Zumba Kids: Will Investors Follow Majesco Entertainment Into Newest Venture?

Small video game company Majesco Entertainment (COOL) has seen its shares drop 42% in 2013. The drop comes off of earnings misses and lowered guidance. The gaming company, popular for its Zumba Fitness line of games, is trading for around $0.60 a share. Can two new gaming updates send shares back above $1.00?

On Friday morning, Majesco Entertainment announced its plans to launch "Zumba Kids" for the XBOX 360 Kinect and Nintendo Wii. The game will target kids ages 7 to 12. Mini-games and dances feature over 30 songs, including hits from Justin Bieber and Willow Smith.

The game has a chance to be successful for Majesco Entertainment. "Zumba Kids" will potentially have a cool factor among kids, as the "Dance Central" games have proved popular with children. The game could also be a good gift idea from parents, as it represents a way for kids to possibly lose weight. There are millions of overweight kids in America. The game could get the blessing from healthcare organizations if it can get kids off the couch and playing a movement based game.

"Zumba Kids" will be released during the holiday season, which could also help propel sales. The game pairs nicely with the latest Zumba Fitness game, "Zumba Fitness World Party". "Zumba Fitness World Party" will be released in October for XBOX One, XBOX 360, Nintentdo Wii, and the Nintendo WiiU.

Weeks ago, Majesco Entertainment announced its "Zumba Dance" game for the iPad and Android based tablets. Available for $4.99, the game is one of the best-selling health and fitness games in over 45 countries. The tablet version is similar to the console game and offers 20 to 60 minute workouts, tracks calories, and also helps users find live classes nearby.

The new kids game doesn't solve the problem of Majesco's dependence on the Zumba Fitness line. However, the game does help expansion of the franchise into new markets. The two new console games and tablet based version offer excitement to the stock. Strong sales of each of these products could lead to a revenue and earnings beat for the fiscal year. Any positive news and sales movement could send shares back over $1.

Analysts expect Majesco Entertainment to post a loss of $0.15 per share in fiscal 2013. Revenue is expected to decline 48.7% to $132.3 million. As you can see, analysts aren't expecting much from the company. If any of these games surprises or posts strong sales, Majesco investors could be in for a wild ride upwards. In fiscal 2014, the company is expected to post a profit of $0.01 with revenue returning to $84.0 million. Majesco is a great speculative stock going forward with a high risk high reward opportunity going into the 2013 holiday season.

*Disclosure-Author Owns Shares of COOL at Time of Writing*

Gluu Mobile Scores Big With MGM Deal For Robocop And James Bond Games

Shares of Gluu Mobile (GLUU) shot up in early morning trading Thursday before settling with a modest gain. The company released an 8K that shows a new deal with MGM. The announcement includes warrants from MGM to purchase up to 3.33 million shares of Gluu Mobile shares. This news could have a huge impact on shares in the near and long term.

Details of the warrants include:

· Rights to make games based on Robocop and James Bond

· Rights to purchase up to 3,333,333 common shares at $3 each

· Expiration on warrants on July 15, 2018

· First 333,333 vested and become exercisable on July 15

· 333,333 shares vest and become exercisable at release of a new mobile game based on MGM intellectual property (does not include first Robocop game)

· 1,000,000 shares vested and exercisable with release of new James Bond game and also 1,000,000 shares per sequel until limit reached

Comcast's Syfy Network And Trion Worlds Potentially Changing Video Game Industry With Defiance

On Monday, Syfy Network will premiere its new show "Defiance". The unique part about this new show from Comcast (CMCSA) owned Syfy is its accompanying video game. This isn't a video game based on a tv show, or a tv show based on a video game. The two are connected and will give players and viewers the most unique experience.

The video game from Trion Worlds is the first to connect to a television show at the same time. Players will have new missions after every episode airs and will have an impact on the show's storyline based on gameplay. By connecting to the television show, Trion can release downloadable content (DLCs) and gain additional revenue.

The show is set in the future in the town of Defiance, similar to St. Louis. "Defiance" is complete with aliens, post war survival, and human struggles. The show will provide a lift to the network that has struggled to showcase original content since "Battlestar Galactica". The channel now counts on reality shows to gain viewers.

There are 13 episodes scheduled to air between Monday and July 8th. A huge budget of over $40 million was spent on the first season. The show was paid for by Comcast and Trion Worlds. Syfy is hoping for a renewal if ratings are strong. Trion has already begun working on a follow up game based on a second season.

The potential for Comcast and its Syfy network is huge. Back in 2009, Syfy charged $0.21 per subscriber to large cable companies. With a declining fan base and viewers, the network has even turned to WWE (WWE) to showcase "Smackdown" on its network. "WWE Smackdown" is shown on Fridays and most recently had 2.52 million viewers.

"Defiance" has also already seen several international pickups, providing additional revenue for Comcast. The show will also air in Brazil, Canada, France, United Kingdom, Ireland, Germany, Spain, Portugal, and Australia.

The Defiance video game was released this month and has seen strong sales for a new brand. According to VGChartz.com, the game has sold 170,000 copies on XBOX360, 70,000 copies on Playstation 3, and 50,000 copies for the PC. Sales remain strong and the game is currently on Amazon's top 100 selling video game list. The game will likely see strong sales this week as the show airs.

The impact on the video game industry could be huge. Two companies recently released games based on AMC's (AMCX) "The Walking Dead". "The Walking Dead", which is the most popular show on television, saw releases from Telltale Games and Activision (ATVI). The Telltale version, which follows an episodic storyline has sold 400,000 copies on the XBOX360 and 250,000 copies on the Playstation 3. The Activision version titled "Survival Instinct" has sold 210,000 copies on the XBOX360 and 140,000 on the Playstation 3.

Imagine that if "Defiance" is successful, television shows following video games will start popping up. Old franchises like Mortal Kombat, Street Fighter, and Resident Evil could all see a boost in game sales with a new version surrounding a television show. A successful "Defiance" could also lead to a buyout of Trion Worlds by a larger company. The video game company is partially owned by Comcast, Time Warner (TWX), and the Ontario Teachers' Pension Plan.

As "Defiance" airs on Syfy Monday, it won't be just science fiction fans watching, but an entire video game industry. This new move by Trion Worlds and Syfy could be just the boost the declining video game market needs.

The potential winners to watch in this video game/television partnership are:

• Comcast-company owns the Syfy channel and will be able to charge other cable networks more in subscriber costs thanks to higher viewer numbers.
• Time Waner-owns Mortal Kombat, Batman Arkham brand which could also translate well from a television series and game concept.
• Activision Blizzard-has large library of games and cold make a play into this avenue. Could also utilize strong bases with its MMORPG games and turn them into televisions shows.

The biggest winners in this new format could be the video game consoles. Consider investing in Sony (SNE) or Microsoft (MSFT). Both have new consoles hitting the market soon, but could see a lift in current games with a television following. A new audience of video game players could emerge from shows like "Defiance". Shows like "American Idol" and "Dancing with the Stars" don't just do well for the talent. It is the human interaction where people have an attachment.

*Disclosure-Chris is long Activision Blizzard (ATVI) 

Video Game Industry in 2013

Anyone who follows my posts on Seeking Alpha or on this blog may know by now that I write about the video game sector a lot. I do not own a video game console or play video games, so where does this knowledge and love for video games come from? Well, it might be that at present time I own shares of three video game companies (ATVI, COOL, THQI). Despite a move away from hardware titles to social, mobile, and digital games, consumers are still buying big blockbusters every year. I wrote an article on Seeking Alpha recently ("Investing in the Video Game Sector in 2013") that provided an early look at blockbuster titles that will be coming out next year.

CNBC provided a list of The Ten Most Anticipated Video Games for 2013:

• Grand Theft Auto V

The Walking Dead Video Game Coming From Activision

Activision added one of the most popular television shows to its lineup of 2013 video games. The Walking Dead, which airs on AMC, hit record numbers for its Season 2 Finale. The show has increased in popularity over its 19 episodes. The third season premieres in October on AMC. There already is a episodic game put out allowing players to play a two hour scenario each month involving the characters of The Walking Dead. You can buy that game for $24.99 below for PC or Mac. I also wrote an article on how to trade AMC and ATVI (Did Activision Score a Blockbuster With The Walking Dead Video Game Rights?).



*Disclosure-I Own Shares of ATVI*

THQ Raises Earnings Guidance and Stock Soars

Just a short time ago, THQ Incorporated (THQI) received a delisting notice from the Nasdaq if it could not maintain a price above a $1 a share. Shares have not seen a $1 since December of 2011 but appear destined to hit the key share price after upbeat earnings from the company.
The fourth quarter loss will now be smaller than the company and analysts once projected. The net loss is expected to now be in the $0.10 to $0.20 range. Previously, the loss was predicted to be in a range of $0.35-$0.50. Net sales will now be reported as $160-$170 million versus projected $130-$150 million.
Saints Row: The Third sales greatly increased once the company did several price cuts to attract buyers. The uDraw segment has weighed down shares and hurt revenue. Stronger sales of the UFC Undisputed game also helped the earnings beat. A blog post I wrote back in January highlighted the new UFC game and the company’s potential. Here’s a look at sales of some recent releases:

North America/Europe/Japan/Rest of World/Total

UFC Undisputed 3 XBOX 360 0.36million 0.08 million 0 0.04 million 0.49 million

UFC Undisputed 3 PS3 0.28 million 0.12 million 0.01 million 0.06 million 0.48 million



Saints Row 3 XBOX 360 0.89 million 0.92 million 0.03 million 0.22 million 2.07 million

Saints Row 3 PS3 0.55 million 0.69 million 0.09 million 0.28 million 1.62 million

Saints Row 3 PC 0.07 million 0.11 million 0 0.03 0.21 million



Sales figures from www.vgchartz.com


Earnings will now be reported on May 15th and this could lead to an increased share price once guidance for the rest of the year is reported. An update on the game release schedule could also push shares back over $1. The company will also report $76 million in cash balances. Along with its cash balance, the company still maintains a $50 million level of credit that can be utilized to release several games in 2012 and 2013.

The company will likely update the status on the highly anticipated Darksiders II game. The game will be a follow-up to 2010’s Darksiders, which sold close to a million copies on the XBOX 360 platform. The company’s recent UFC game is also helping earn the company additional revenue with downloadable character packs, including the recent International Fighters pack. The WWE games also have made extra money from downloadable character packs. In my recent blog post, I also mentioned how the company was expanding into social gaming including UFC and Margaritaville.



The fifty two week share price of the company is a wide $0.45-$4.67. Shares once traded for over $35 a share. I bought shares of this stock under $1 as I believe the company is producing enough money from several minor hits to keep its studio going. New releases will power the company further along or will lead to a buyout. A buyout is also very realistic as larger Take Two (TTWO), Electronic Arts (EA), or Activision (ATVI) looks to strengthen its portfolio and will gain the Saints Row, Darksiders, and UFC brands as well as others. I remain bullish on shares of THQI and think they are worth buying below a $1 a share.

*Disclosure - I own shares of THQI and ATVI