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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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No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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