Well, once X360 was released in 2005, did PS2 games died immediately ? No. PS2 software still selling better than X360 in 2005, and 2006. 2007 started to see X360 > PS2, but not by a big margin. 2008 is the "real" year PS2 S/W started decline severely. Same thing happened during PS1 transition to PS2.
IF (a big if) X720 is released on 2010 (possible, but <50% chance IMO), we can still see Wii Play selling up to 2012 or 2013. So it is still 4 - 5 years life for this S/W.
Like deftangel said, I also "wouldn't short this stock in a million years". I will only short this IF : - It stop showing up in NPD Top 10 - Nintendo announce a new WiiMote+S/W bundle, to replace this game (not likely, but the possibility exist).
It's high because the vast majority of new Wii consoles require extra controllers and as a new owner, it makes sense to pick up at least one copy of Wii Play in the process of doing so.
The Wii's life cycle is a matter of opinion but I would say two years is very pessimistic and I wouldn't short this stock in a million years. It'll be top 10 in most regions in 2009, 2010 and possible a few years after that.
Why is this stock selling so high? "Price forecasts 35.47M copies sold" and the actual sales for this are way less then 35.47M; Wii Play has most likely a year or two to still sell decent numbers until the new consoles come out, and the new games for the new consoles come out.
@JoshuaJSlone, You are right, it not safe to assume an 35% attachment rate using September's. When short, assume the highest figure, so you are covered either way.
I don't remember why, but I missed the boat on this one.
@apujanata, Using 45% to get 31.5 DKP is one reasonable argument, but if we go by September's 35% we end up with a much lower 24.7, which would at current price of 34.1 be about a 28% profit.
Though it is probably safer to assume an average percent rate than merely the previous month's.
@JoshuaJSlone, @kspraydad, Since current price is 33.72, which means less than 10% profit IF it cash out at 31.5 DKP predicted price point, I don't want to invest in this. I prefer bigger margin than 10%, say 15 - 20%.
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