The G5 Entertainment share has managed to withstand the recent weakness in the broader market. Over the last 4 weeks, G5 has gone up some 10% and is currently trading in reach of its all-time high levels from January this year. The OMX30 is down almost 2% since late June and particular small-cap names got beaten even more as investor take risk off the table.
G5’s relative strength is rather impressive and it is fundamentally justified given the positive newsflow during recent weeks, including the successes of some its recent game releases. The share price resilience should also be interpreted as a sign of increased trust from investors. People have started to believe in the G5 case more and more and management made a wise move in taking on board Swedish “Traction” as a strategic investor. All eyes are now on August 15th, when the company will present its Q2 2011 report and is likely to increase its FY 2011 guidance. A glimpse into 2012 would be highly appreciate as well, but it might be a bit too early for that. On the other, it would be in everybody’s interest if G5 was to shed some light on how they want to use the Traction money, which in my opinion should be directly related to the number of games to be released in 2012. So sit tight and enjoy the ride!
PS: The Wall Street Journal Digital Network (www.allthingsd.com) published an interview with Electronic Arts’ CEO John Riccitiello, who says that smartphones and tablets have “radically changed” the gaming space.
“We have a new hardware platform and we’re putting out software every 90 days,” Riccitiello told IndustryGamers. “Our fastest growing platform is the iPad right now and that didn’t exist 18 months ago. … Consoles used to be 80 percent of the industry as recently as 2000. Consoles today are 40 percent of the game industry.”
An interesting observation coming from the CEO of one of the biggest games publishers in the world. It seems that iOS and the devices that run it have indeed created pricing and customer migration pressure for the traditional gaming platforms whose proprietors initially dismissed them. As Riccitiello observed during EA’s Wednesday earnings call: “Gone forever is the 4- to 5-year console cadence that gave developers ample time to invest and retool for the next big wave. Consider that just 18 months ago, there was no iPad, Google was just experimenting with Android and most big games were limited to a single revenue opportunity at launch. Consider that each of the major consoles now has a controller that encourages users to get off the couch and get into the action. On smartphones and tablets like the iPhone and iPad, the top paid apps are all games.”