@Alpha, the video game industry has the dichotomy where large publishers rely on recurring income from franchises while independent developers try to launch something new. This is similar to the drug industry where pharmaceutical companies are relying on the cash flow from clear cut winning patents while biotech firms are hoping to come up w/ the next hit.
The risk in investing in biotech firms is very clear. Your whole investment is made by the fact of a drug passing FDA testing. This results in a very risky investment that might sky rocket with an FDA announcement or leave you writing off some worthless shares.
In the video game industry, we can't even invest in these little risky guys as it's a lot harder for independent developers to go public. A single video game hit just isn't anywhere as big as a potential blockbuster drug. We really only have the more "secure" companies like ERTS and ATVI...and even then they are still very risky. The publisher stocks have been slumping for a while now because the products just aren't making the numbers.
The article seems to imply that taking more risks is what is necessary to make VG companies more impressive investment opportunities...but this would mean we need risky products to be successful every quarter to the extent that they pay for the risky products that do not succeed.
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The risk in investing in biotech firms is very clear. Your whole investment is made by the fact of a drug passing FDA testing. This results in a very risky investment that might sky rocket with an FDA announcement or leave you writing off some worthless shares.
In the video game industry, we can't even invest in these little risky guys as it's a lot harder for independent developers to go public. A single video game hit just isn't anywhere as big as a potential blockbuster drug. We really only have the more "secure" companies like ERTS and ATVI...and even then they are still very risky. The publisher stocks have been slumping for a while now because the products just aren't making the numbers.
The article seems to imply that taking more risks is what is necessary to make VG companies more impressive investment opportunities...but this would mean we need risky products to be successful every quarter to the extent that they pay for the risky products that do not succeed.