The long-awaited announcement of the first next-generation console has rejuvenated investor interest in core video games.
That’s according to analyst Michael Pachter, who said in an investor note that the trend should grow stronger still once Microsoft finally unveils the successor to Xbox 360.
"There appears to be some light at the end of the long tunnel, with share prices for the game publishers beginning to rally after underperforming the market for most of the last three years,” he stated, as reported by GamesIndustry.
“Once Sony announced the PS4 in February, investor confidence returned somewhat, and share prices for Activision, EA and Take-Two have all risen for most of the year.
"We expect a similar impact from Microsoft's announcement of its next-generation console prior to E3. While there have been no announcements from Microsoft confirming even the existence of a next-generation console, we think that the company is likely to announce before E3 begins in June, with an announcement likely as early as this month.
“Once both next-generation consoles have been revealed, we expect further information on specifications, features and pricing to emerge at E3, beginning with Sony's and Microsoft's press conferences on June 10th."
Pachter admitted, however, that the next-gen consoles are unlikely to raise the graphics quality bar to the same extent that new hardware has done in the past, although other features should still prove sufficient to woo consumers.
“Many investors remain sceptical that these improvements do not allow for a dramatic improvement in graphical quality for next-generation games,” he added. “While we think this is more of a function of the current state of display technology, we tend to agree that next-generation games will not be significantly more visually stunning than current-generation games.
“However, we think that improvements in facial and voice recognition technology, and dramatic increases in memory may allow for 'smarter' game characters, who may react to and adapt to the style of game play.
"We expect consumers to be dazzled by the next-generation consoles, and think that rich multimedia functionality may be sufficient to induce most to consider upgrading. Ultimately, we think that software will drive the purchase decision for most consumers, and we expect a significant number of high-quality and high-profile games to launch for next-generation consoles in 2014."