Activision - ATVI

While the rest of retail may be in a tailspin due to ever increasing economic pressures, I expect spending on video games especially on the well known franchises to hold up well over coming quarters. To play this, I think you should look at ATVI, the premier company in the video game space. ATVI is very growth oriented and own top brands such as Guitar Hero, Call of Duty, and World of Warcraft that are extremely popular and generate quite a bit of loyalty among gamers. Furthermore, the company appears well positioned for the holiday season with titles such as Call of Duty World at War, Guitar Hero World Tour, the official Quantum of Solace game, and a World of Warcraft expansion pack.

With all the market turmoil, shares have come off a bit, but I suspect that ATVI will outperform it's competitors, specifically ERTS, in the coming months. Why ERTS? ERTS is a more mature company with titles including Madden, Fifa, etc. Those names are a bit tired and lack significant growth potential. Furthermore, sports titles appeal to more casual gamers who are much more likely to forego buying a game due to economic pressures than Activision's typical customer who is likely to keep spending no matter what. For all of these reasons, I'd look to go long ATVI and short ERTS. Over the next several months I think the story will play out and ATVI will be the winner.