Business Update with Mark Lacter

Black Friday; Activision

KPCC's business analyst Mark Lacter talks about Black Friday shopping; he also talks about how Activision is already ahead of the holiday game with the release of “Call of Duty” franchise: “Modern Warfare 3.”

Susanne Whatley: On Tuesdays we talk about the latest business stories with Mark Lacter. Mark, we’ve got Black Friday coming up…that’s the all-important day after Thanksgiving for retailers. And it’lll be up and running earlier than ever.

Mark Lacter: Actually for Wal-Mart, it’ll be Black Thursday, Susanne. – the chain is going to be open all-day Thanksgiving and then start its special sale at 10 o’clock. You also have Best Buy, Macy’s, Kohl’s, and Target all opening their stores at midnight, which is four hours sooner than in previous years – and a midnight opening is likely to have folks lining up at 9 or 10 p.m. Deciding when to open is a big deal – Black Friday is expected to generate around $20 billion for the retail business, and it provides a kind of momentum for the rest of the holiday. For shoppers, the big attraction in those early hours is having a few items available at very low prices (Best Buy is selling a 24-inch TV for eighty bucks, that sort of thing).

Whatley: I guess that’s why folks wait in line…

Lacter: Yeah, retailers figure that once you’re in the store, you’re more likely to buy other stuff. Now, there was a time when the chain stores wouldn’t even consider opening so early, but then Kmart decided to try Thursday hours and since then even a few specialty retailers, including the Gap, have started doing it as well.

Whatley: I can’t imagine everyone is happy about this, especially the people who work in these stores.

Lacter: You are seeing some grumbles on Twitter and Facebook. Of course this is an anything goes retail world, especially with the popularity of online shopping that’s available all the time, holidays included. And it’s also a super-competitive retail world; holiday sales are only expected to increase in the two-and-half to three percent range this year. So everyone is going after every single dollar – the Best Buy folks don’t want to lose four hours to the Target folks, and nobody wants to lose out to Amazon. Frankly, that’s as good an explanation as any for these earlier hours.

Whatley: Are these new hours permanent?

Lacter: Not necessarily. Last year Sears was open on Thanksgiving, but it found that many folks who shopped on Thursday were doing it online. This year it’s remaining closed until 4 a.m. on Friday. J.C. Penney is opening at 4 as well – maybe figuring they’ll attract shoppers who don’t want to stay up all night. It’s really kind of a free-for-all.

Whatley: We’re still more than a week away until Thanksgiving, but already it looks like there’s a big winner for the holiday season.

Lacter: That’s right – It’s Activision, the Santa Monica-based videogame publisher, which is just out with the latest version of its “Call of Duty” franchise: “Modern Warfare 3.” In the first 24 hours after being released, Activision reported $400 million in sales, which the company says is a record – not just for videogame sales, but for the launch of any entertainment title. That may be pushing things a bit, but there’s no doubt that “Call of Duty” represents a huge portion of the company’s total revenues – and, in some ways, that’s by design.

Whatley: How so?

Lacter: The idea is to capitalize on mega-hits – concentrate on games that have proven very popular – and then come out with new versions every year or so. In some ways, this is similar to the approach taken by the major movie studios that come out with a blockbuster – say, “Pirates of the Caribbean” – and then have a series of sequels. The risk, of course, is that the versions start to look alike or that people just get tired of playing the game. That obviously hasn’t happened so far, but some stock analysts believe Activision should diversify by moving into the casual game arena – casual games being titles like “FarmVille” that you find on Facebook.

Whatley: Is that going to happen?

Lacter: Most likely, but its mainstay is still the more traditional types of games that people play on consoles – and which offers snazzy graphics and realistic player experiences. That’s where Activision has been most successful.

Whatley: And you’re writing about Activision in the December issue of Los Angeles magazine. Thanks Mark.

Lacter: Thanks Susanne.

Whatley: Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.


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