Financial Stocks to Hit Bottom in October?
August 29th, 2008 | Posted by stockBy Emily Thornton
Could the worst news for financial stocks be over by October? That’s what veteran financial services analyst Guy Moszkowski at Merrill Lynch (MER) predicts. Below are excerpts from a recent conversation he had with BusinessWeek in which he shared his thinking:
August 29th, 2008 | Posted by stockOctober will probably be the bottom in the cycle. The only reason it wouldn’t be is if this recession lasts much longer than recessions in the past.
Since 1990, financial services stocks have bottomed in October during the industry’s troughs. There’s a reason for that. Right around that time, they are reporting their worst earnings for the cycle. It’s also when mutual funds are doing their tax loss selling. They make their capital distributions in the fourth quarter and that determines the capital gains tax that investors are going to have to pay. Mutual fund managers sell losers to realize losses and to offset whatever gains they have. They sell some of their big losers in October so the tax hit is limited. It happens every time.
Posted by: Ben Steverman on August 29, 2008
There have been 74.9% fewer US IPOs this year than last year, according to numbers out today from Renaissance Capital. Last year, 273 IPOs raised $59.7 billion. But only 43 companies have had initial public offerings so far this year, raising $27.8 billion. The gory details here.
(From Emily Thornton)
August 28th, 2008 | Posted by innovOver the past few vintages, Craig Jaffurs has emerged as one of Santa Barbara’s finest, most consistent winemakers, with his wines going from strength to strength. His specialties include single-vineyard syrahs as well as a grenache. Wines from these two renowned Rhône Valley varietals are often referred to as “Rhône Rangers” when made in California. Following are some of the most recent releases from Jaffurs Wine Cellars, all noteworthy as well as realistically priced for their quality. The winery’s fax number is 805 962-7007.
89+ points
2005 Syrah Thompson Vineyard Santa Barbara
An inky/purple-tinged effort revealing hints of tar, spring flowers, barbecue smoke, pepper, and cassis, this syrah plays it close to the vest. A broad, powerful, muscular, tannic, backward red, it requires one to two years of bottle age, and should evolve for a decade or more. $34
90 points
2006 Syrah Santa Barbara
This is a beautiful, lush, sexy effort revealing scents of charcoal, burning embers, blackberries, and cassis. Succulent with pure fruit, medium to full body, and a lush texture, it begs for consumption over the next three to four years. $23
90+ points
2005 Syrah Bien Nacido Vineyard Santa Barbara
The Bien Nacido Vineyard’s earthy/graphite character as well as a more firm, muscular structure are obvious in this dense purple-colored effort. It reveals beautiful freshness (a characteristic of all these Jaffurs wines), full body, and a dense, powerful, but backward personality displaying high acidity. This cuvée will benefit from one to two more years of bottle age. Anticipated maturity: 2010-20+. $34
92 points
2006 Syrah Larner Vineyard Santa Barbara
Apparently available only in magnum, the 2006 Syrah Larner Vineyard emerges from a site that would merit grand cru status in France. (The Larner Vineyard nearly always produces wines with excellent minerality, ripe fruit, and a distinct personality.) This offering exhibits an inky/blue/purple color along with beautiful aromas of sweet black raspberries, black currants, crushed rocks, and acacia flowers. It is an opulent, full-bodied effort displaying a seamless integration of acidity, tannin, wood, and alcohol. Enjoy it now and over the next decade. $34
92 points
2006 Syrah Verna’s Vineyard Santa Barbara
Another brilliant offering, the Syrah Verna’s Vineyard offers sweet, juicy crème de cassis, black cherry, spring flower, licorice, and background wood characteristics. This full-bodied, deep, chewy, lush, impressively pure, textured, long syrah should drink well for 7-10 years. $38
93 points
2006 Syrah Ampelos Vineyard Santa Rita Hills
The stunning 2006 Syrah Ampelos Vineyard boasts an impressive black/purple color in addition to a gorgeous bouquet of bacon fat, graphite, crème de cassis, plums, and blackberries. Full-bodied as well as refreshingly elegant with terrific precision and minerality, this beauty can be enjoyed now or cellared for 8-10 years. $42
Social Media Exposes the Corporate Psychopath
August 26th, 2008 | Posted by innovTruth or dare.
We dare you (CMO, brand manager, PR-communications specialist, CRM manager, or whoever you are) to have your company authentically enter into the innovative realm of online social media, the world of Facebook and other networking sites (or as it is known in shorthand, Web 2.0).
Not ready yet? Afraid you won’t have control of what happens? C’mon, we double dare you.
Still, not that daring? O.K. If you won’t take the dare, you have to tell the truth. Is your company customer-focused?
“Yes, of course” (you answer without thinking). Seriously now, be honest. Does your institution really care about its customers or only about itself? “Our customers,” you reply.
We believe you. But what we believe doesn’t matter. And the fact is, survey after survey says your customers don’t believe you. Ever.
The reason is obvious. Your organization is seen as a corporation, and corporations in the eyes of most people are evil. Large companies—with a 13% approval rating—rank just above Congress and law firms when people are asked to list the most admired institutions in America, according to Harris Interactive.
In fact, if people were to anthropomorphize your organization, your firm would be seen as highly antisocial at best and psychopathic at worst.
The impassioned polemic, otherwise known as the movie The Corporation, asked people to describe big business.
Among their answers:
• “Self-interested”
• “Inherently amoral”
• “Callous and deceitful”
• “It breaches social and legal standards to get its way.”
• “It does not suffer from guilt.”
Sure, the movie has an anticorporate slant. But Harris Interactive chose its people at random—companies would not have scored at the bottom of the pack if those surveyed thought of workplaces in the same light as Mother Teresa.
So this is what you are up against. People think companies are inherently bad. It’s no wonder they don’t believe you when you say you are customer-centric, no matter how many times you profess you are.
But you can change that. The 21st century, with wikis, blogs, and the millions of niche online communities, etc., allows us to create a more level playing field when it comes to customer relationships. It’s now possible for us to share with consumers what we as companies are really all about and what we believe, face-to-face, so to speak.
That’s a big responsibility. Is your company up to it?
The bad news is you can’t hide from these innovations. They are now part of the daily fabric of most of your customers’ lives. Even more bad news: If you’re opting out, by default your absence will brand you as antisocial and insincere when it comes to being customer-centric.
The good news is that the innovative technology you need to use is the easy part. The better news is if your intentions are authentic, your marketing budget is certain to experience exponential efficiency with infinite potential. And the best news, thanks to breakthrough software such as Shoutlet.com, is that it’s all measurable and trackable with real-time flexibility and control. (Full disclosure: we think Shoutlet is so wonderful we have invested in the company—nothing like putting your money where your mouth is.)
What are the fundamentals you need to master in this new world? There are three.
• Phase 1: Architect a Proper Presence
First, you need to identify where your target is and which communities are important to them. You want to be where your customers, and potential customers, hang out. Having identified those places, you need to understand the conventions and etiquette of those environments.
Truth or dare.
We dare you (CMO, brand manager, PR-communications specialist, CRM manager, or whoever you are) to have your company authentically enter into the innovative realm of online social media, the world of Facebook and other networking sites (or as it is known in shorthand, Web 2.0).
Not ready yet? Afraid you won’t have control of what happens? C’mon, we double dare you.
Still, not that daring? O.K. If you won’t take the dare, you have to tell the truth. Is your company customer-focused?
“Yes, of course” (you answer without thinking). Seriously now, be honest. Does your institution really care about its customers or only about itself? “Our customers,” you reply.
We believe you. But what we believe doesn’t matter. And the fact is, survey after survey says your customers don’t believe you. Ever.
The reason is obvious. Your organization is seen as a corporation, and corporations in the eyes of most people are evil. Large companies—with a 13% approval rating—rank just above Congress and law firms when people are asked to list the most admired institutions in America, according to Harris Interactive.
In fact, if people were to anthropomorphize your organization, your firm would be seen as highly antisocial at best and psychopathic at worst.
The impassioned polemic, otherwise known as the movie The Corporation, asked people to describe big business.
Among their answers:
• “Self-interested”
• “Inherently amoral”
• “Callous and deceitful”
• “It breaches social and legal standards to get its way.”
• “It does not suffer from guilt.”
Sure, the movie has an anticorporate slant. But Harris Interactive chose its people at random—companies would not have scored at the bottom of the pack if those surveyed thought of workplaces in the same light as Mother Teresa.
So this is what you are up against. People think companies are inherently bad. It’s no wonder they don’t believe you when you say you are customer-centric, no matter how many times you profess you are.
But you can change that. The 21st century, with wikis, blogs, and the millions of niche online communities, etc., allows us to create a more level playing field when it comes to customer relationships. It’s now possible for us to share with consumers what we as companies are really all about and what we believe, face-to-face, so to speak.
That’s a big responsibility. Is your company up to it?
The bad news is you can’t hide from these innovations. They are now part of the daily fabric of most of your customers’ lives. Even more bad news: If you’re opting out, by default your absence will brand you as antisocial and insincere when it comes to being customer-centric.
The good news is that the innovative technology you need to use is the easy part. The better news is if your intentions are authentic, your marketing budget is certain to experience exponential efficiency with infinite potential. And the best news, thanks to breakthrough software such as Shoutlet.com, is that it’s all measurable and trackable with real-time flexibility and control. (Full disclosure: we think Shoutlet is so wonderful we have invested in the company—nothing like putting your money where your mouth is.)
What are the fundamentals you need to master in this new world? There are three.
• Phase 1: Architect a Proper Presence
First, you need to identify where your target is and which communities are important to them. You want to be where your customers, and potential customers, hang out. Having identified those places, you need to understand the conventions and etiquette of those environments.
One Approach to Value Investing
August 26th, 2008 | Posted by stockThis idea, “The 8 Stock Portfolio,” has some promise.
The web site’s author pointed out earlier this month that while major indexes are off about 20%, “many individual stocks have been absolutely taken to the woodshed.” Many brand-name stocks are down “50%, 70%, 90% or more from their 52 week highs.”
He or she writes:
This past week, I remembered another time not too long ago that felt similar. The year was 2003. Priceline was trading for less than the cash on its balance sheet, and the company wasn’t even burning cash. Apple was trading for a few dollars above cash and no one saw anything special about this company with 4% of the PC market and a few fringe products. A funny sounding company called Research in Motion slipped below $2 per share. There are more, but you probably get the picture.
So the web site’s creator has chosen eight beaten-down stocks to buy hold. The site and blog will track their performance.
I’ll find this interesting to watch. It related to the current debate over value investing. (I wrote “The Plight of the Value Investor” on Aug. 4. Another wrinkle is this debate over whether value guru Benjamin Graham would be buying bank stocks.) Certainly there are plenty of cheap stocks in the stock market right now, but are they good deals or value traps?
Three weeks after it was created, the eight stock portfolio is up 13.6%. Impressive, but the creator has the right idea in planning to hold onto these stocks for “3 to 5 years through thick and thin,” adding: “Likely some will work out and some will fail, but on the balance I’m hoping for some shocking outperformance.”
K Vintners: Washington State Superstar
August 21st, 2008 | Posted by innovK Vintners is where the larger-than-life Charles Smith presides. He is an innovator, marketing genius, outspoken, you name it—but above all the man is a brilliant winemaker who knows where all the great fruit is hidden. In a region where blending is the rule of thumb, he is the ultimate terroirist. Each wine reflects the vineyard from which it was produced, but there is also a house style that lets you know immediately who made the wine. While it’s much too soon to put K Vintners on the same level as a Domaine Leroy or Domaine Zind-Humbrecht, the experience you get tasting in the cellar is much the same as in those legendary wineries—brilliantly made wines reflecting the terroir but also having a distinct winemaking signature. My thanks to Jay Miller, my Washington State expert, for these reviews from this exceptionally exciting Washington State producer.
91 points
2005 Syrah Morrison Lane Walla Walla Valley
The purple-hued 2005 Syrah Morrison Lane reveals an excellent perfume of wood smoke, mineral, spice box, blueberry, and blackberry liqueur. The flavors are developing well but the wine is in need of more midpalate depth. Drink it over the next six to eight years. $45
91 points
2007 Viognier Columbia Valley
Fermented with native yeasts (as are all the K Vintner wines) in neutral oak, this light gold-colored Viognier offers up alluring aromas of mineral, peach, apricot, and tropical notes. On the palate there is excellent acidity, and the minerality of the wine becomes more apparent. Well-balanced and long, this is a wine to drink over the next one to two years with Pacific Northwest salmon. $20
92 points
2005 Syrah Cougar Hills Vineyard Walla Walla Valley
The 2005 Syrah Cougar Hills is restrained aromatically with an elegant personality. Concentrated, ripe, and round, the flavors are already exhibiting complexity, and the finish is very long. Allow for another three to four years in the cellar and drink it through 2020. $45
92 points
2005 Syrah Phil Lane Walla Walla Valley
The 2005 Syrah Phil Lane was sourced from a vineyard yielding 0.5 tons of fruit per acre. The nose offers up meat, game, bacon, spice box, pepper, and blueberry. It is just a bit lean on the palate and a bit restrained, but the texture is smooth, the flavors pleasing, and the finish long. $70
92 points
2005 The Boy Walla Walla Valley
A blend of 88% Grenache and 12% Syrah, this 2005 offers sensational aromas of kirsch liqueur, smoke, toast, black cherry, blueberry, and garrigue. On the palate, this Chåteauneuf du Pape look-alike delivers gobs of ripe fruit and layers of flavor but manages to remain elegant. This lengthy effort can be enjoyed now but should keep for a decade. The quality of Washington Grenache is clearly demonstrated by The Boy. $40
93 points
2005 Roma Walla Walla Valley
The 2005 Roma is 75% Cabernet Sauvignon and 25% Syrah. Aromas of blood sausage, bacon, black currants, and blackberries are followed by a layered yet elegant wine with great concentration and six to eight years of aging potential. It will be at its best from 2015 to 2030. $55
94 points
2005 El Jefe En Chamberlin Walla Walla Valley
Sourced from another Cayuse vineyard, this cuvée offers impressive aromas of smoked, black cherries, and blackberries. The wine is layered and complex with tons of flavor as well as a sense of elegance. This lengthy wine will be at its best from 2012 to 2020. $55
94 points
2005 Ovide En Cérise Walla Walla Valley
A combination of 75% Cabernet Sauvignon and 25% Syrah, the 2005 Ovide En Cérise offers up notes of fresh herbs, leather, and tobacco. It is a broad, mouth-coating effort with a long finish. $55
94 points
2005 Syrah The Deal Sundance Vineyard Wahluke Slope
This purple-colored Syrah exhibits a fragrant nose of mineral, scorched earth, game, espresso, blueberry, and blackberry. Opulent on the palate, rich, and full-flavored, gobs of spicy fruit lead to a lengthy, fruit-filled finish. Give this 2005 two to three years to evolve and drink it through 2018. $35
95 points
2005 Syrah The Beautiful Walla Walla Valley
This offering from the Cougar Hills Vineyard includes 5% Viognier, which gives the aromatics a serious lift. On the palate, the wine is round and rich, elegant yet powerful. Spice, game, and pepper accompany layered blue fruits into a lengthy finish. This is a wine for hedonists only. $50
95 points
2005 Syrah Wells Walla Walla Valley
The 2005 Syrah Wells is dark ruby-colored with an alluring bouquet of smoked meat, game, and camphor oil. Elegant yet opulent, the wine is already complex, the fruit ripe and sweet, and the finish long. This concentrated effort is a total crowd-pleaser. $50
96 points
2005 The Creator En Cérise Walla Walla Valley
The 2005 The Creator En Cérise is 60% Cabernet Sauvignon and 40% Syrah. The wine is super-expressive aromatically with notes of pain grillé, pencil lead, blueberry, spice box, and black currant jam. Sweet and layered with all components in harmony, this opulent effort easily conceals enough tannin to support six to eight years of cellaring. It should be at its best from 2015 to 2030. $45
97 points
2003 Syrah The Hunter Walla Walla Valley
This 2003 is a full-bore, pedal-to-the-metal wine with a splendid perfume of pain grillé, pencil lead, blueberry, blackberry, and licorice. While structured—eight to 10 years of cellaring would be beneficial—the wine is already layered and rich. With ideal storage it should continue to provide pleasure through 2035. $100
Yes, Virginia, there is a Santa Claus, but Q4 EPS setting an all time high, let’s get real
August 21st, 2008 | Posted by stockFinancial earnings have been negative for three consecutive quarters, which ties IT’s Q1-3,’01 earnings record, but their 44% stock decline from the October highs is still better than IT’s 18 month (3/00-10/02) 82% free-all. Next quarter, Q3, the Financial sector is expected to be positive, with earnings only declining 52% year-over-year (we can always hope). And their current 12-month P/E of -21,972 is expected to decline (but doesn’t a lower negative P/E mean a higher loss – must be those imaginary numbers from 9th grade algebra).
Employment/unemployment keeps moving in the wrong direction, and housing, well, at least its shelter from the storm.
The good news is that oil is down 8.0% at the pump over the last month and Agriculture is down 4.1%; so the 12-month increase is now down to just 34.3% and 30.6% – and they’re still running those “What’s in your wallet” ads – it’s empty, like my gas tank.
The rebates are gone, and little is now being said about more, at least not from Congress which adjourns next month, only to return January 15th – they need time for all those inauguration parties.
However, relax, be happy, relief is just around the corner (or the curtain), with Q4 2008. Yes, that quarter which starts in a little over a week for MS, GS, LEH, COST, FDX, KBH, and LEN, is predicted to not just be better, but post the highest quarterly earnings in history, ever! No, it’s not earnings creep from inflation (which depending on who you talk to may not exist) – it’s optimism, because the sun will always come out tomorrow.
2009 is expected to be even better, with operating earnings projected to be 23.2% above the record 2006 numbers, but (again, don’t pay any attention to that man behind the curtain) the As Reported earnings, under those Generally Accepted Accounting Principles, set by the Financial Accounting Standards Board, are expected to still be down 20.7% from 2006; their respective P/Es are 12 and 20 (for specifics click here).
Maybe it’s time someone admitted that the market, the economy, and earnings were good for awhile. However, times and cycles change, and things are a lot more difficult now then they were (if you prefer challenging, you’re not there yet). No patriotic speech, but things will get better, then worse and then better again. Hope you’re sitting for the big news, but this will not be the last Bear market. Seems like both parties are quoting Reagan – how about ‘trust but verify’.
So do you buy now? Well, maybe. Buy if you’re a long-term investor who has time and liquidity on your side, and the ability to ride out the years. You should eventually be able to point back at what, most likely, is now a buying point. Even if it’s not at the bottom, over years, close enough should be good enough. But if you’re part of the weeping majority on a shorter schedule or are just missing a digit or two in your latest cash flow statement, you may want to consider a little less risk, a lot less potential gain, and buying some non-perishable food before the price goes up, or any of those expected post January 15th changes (surcharges, special purpose funds, revenue enhancers, deduction reducers – a tax by any other name) take affect for these challenging times and spend it for you.
August 18th, 2008 | Posted by innovrow our company. I think we started to see some of those results. We are very focused on how we continue to grow as a best practices company – how we take a look at the portfolio of products we have and how we maximize that portfolio. In our first quarter, we put a lot of focus on looking at what our opportunities were for building our revenue story. That was [fueled by] the Dragon Ball Z launch, which continues to be a strong franchise for us, our Alone in the Dark launch, our Backyard Sports launch, and we also across the board saw a lift in our catalogue [sales].
From a portfolio perspective, although Alone in the Dark did well, making those big budget hardcore games is risky. Majesco, for example, used to put out one hardcore game after another and it nearly killed them, and then they switched gears to focus on the casual market and lower budget games for DS and Wii. Is that an approach we’re going to see from Atari, or will we continue to see hardcore games?
I think we are fortunate because Atari and Infogrames are franchise owners. We have the benefit of looking into our franchise portfolio from which we can pull our overall product strategy. We are a company that has a very diversified approach on what our product strategy is. If you look at a franchise like Alone in the Dark, it’s a bigger budget, console franchise, but we also have the benefit of the history of the Atari Classics or the N+ title, which is coming out in August, to really look at the growing mass market audience. From a risk perspective, we have the opportunity to be fairly well balanced, to have a diversified portfolio approach. You would expect to see from us products that fit both audiences. We have the benefit of having Phil Harrison and David Gardner really leading that global product discussion amongst all the executives worldwide about where we put our time and emphasis, what our overall portfolio strategy is going to be.
You’re bringing N+ to the DS and PSP, but the Q1 revenue breakdown was heavily slanted towards PS3 and 360. Is Atari looking to do more on portables and on Wii?
Yes. At E3, we showed N+, a Jamie Oliver What’s Cooking? title for the DS, the Backyard Sports franchise for the DS… There’s certainly more that you’ll see announced this year that will come out for the DS and PSP. Certainly on the Wii, we have opportunities that we’ll be announcing also. Obviously, Backyard Sports on the Wii has done very well for us and will continue to be part of our franchise strategy there. So yes, you’ll be seeing more on those platforms from us.
Is there a certain percentage that you’re targeting for how to balance the portfolio, like 50% on Wii or something?
We’re not exactly setting those types of goals for ourselves. We look at the franchises we think are important to us and we evaluate those franchises for the platform that it makes the most sense on, the audience we’re looking to [target]. As a franchise company, we look at what platforms make the most sense. We definitely look at the platform lifecycles and pricing in the market. We do a careful analysis of the platforms, but at the same time, as a franchise owner, we are focused on the platforms that make the most sense for our titles.
Is there any thinking of getting more into digital distribution on XBLA, PSN, WiiWare or leveraging your own Atari classics with a PC portal?
We already are in the business of digital distribution, but on the Atari website, which will be updated, it will be more readily seen and readily available. We are involved in a number of digital distribution initiatives, whether it’s powered by Digital River or other companies that we’re working with. It’s definitely a stronger focus for us in the future, and that’s something from a portfolio perspective that we’re much more focused on going forward. We are doing products on XBL already and we will continue to focus on building that business as well as PSN and the WiiWare business.
There’s always talk of digital distribution eventually replacing retail, but how big do you see this business becoming for Atari?
The exact numbers, we’re all looking to see how it plays out. We are seeing success on a number of our PC titles, while we’re also seeing the fact that the PC overall as a retail platform continues to flatten or shrink in some cases. We are looking toward digital distribution as an outlet for us for our PC franchises and PC versions of our titles.
In terms of branding, when Phil Harrison came on board he talked about the strength of the brand, but how relevant is the Atari brand nowadays, especially among today’s youth who didn’t grow up with those classic games?
It’s still one of the world’s most recognized brands. It certainly resonates with an older audience that grew up with it. There’s a retro/cool aspect to Atari with the younger audience that we see. I think our goal is to continue to transform the Atari brand by going back to how it was built in the early days – quality games, innovative games. The brand is really built on the gameplay experience. I think Phil and David have both talked about the role of our games and the Atari brand as an anchor for the company going forward. There is certainly a lot of brand equity, but that brand equity needs to be reinforced and we need to continue to build that through quality, innovative games because, at the end of the day, that’s what our business is. You will also see going into the future, we will continue to look at other ways [to grow]. From a licensing perspective, there’s some stuff that’s been announced, like t-shirts… Atari hasn’t been in that business, so we’re reaching out to the Atari consumer with some licensing programs. But, of course, our real focus in on building the brand through the games.
You mention the retro/cool factor but does a 15-year-old really care? Were surveys conducted to find out how the brand resonates with the younger demographic?
There have been some surveys… we’d have to circle back with you on that. Again, I think there is an awareness, mostly focused on an older set; there still seems to be that ’80s retro world, and Atari just happens to be one of the brands that people do know regardless of whether they grew up with it. But our job is to not rest on that… If we stay focused on building quality, innovative games, the overall brand awareness will continue to broaden and certainly reach the younger audience.
Will the Atari brand be used as the global brand in place of Infogrames once the merger is complete?
Sorry, I can’t comment on that.
Ok, so which games in the pipeline do you see as reinforcing the brand for Atari?
Again, I’d say N+, which is more of a high quality casual gamer’s game. The Witcher continues to be a focus for the company as more of a core title. And we have some releases coming out this fall, which I think will differentiate us. For example, the Race Pro racing sim game and even titles like Jamie Oliver’s What’s Cooking?. So I think you’ll see some diversity with what we’re doing, but at the end of the day, [these titles] are built around franchises and really built upon reaching our consumers as a quality game experience
ing our consumers as a quality game experience.
From a business standpoint, what I can’t reinforce enough is that in North America our goal is to really build a best-in-class sales, marketing and distribution platform that, when given franchises, maximizes those through innovative marketing and campaigns. When people think about Atari in North America, I want them to think about our strength in launching titles and managing titles.
Thanks for speaking with us today.
August 15th, 2008 | Posted by innov“Don’t leave money on the table; don’t let anyone leave the table.”
As the gaming industry becomes increasingly high-profile, and as investors train their sights on the seemingly huge amounts of money to be made from gaming, there is still an enormous number of potential pitfalls for would-be game designers, developers, and distributors. Already, evolution has seen some business models fall by the wayside as being inappropriate or misguided. Here, then, is an incomplete, sure-to-be-outdated-itself list of ways to make money from games, particularly those games that fall into the “social” category, and which don’t require the tremendous upfront investments of traditional console-based video games.
Social gaming is sometimes called “asynchronous” gaming, which essentially means players take turns. People who want to play games have busy lives, or maybe they even live in different time zones. Regardless, with a well-designed turn-based game, you can keep them happily engaged whenever they have time to spare. NPD Group puts retail sales of video games for the “mature” adult audience at 15% market share; 85% of sales go to everyone else. Social games fit nicely into that “everyone” space and provide a potentially massive market if monetized effectively.
Significant Shift
Time was that bricks-and-mortar stores selling physical, boxed product were the backbone of the games industry. Then online retail came along and superseded traditional stores in importance. But already, the long-term future of the games industry is digital, and will not include physical media at all. Consoles and even handhelds connect online and the hardware makers such as Nintendo (7974.T), Microsoft (MSFT), and Sony (SNE) have all launched their own online game stores. So as soon as Internet access has reached the necessary level of penetration and reliability, media such as DVDs and cartridges will be obsolete. For those looking to design, produce, or distribute games, this is a significant shift. The involvement of players such as Facebook, Google (GOOG), MySpace (NWS), and Apple (AAPL) provides an even more compelling reason to view the social space as a serious business opportunity (BusinessWeek.com, 8/11/08).
In the social games space, investors initially focused on drawing in massive numbers of players. “We have 17 million installs!” developers shouted happily. But soon, thanks to data from tracking companies such as Adonomics.com, it became clear that only 1% of those who installed a game would actually stick around to play it. At press time, Adonomics reckoned the popular Facebook game Vampires had been installed nearly 9 million times, and yet has only 87,570 active players. (Facebook, for its part, says the game has more than 1 million users.) But whether the drop-off rate is 90% or 99%, something is clearly wrong with the business model.
So investments switched to the games that people return to on a regular basis. That’s worked for a while, but even with traffic, many games run at a loss because they rely on advertising to fund the experience. So now, the focus is entirely on revenue: “How much money are you making? Who cares if you have a million users if you are losing money each month?”
Thirty-Three Moneymaking Ideas
The following list of potential business models for gaming looks at all aspects of the industry. From designing and producing trialware, which allows players to play a restricted version of a game for free in order to try to upsell the full version, to selling episodic entertainment and expansion packs, there are numerous innovative and interesting business models that are applicable to creating a successful, moneymaking game. Some, such as individual microtransactions, might seem incredibly tiny in scope, yet can have a huge impact if scaled effectively. Others tap into the current trend toward social networking, by bringing the real world and real people (who marketers just love) into a gaming’s virtual environment. The good news is that many of these ideas can be applied at the same time.
Take a look at this slide show of 33 ways to make money from games.
Wines from Tuscany’s Most Famous Family
August 14th, 2008 | Posted by innovNo visit to Tuscany, nor any tasting of Tuscan wines, would be complete without looking at what one of Italy’s great families accomplishes. Despite their enormous vineyard holdings and huge worldwide visibility, there is never any doubt about the quality of wines that emerge from Piero Antinori and his family. Following are some of his current releases from both the brilliant 2004 and very good 2005 vintages. These offerings range widely in price, with their renowned Solaia fetching an arm and a leg, but there are also some superb values in Chianti Classico as well as Antinori’s Umbrian white wine, a chardonnay-and-grechetto blend called Castello della Sala. My thanks to Antonio Galloni, a top expert on Italian wines who works with me, for his reviews of these extraordinary wines. For information on availability in your area, please call Antinori’s importer, Ste. Michelle Wine Estates, Woodinville, Wash. (425 415-3738).
88 points
2004 Vin Santo del Chianti Classico
Antinori’s 2004 Vin Santo del Chianti Classico isn’t one of the more inspired versions of Tuscany’s famous dessert wine. While it offers up an attractive set of leather, caramel, roasted nuts, spices, and orange peel flavors, it doesn’t have the complexity or personality to stand up to the finest wines being made today. Anticipated maturity: now-2012. $30/500ml
89 points
2004 Chianti Classico Riserva Badia a Passignano
The 2004 Chianti Classico Riserva from the Badia a Passignano property spent 14 months in small French oak barrels prior to being bottled. It is a richly flavored Chianti loaded with sweet dark fruit, smoke, licorice, and tobacco nuances. Made in an accessible yet generous style, it is sure to provide much pleasure over the next few years. Anticipated maturity: now-2014. $50
90 points
2005 Castello della Sala Cervaro della Sala
The 2005 is an especially refined Cervaro della Sala from Castello della Sala, the Antinori family’s Umbrian estate. A blend of 85% chardonnay and 15% grechetto, it reveals an elegant profile of sweet tropical fruit framed by finessed tannins and a lovely note of underlying minerality. Today the French oak is a little prominent but it should integrate into the wine in another year or so. Anticipated maturity: 2010-15. $43
91 points
2004 Chianti Classico Riserva Marchesi Antinori
Antinori’s flagship Chianti, the 2004 Chianti Classico Riserva Marchesi Antinori, reveals excellent depth, vibrancy, and freshness. Ripe black cherries, new leather, menthol, smoke, and wild herbs flow from this sweet, layered Chianti. The wine is approachable today but also has the tannic backbone and stuffing to ensure another decade or so of very fine drinking. It spent 14 months in small French oak barrels prior to being bottled. Anticipated maturity: 2009-19. $35
92 points
2005 Tignanello
Antinori’s beautiful 2005 Tignanello possesses perfumed, well-articulated aromatics that meld into a soft, generous core of ripe red fruits. Smoke, mineral, tobacco, and spice overtones develop in the glass with air. This is a relatively slender Tignanello, and while it doesn’t have the qualities of the superb 2004, it does have the balance to age gracefully for the next decade or so. Anticipated maturity: 2010-20. $110
93 points
2005 Solaia
The 2005 Solaia is elegant and refined, yet it remains incredibly primary. Still, it is hard not to admire the wine’s layered expression of blue and black fruits. The oak is prominent, but the wine should come together with bottle age. The Solaia vineyard is one of the most unique terroirs in Italy, and this cuvée has a track record of developing beautifully in bottle, even in smaller vintages. It will be fascinating to follow this Solaia as it matures. Anticipated maturity: 2012-23. $280
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