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Minyan Mailbag: On Golden Pong

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Hooray for Hollywood!

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Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next discussion with that very intent.


Toddo-

I am trying to understand the video game dynamic that you are talking about. Is this going to be a new advertising medium? I have to admit this is interesting. What stocks do you watch in this sector?

Thanks,
Minyan Frank


MF-

We've spoken about this on the Buzz before--my belief is that Madison Avenue advertising spends are being squeezed out of conventional channels (TV) as a function of DVRs and evolving technology. As such, there is a powerful secular trend in place (online advertising) that should spill over to the video game manufacturers. Sumner Redstone has been all over this (Midway Games (MWY)) and it could be one of the reasons why the sector has been en fuego. When Halo 2 pre-orders more than Shrek 2 made on its opening weekend, it makes sense that corporate brands will want to get in front of those eyeballs.

My best friend and college roommate, Kevin Wassong, is the smartest media mind I've ever met. He told me ten years ago that Madison Avenue would one day be a ghost town unless they transitioned their efforts from traditional commercials to product placement and content integration. I had no idea what he was talking about at the time but that's why he was, as the founder and CEO of JWalter Thompson's digital division (connect@jwt). The dynamic that "Fish" spoke of continues to evolve and will manifest as we edge through the digital age.

I'm not an analyst and can't speak to which stocks are the best positioned to take advantage of this trend. I do sense that we'll see continued consolidation as media companies see the cost advantages of owning this space rather than renting it. When I discuss the evolution of "virtual real estate," I'm well aware that 1) it smacks of bubble talk and 2) I may be "talking my position" a bit. Still, one of the major reasons that Dow Jones (DJ) bought MarketWatch was to increase the bandwidth needed to facilitate the secular online advertising trend.

I would also note the migration of brands across multimedia channels. Electronic Arts (ERTS) alliance with ESPN (DIS) is a prime example of how two mediums can commingle for their greater good. Platforms and products that can transcend those boundaries (note that Halo will soon be coming to a theater near you) will sit at the crossroads of convergence. This evolution is one of the reasons why I believe that Minyanville is properly positioned for the future. It's incredibly exciting and we're all gonna take the ride together.

Kindly,

Toddo

R.P.

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