Game stocks are not dead money - Cowan and Company

Investment in videogame companies is at a low this console generation, but analyst firm Cowan and Company believes the business is due to for an upturn in the coming months.

The recession, encroaching iPhone sales, publishers struggling to grow profits and a poor 2009 has lead investors to assume the current cycle is "dead and uninvestible", but according to Cowan, 2010 can be a strong year due to major software releases, further home console price cuts and a dedicated gaming consumer.

The casual market may have cooled, but the hardcore audience remains loyal, noted the company, and resurgent sales of the Xbox 360 and PlayStation 3 hardware bode well for a line-up of big games this year.

The company also pointed to possible price cuts for all three home consoles in the last half of the year, estimating the PlayStation 3 and Xbox Elite could drop to $249, and the Wii and Arcade Xbox 360 to $179.

"This should bring the current generation consoles further into the wheelhouse of the mass market consumer and should keep sales fairly robust," said the firm.

Titles pegged for big sales success in the first half of the year include Mass Effect 2, God of War III, Final Fantasy XIII and BioShock 2, with Halo: Reach, Crackdown 2, Fable III, Alan Wake, Gran Turismo 5, Super Mario Galaxy 2, Metroid: Other M and possibly a new Zelda for the last six months of the year.

Activision is the publisher most likely to benefit from an improved 2010, with the release of StarCraft 2 and World of Warcraft: Cataclysm, a full-year of WoW operations in China and new releases Blur, Singularity, James Bond and True Crime, said the company, which also pointed to growth for Take-Two, Square Enix and Ubisoft.

However, Cowan and Company was muted on the launch of motion control peripherals for the Xbox 360 and PlayStation 3, saying there could be a catch 22 situation as publishers wait for significant hardware sales and consumers hold off for strong software.