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Teen Interest In Console Gaming Good For EA, Activision, Take-Two

A survey of U.S. teens showed interest and spending on console video games is climbing, boding well for game publishers Activision Blizzard ( ATVI ), Electronic Arts ( EA ) and Take-Two Interactive Software ( TTWO ). Piper Jaffray surveyed 6,500 teenagers nationwide for its 31st semiannual teen survey. Of more than 4,000 video game respondents, 78% own a current-generation game console or expect to in the next two years, up from 73% in the fall survey. Plus, teen video game spending intentions reached new highs in the survey. Piper analyst Michael Olson, in the investment bank’s research report, reiterated his overweight ratings on Activision, EA, Take-Two Interactive and retailer GameStop ( GME ). Teens in the survey expect to spend, on average, $214 this year on video games, up from an 11-year average of $152. “The rising level of interest and ownership in consoles is a clear positive for the game publishers (ATVI, EA, TTWO) and GameStop (GME) as it speaks to the console cycle’s potential to drive software growth in 2016 and 2017,” Olson said in the report Tuesday. Male teens surveyed said they allocate 20% of their overall spending on food, 15% on clothing, and 13% on video games. “Amazingly, video games ranks higher than cars (10%) and electronics (9%),” Olson said. “We believe this is yet another sign that video game consoles are not losing mindshare and, in fact, may be more popular than ever.” Current-generation game consoles include Microsoft ’s ( MSFT ) Xbox One, Nintendo ’s ( NTDOY ) Wii U and Sony ’s ( SNE ) PlayStation 4. Olson anticipates strong spending on video games in the next 12 months, driven by an uptick in the overall quality and quantity of major games. These include new titles in such popular franchises as Activision’s “Call of Duty” and EA’s “Titanfall.”

Junior Could Get A College Scholarship For Playing Video Games

Parents worried that their kids are playing too many video games might need to rethink their perspective. At least one university plans to offer academic scholarships for e-athletes, people who play competitive video games. The University of California, Irvine, announced Wednesday that it will offer as many as 10 academic scholarships to students on its e-sports team. UC Irvine is launching a major e-sports initiative in the fall, the first of its kind at a public research university. The initiative includes a state-of-the-art arena equipped with high-end gaming PCs, a stage for “League of Legends” competitions and a live webcasting studio, which will be constructed at the UCI Student Center. “League of Legends” is a multiplayer online battle arena and real-time strategy video game produced by Riot Games, now a unit of Tencent Holdings ( TCEHY ). “ UCI eSports will be built on four pillars: competition, academics, entertainment and community,” Thomas Parham, vice chancellor for student affairs, said in a statement. “We hope to attract the best gamers from around the world, and our academic programs in computer gaming science, digital arts, computer science, engineering, anthropology, law, medicine, neuroscience and behavior create a strong foundation for research and inquiry related to gaming.” UCI already is home to a dedicated gaming community. College Magazine ranked UCI the No. 1 school for gamers in 2015. A recent survey of UCI students found that 72% identify as gamers, and 89% support the creation of an e-sports team, the school said. The computer game science major in the Donald Bren School of Information & Computer Sciences is the largest in the country. Los Angeles-based Riot Games has pledged its support for the e-sports initiative and will work with UCI to offer a premium “League of Legends” gaming experience. Custom gaming computer maker iBuyPower is equipping the 3,500-square-foot eSports arena with 80 of its high-end gaming PCs loaded with the most popular video game titles. E-sports is a hot growth area for video game companies. Major game publishers Activision Blizzard ( ATVI ), Electronic Arts ( EA ) and Take-Two Interactive Software ( TTWO ) have launched their own e-sports businesses. RELATED: Everybody Into The Pool! Take-Two Joins Esports Trend .  

Take-Two Interactive Software’s Games Show Staying Power; Q3 Beats

Video game publisher Take-Two Interactive Software ( TTWO ) late Wednesday trounced Wall Street’s targets for the December quarter, despite not having launched any big new games during the holiday shopping season. The New York-based company earned 89 cents a share excluding items on sales of $486.8 million in its fiscal third quarter, ended Dec. 31 . Analysts polled by Thomson Reuters had expected Take-Two to earn 50 cents a share ex items on sales of $452.8 million. On a year-over-year basis, earnings per share fell 67%, and sales fell 31%. Take-Two credited the sustained popularity of such games as “Grand Theft Auto 5,” “Grand Theft Auto Online,” “NBA 2K16,” “WWE 2K16” and the “Borderlands” series for its fiscal Q3 upside. Take-Two stock was up more than 4%, near 34, in afternoon trading on the stock market today . The stock hit an all-time high of 37 on Nov. 6. Take-Two has “limited near-term product momentum” because its next big game, “Battleborn,” isn’t scheduled for release until May 3, which falls in the company’s fiscal 2017 first quarter, says Baird analyst Colin Sebastian. He rates Take-Two stock as neutral, with a price target of 38. One big disappointment is the lack of a new game on the horizon from Take-Two’s Rockstar Games, Pacific Crest Securities analyst Evan Wilson said in a research note Thursday. Rockstar is the studio behind the “Grand Theft Auto” and “Red Dead” franchises. “The Street had previously been hopeful for a big Rockstar release this year (Red Dead), but that is not happening, and we still have not heard any news for next year,” Wilson said. “It has now been two years since discussion about an imminent Red Dead announcement began.” Wilson rates Take-Two stock as sector weight, with a fair value in the mid-30s. Take-Two continues to benefit from two powerful tailwinds: faster-than-expected sales of current-generation consoles and the transition to digital revenue streams, which is driving improved profitability, Jefferies analyst Brian Fitzgerald said in a note Wednesday. He rates Take-Two a buy, and he raised his price target to 48 from 44. RELATED: Everybody Into The Pool! Take-Two Joins Esports Trend .