The product, details of which will be unveiled at a later date, will be developed and published by BioWare and LucasArts, and will push the boundaries of the gaming market by utilizing the strengths of both companies to deliver an innovative, high-quality experience.

It sure sounds like a new MMORPG (massive multiplayer online role playing game) is coming down the pipe.  These and other companies are soon to be covered in our Special Situation Investing Newsletter because of some radical changes that are coming in the video game sector in 2008.  Bungie Studios is on the path to independence, at least somewhat.  Certain previews will be made to our free email distribution list.

Jon C. Ogg
October 30, 2007

The two studios have been recognized for creating some of the highest-quality games in the industry.  BioWare Corp. and Pandemic Studios have ten franchises under development, including six wholly owned games. BioWare Corp. is currently developing the highly anticipated Mass Effect, which will be published by Microsoft in November (NOV. 20), and is in the early development stages of a massively multiplayer online game (think EverQuest or WOW, but not those per se).  Pandemic Studios and BioWare Corp. employ roughly 800 people across four studios located in Edmonton, Canada; Los Angeles; Austin; and Brisbane, Australia.

EA will pay up to $620 million in cash to the stockholders of VG Holding Corp. and will issue up to an additional $155 million in equity to certain employees of VG Holding Corp., which will be subject to time-based or performance-based vesting criteria. EA will also assume outstanding VG Holding Corp. stock options. In addition, EA has agreed to lend VG Holding Corp. up to $35 million through the closing of the acquisition.  The transaction is supposed to close in January 2008 and will be dilutive to EA’s 2008 EPS by $0.30 to $0.40 on a GAAP basis and by $0.05 EPS on a non-GAAP basis. 

Microsoft’s (NASDAQ:MSFT) Halo 3 is well over $300 million by now in sales for the first two weeks and the path for Bungie Studios to become its own independent company is going to potentially shake up the industry.  Sure sounds to me like they want their own version of Halo or WOW to me……..

We have been reviewing this upcoming "launch" of Bungie into its own company.  There are still more questions than there are answers.   But this will create a unique special situation investing scenario that will be made available first to subscribers of our Special Situation Investing Newsletter.   Shares of Electronic Arts closed down 2% at $58.69 today, but shares are down another 2.5% at $57.25 in after-hours trading.

Jon C. Ogg
October 11, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the Special Situation Investing Newsletter and he does not own securities in the companies he covers.

Last night came the announcement that the company already saw Halo 3 generate $300 million in revenues in just the first week alone, although we noted that this will quite easily and quite rapidly reach $500 million.  It is when, not if.  We have noted how investors were looking at this, and now there is going to be a new way to look at it.  We have joked before about the XBOX franchise being spun-off to existing holders, but this will do for now.

Microsoft will retain an equity interest in Bungie, at the same time continuing its long-standing publishing agreement between Microsoft Game Studios and Bungie for the Microsoft-owned "Halo" intellectual property, as well as other future properties developed by Bungie.  Bungie Studios will remain in its current location in Kirkland, Wash.

We have already stated how the next generation games of Halo are already under conceptual development despite this being the "end the fight" version of the game. All you have to do is follow the money, it ALWAYS works.

Interestingly enough, Electronic Arts (NASDAQ:ERTS), THQ Inc. (NASDAQ:THQI),  Activision (NASDAQ:ATVI), and even Take-Two Interactive (NASDAQ:TTWO) are all trading higher.  This will end up becoming quite a unique situation for our readers of the SPECIAL SITUATION INVESTING NEWSLETTER as more data becomes available, and we eagerly look forward to providing special coverage of this special situation.

Jon C. Ogg
October 5, 2007

Jon Ogg produces the Special Situation Investing Newsletter and he does not own securities in the companies he covers.

GameStop will host “Finish the Fight” midnight events on Monday, September 24, 2007, at over 3,700 of its U.S. GameStop and EB Games stores for the long and highly-awaited launch of HALO 3.  This will include Halo trivia contests and Halo 2 challenges that will lead up to the first sale of the game at 12:01a.m. If a Halo trivia contest isn’t dorky, then what on earth is?  This sure sounds dorky to this 30-something dork.  Halo fans can also check out GameStop’s “Halo Store.”  Most participating GameStop and EB Games locations will begin their countdown to launch at 9:00 p.m. local time; however, customers are encouraged to contact their local store to confirm the exact time of the event.

Schools and tech support departments around the country are probably going to have very light attendance next Tuesday and Wednesday.  NPD showed a good grab in the August sales for Xbox.

Jon C. Ogg
September 18, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

With September 25 falling on a Tuesday you can bet that schools (and tech support departments) around the U.S. are probably going to have record absentees.  "I can’t come to school today, because I have Arbiter’s flu and the Covenant just has me worn out."  Sure, certain public beta demos have been out for testing and for introduction for a while, but this game already has recorded 1 million copies in U.S. pre-sales and it’s a safe bet that almost every Xbox 360 owner will buy a copy of this game between now and early 2008. 

It’s not really released how many copies of each version were sold or are being made available, but here is what is coming out:

• The LEGENDARY edition for $129.99 with a collectible helmet case and bonus disks with supplemental content.
• The Halo 3 Limited edition for $69.99 will have a hard sleek metal cover and a bound collection of information and art plus a bonus disk.
• The standard edition for $59.99 is likely to be the biggest seller.
• Of course there is also the OFFICIAL STRATEGY GUIDE for $19.99.
• For the true enthusiasts, there is even the Xbox 360 Halo 3 Special Edition Console for $399.99.

After the recent Xbox recall gaffe, the Bungie games and Xbox unit needs a blockbuster.  This was the year that the entire Xbox venture was supposed to become profitable, but the charges took care of that.  Also, what about that darned Halo-based movie (and is this a real pre-preview)?

GameStop (NYSE:GME) has to be happiest about one thing: there’s no Chinese lead paint in video games.  Take-Two (NASDAQ:TTWO) already got its bad news out of the way after it delayed its release of the new Grand Theft Auto franchise game until 2008.  Now it looks like it will just be Halo 3 that creates a vacuum for other gaming companies in a couple weeks.

If you are Activision (NASDAQ:ATVI) or Electronic Arts (NASDAQ:ERTS), you might want to wait until after the first week of October before making any major release announcements.  Companies that make video game announcements around that time will not get heard.  GameStop Corp. (NYSE:GME) shares closed up 2.8% today at $50.18, just over 3% from the all-time highs of $51.99.

Hopefully this will help Microsoft (NASDAQ:MSFT) finish its own fight.  Microsoft’s stock should no longer be called "Mister Softie."  It’s new nickname should be "Master Chief."  If you want all the last minute news on it, you can access the Xbox.com site here.

What would a spin-off of Bungie and Xbox be worth to Microsoft shareholders?  It doesn’t matter because it almost certainly won’t happen, but it would be an interesting exercise.

Jon C. Ogg
September 11, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

*IMAGE PROVIDED BY BUNGIE STUDIOS.

Take-Two is also delaying its Manhunt 2 for PS2, PSP, and the Wii.   The losses now look large, quite large.  The company says it is in sound financial position, but they just now irritated shareholders and clients.  Investors who jumped in hoping that the new team was going to do a full takeover probably wish by now that they would have played a stock by the name of Forrest Gump’s fruit company.

There is always some good news, and this is the case for the rest of the sector.  Microsoft’s (NASDAQ:MSFT) Halo 3 is going to set records for game releases.  GTA was set to be another major blockbuster coming out right after Halo 3.  In short, Electronic Arts (NASDAQ:ERTS), THQ Interactive (NASDAQ:THQI), and Activsion (NASDAQ:ATVI) may have just gotten one monkey off their backs.   Activision (NASDAQ) just released earnings and is trading up about 1% on "Guitar Hero".   THQ Interactive (NASDAQ:THQI) traded higher today, but its shares are up another 1%; and Electronic Arts (NASDAQ:ERTS) is up almost 1% after a 7% rise today, despite its warning yesterday.   GameStop Corp. (NYSE:GME) isn’t faring as well since this takes out a key upcoming blockbuster title out of the Christmas season sales, with shares giving back gains today with a 3.6% drop in after-hours. 

We noted just yesterday how the sales out of the upcoming Halo 3 and GTA 4 would have acted as a suction against many of the outside game title sales for a period after those were released.  This delay of the GTA title just got rid of a monkey for the other game publishers. 

Take-Two shares are down almost $3.00 in after-hours trading down to $14.00. 

Jon C. Ogg
August 2, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.