Take Two entered a bullish spell and has powered past Activision Blizzard, approaching its 52-week high of $13.01 a share. And Take Two is doing it with games that don't have the vast and multi-national communities that Activision Blizzard strives to connect and centralize with venues like Battle.net. Such connectivity is great for the gamer, but it's something the gamer doesn't want to pay for. The gamer wants to pay for good games.

This is perfectly shown in the company we love to hate: Zynga (NASDAQ: ZNGA). If all new games really needed some form of social element, then a pure social and mobile gaming company should be positively gilded. Zynga has done us all a great favor in proving that the "free to play" genre of gaming is suffering from short attention spans. Mobile gaming will one day be a cash cow for public companies, but it is still experimental. Unless Zynga can buck the curve, it will be years before that company finds a fan base loyal enough to drive a healthy share price.

In our current climate, it is still core gamers by the millions paying $60 a pop for successful titles. 

There is a future in mobile and social gaming, but right now Take Two's focused approach is reaping dividends and more is on the way. 


Taylorian has no positions in the stocks mentioned above. The Motley Fool owns shares of Activision Blizzard. Motley Fool newsletter services recommend Activision Blizzard and Take-Two Interactive . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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