I don't play COD type of game, so I believe your explanation on their reason for success. I agree that SSBB is a little bit too optimistic to be used as comparison for RE5. Originally, I also used DMC4 good news "2 million shipped", but it later on turn out to be a major case of shipped != sold. I agree that the reason for predicting optimistic view is much, much less than the reason for predicting pessimistic view. I agree that the reason for NOT shorting RE5 X360 is way more numerous than the reason of going long on RE5 X360.
The big question is : will the market move to the right direction (down) ? You and I both realize that there was a lot of time in the near past that the stock can go in the wrong direction, even though you and I agree on a certain direction. Personally, I couldn't short this, since I am in the red now.
@apujanata, Using COD and Smash Bros may lead you to the wrong conclusions.
While COD4 won high acclaim, COD3 wasn't done by the same development team and was criticized compared to earlier entries in the series. A far better example would be COD2 to COD4 (which would support your sales theory as well, which does have merit). But that was a major jump forward for the series in terms of settings and online features.
Similarly, look at Smash Bros. It is easily the most-hyped game on the Wii, which has happens to be selling a lot faster than the Gamecube. It's an exceptional example.
Now, look at Resident Evil. The previous game was a tremendous step forward for the series (in terms of gameplay) and was released on two systems (we'll ignore Wii sales) with a huge combined install base. Yet its sales were still lower than the first 2 entries in the series. Why would RE5 sell more on systems with a fraction of the install base? This series has seen a steady decline in sales for its games, so why will this entry be any different, especially since it is no longer featured on the top-selling system (as the Playstation brand used to be)?
@Gaara42, The source I used is the Capcom million seller, same source as one of yours.
I think the major difference between you and me is in future prediction. You believe that it is possible for RE5 to have > RE4 sales (using RE4 on GC+PS2). I believe that it is possible (not a big percentage, mind you) that RE5 (PS3+X360) > RE4 (GC+PS2+Wii). You are taking the pessimistic view, I am taking the optimistic view.
I only short something when "even though I am using the optimistic view, the stock price is still overvalued". The main reason for this caution is the fact that the video game market are still expanding right now : in Japan, in US, in Europe.
COD4 is way > than COD3. Super Smash Brawl is way > than Melee. Super Mario Galaxy is bigger (maybe not as big a percentage increase) than Super Mario Sunshine. My conclusion is still the same : This is a high risk, high gain stock.
If you have a brave heart and have spare money, you should jump now. I myself prefer to wait until the first NPD future, or the news of the game sales itself before jumping in.
The reason I was even more cautious now : SSBB #. I thought the 2.4 Million first month is the limit, hence I cash out at that price point. It now seems that I underestimate SSBB. IF I short SSBB at 2.4 Million Price Point, I would have been losing money.
You failed to mention that Resident Evil 2 sold around 4.96 million copies (please cite your sources) when it was released on the original Playstation in 1998, with no other release on a major platform until a year later (and even then it was only the PC). It was not until almost a good 2 years later that it was released for the N64 and Dreamcast. In the case of Resident Evil 5, it is being released simultaneously on two systems, each with an install base smaller than the original Playstation had when Resident Evil 2 was released.
If you look at Capcom's site, you notice that sales of Resident Evil games peaked with Resident Evil 2 and have declined since. Resident Evil 2 sold 4.96 million copies; Resident Evil 3 sold 3.5 million copies; Resident Evil 4 sold 3.6 million copies(Gamecube + PS2 numbers) and all of the rest of the Resident Evil releases since Resident Evil 2's have sold sub-1.4 million copies . For Resident Evil 4 the Wii number is not included since this game will not be released on the Wii or another major platform, so adding in sales for a third platform skews the numbers as we are predicting sales based on Resident Evil 5 which will be released on two platforms.
Due to this, the possibility of Resident Evil 5 selling nearly 5 million combined copies seems unlikely, though not implausibly. It would make Resident Evil 5 the second best selling Capcom game of all time. We are currently predicting for this stock alone, just the Xbox360 version, to be their 4th best selling game of all time, which seems highly unlikely. Take into account the fact that this will be released on both the PS3 and Xbox360, each of their GLS should be sub-3 million since they would end up sharing total sales.
From this we can take the maximum a Resident Evil game as sold (4.96 million from Resident Evil 2) and cut that in half to reach the GLS of each Resident Evil 5 stock, which would be around 2.5 million. Though Devil May Cry shipped around 2 million copies in a short period of time, I expect sales to be front loaded, so it would level out around 3-3.5 million eventually. It is doubtful that Resident Evil 5 will ship nearly 4.7 million in its first couple months, a number around 2.5 million combined (for both Xbox360 and PS3) seems more plausible. Due to this I think a lifetime total of around 5 million for Xbox360 and PS3 combined is likely, and due to the previous ratio breakdown, GLS for the Xbox360 version of Resident Evil 5 should be around 2.5 million.
A little bit more analysis, using the link you provided.
DMC series sales ranged from 2.16 Million (DMC1) to 1.3 Million (DMC3). In less than 2 months since release, DMC4 managed to sell / ship 2 Million unit, almost as big as DMC1 (highest in the series) LTD/GLS. DMC4 GLS probably will reach 3 Million unit, WW.
RE series sales ranged from 4.96 (RE2) to 2.75 Milion (RE1). RE4 total sales for PS2+GC+Wii = 4.75 Million. WHAT IF RE5 get to 4.7 Million sales (almost near the highest record ever, RE1) in less than 2 Month (just like DMC4) ? If 40% - 60% of sales are on X360, that means 1.6 Million to 2.8 Million for the first 2 months, and 2.4 - 4.2 Million for GLS.
IMO, this stock is a high risk, high gain stock. I think I will stay away from this stock, especially from a short position (I might still get in on long position). You are free to do whatever you want.
What IF what happened to DMC4 (surprising good sales #) also happened to RE5 ? I am lucky that I didn't invest any money on DMC4, which is a short for me (based on DMC3 sales #), otherwise, I would have lost a lot of money.
You would agree though that this stock is overvalued and should be sub 220DKP levels? I will reinterate what I said several weeks ago:
Resident Evil 4 for the PS2 only sold around 2 million copies (Capcom site), on a much larger install base than the Xbox360 will have when this is launched. The Gamecube game had already proven Resident Evil 4's worth as one of the best games of the generation, a reason why so many PS2 owners picked it up (and it had extras that the Gamecube version did not have). If Resident Evil 5 isn't near perfect, then I have a hard time believing that it will be able to sell 3.16 million, especially since it will be competing with Resident Evil 5 on the PS3 at the same time. Even if the game turns out to be great, the amount of competition and simultaneous release on two platforms will take a bite out of sales. Due to this 2 million or 200DKP seems more accurate to me.
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This stock continues to rise, read the reasons why it should be below 300DKP (around 250DKP) in this post.