@drl21, If you wanted to profit in this stock, I would suggest that you don't change your original estimate. When doing shorting, I always advice getting bigger margin. Staying with 5-10 or 5-9 is better than going with 5-8.
It's ok, I appreciate the sentiment of the up-bid more then the actual up-bid itself.
In addition you make some very good points to suggest that Even I may be over estimating the sales a bit. I think based on those points I'll adjust my neutral zone down to 5-8 instead of 5-9. Sell if it's above 8.
BTW, I have compiled a probably useless list of people who has gone long or short significantly (as percentage of their networth or just total amount of DKP invested in Diablo III) : Long : ChrisZhong, sunblaze, Eclectus, Sieglove, Tioneb. Short : vGinfidel, apujanata, JoshuaJSlone, drl21, Zeromous.
One interesting note : Even though it didn't show up on zukaus's profile, I think (I could be wrong here) Zukaus went long on this stock. The current holding is very small (only 460 stock, if my calculation is correct, and not made wrong by other stock fluctuatino at the same time I tried to calculate Zukaus's holding of this stock).
To Zukaus, I hope this kind of thing (analyzing your position on a certain stock, and discussing it on forum) does not bother you. If it bother you, please tell me, and I will stop doing it in the future. I will still discuss obvious things about you, like which stock have shown up on your profile, but not "hidden" things, like your position on Diablo III.
I couldn't agree more drl21, and I'd bid you up if it weren't for my bidding being suspended (Apparenly bidding down 3 legitimately useless posts from the same person is a crime).
Where revenue is useful, is determining future movement in the industry and directly influences marketing and sales efforts/decisions in quarters to come. Simply to say more people have PCs only increases the potential market as you pointed out- but gives no indication as to why people are not buying games on PC.
Truth is, to the avg. consumer there are many reasons to not buy games on PC:
*Draconian and faulty copy protection *more reliable performance from dedicated chipsets *state of the art technology costs more than equivalent consoles.
I know all of the above will keep me from purchasing Diablo3....having not been too crazy about Diablo one and two, you can count out my PC as a potential licensee. If it were on PS3 I might at least buy it for posterity.
So, the question is how many others feel like I do, and conversely how many others actually liked Diablo 1&2 will not buy because of current PC gaming market conditions? How many of the last 6-8 million that bought diablo 2 will not buy diablo 3 for whatever reason? The folly is to assume that everyone and then some will buy the successive title.
This is an example why sales growth over the course of a series (1, 2...3 etc) is not linear, but a bell curve.
@drl21, I also have the same guidance as you : "this game will not reach 14 million, likely will not reach 10 million, and theres a good chance it will not reach 8 million, although I don't think 8 is really a safe bet either up or down"
Like I mentioned, 8 - 10 Million is a good neutral zone. The higher the price (higher than 10 Million) The better for short. The lower the price (lower than 8 Million) the better for going long.
I would say that in general Revenue and sales do correlate. Most if the time revenue falls and drops with sales. Profit may not necessarily correlate, I would give you that one. Still, I think it is a fair indication that PC sales are not the guarantee that they were. Consoles are doing more and more of what, 5 years ago, they could never do and only PC games could. Today theres simply less need for a game to be on PC. Keep in mind that this game is at least being looked into for a console release. While that is far from set in stone, if that does happen it will take considerable sales away from the PC. In general, all other things equal, (ability to play online, compatibility of controls) people would prefer to play a console version, at least that has been the trend recently.
Either way, no matter how you slice it, this game will not reach 14 million, likely will not reach 10 million, and theres a good chance it will not reach 8 million, although I don't think 8 is really a safe bet either up or down. I would sell anything over 9, and buy anything under 5 right now. I would say that the range between 5 and 9 is too iffy this far before release.
I'm confused too, I mean I shorted at 800 thinking this was wise. Diablo is simply not as popular globally as for instance Starcraft. How on earth does the TSE justify the current pricepoint?
Guess I'm just more bearish than the majority of TSE profiteers, or just not as good at reading investors. I tend to focus on the reality of the market rather than what others are doing. Often this means losing money :)
@drl21, This stock is very volatile. Whoever managed to short this stock at 140+ price point are now enjoying the profit. I was too late in getting into this stock.
Was there any game that have doubled the sales of their previous game ?
Just because more PC's are being sold does not mean that the PC gaming market is increasing. In regards to the percentage of annual game sales, PC sales are producing less earnings then console sales. Whether this is because PC games are less popular, or because consoles are more popular, is debatable. But overall, compared to consoles, PC games are not genorating the income that they used to.
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If you wanted to profit in this stock, I would suggest that you don't change your original estimate. When doing shorting, I always advice getting bigger margin. Staying with 5-10 or 5-9 is better than going with 5-8.