Earlier today, a reader had asked if I was an investor (because of all of the company research and prediction posts.) As usual, my response ended up getting pretty long, so I just converted it into a full post. :)

If you ask me some interesting questions, sometimes you'll get some interesting answers. One of my other recent posts ("Playing the Long Con") also came out as a result of a reader question.

This post might really interest some of you, especially if have a stockbroker or you're looking for a way to predict stock changes.

So, to be clear, I'm not an investor and I haven't done any investing. I'm not involved in it because I don't know anything about how to do it.. probably like many of you. If I had a broker that could move fast, or I personally knew how to short sell stocks myself, it's something I would actually do. ("Selling short", by the way, is basically a way to benefit financially when a stock loses value.. so you're betting that a company will do poorly in the future. You might have heard the term "bear market" before, it's the same sort of field.)

I do recognize, though, that the kind of stuff I research or analyze does have in some cases a strong correlation with stock price changes. I'll give you a real world example of something that actually happened last year.

It's something that can be theoretically useful again in the future.

So, here's the investment tip: leaked video games. :)

If you know ahead of time that a game is going to get really bad reviews, you therefore know that it's going to have bad sales and you will know this ahead of other investors. When the first day sales come, the stock prices will react to the bad reviews and sales figures.

THQ's Homefront leaked publicly online two weeks early, and if you had played the game (or saw the reviews) you knew it was going to be TERRIBLE. At the time, I would have actually shorted the stock (if I had the tools and knowledge) knowing that THQ had invested a lot of money in this project and they were depending on it for the future.

Here's what happened to the THQ stock after the game launched on March 15, 2011. Remember.. two weeks prior to this, the stock hardly budged even though the game was leaked and gamers found it horrible.

This was a perfect opportunity to short the stock, because you would have known sales would be very poor. It was so bad, in fact, that the stock continued to tumble until they were even threatened to be delisted.

This also tells me that not a lot of investors follow these leaked games, or even play them themselves, which is a huge disadvantage for them. They invest in something that they don't understand, and probably rely on investment advice from others.

This isn't possible with all companies though. EA and Activision are hard to predict, so I would skip those. But, the more volatile companies are easy to predict. For example, THQ, Take Two, Namco Bandai.. they release less titles, have less regular income (like subscription based games) and they rely more on major titles.

A major title means major investment, and it means they're counting on it's financial success. If something goes bad, their stock cannot recover as easily.

(I would have loved to include Bethesda in that list, based on the RAGE leak, but they're a privately traded company so I don't know what happened internally.. I assume it was fairly negative though.)

When a game leaks, here are the signs to look for in the company:

• If it's a major title they're highly dependent on. This makes it a volatile release, which is what you want.
• It's being released in the absence of other major titles.
• If it's a new franchise and they intend on future growth for it.
• Hype of the game demonstrates high expectations.
• Look for high sales expectations especially from industry specialists since investors follow their advice.

You also need to be prepared yourself.

You never know when a game is going to be leaked, or how long before the game is officially released. Sometimes if the street date is broken, you might only have 2-3 days to make a decision.

If you can obtain the game, you need to be well familiar with the genre to know if it's going to do well or not. Don't bother guessing the success of a RTS game if you've never played one before. You also need to be a well discerning individual who can rush through and properly judge the game content as quickly as possible. There are a lot of factors to consider, like graphics, story, ease of use, and game length. Game length especially! With that in mind, you should always have a memory editing tool (like Cheat Engine) handy so that you can cheat through the game and experience as much as possible to make a quick but informed decision. (Trainers and in-game cheat modes won't be available when the game is leaked, so you have to do it yourself.)

Some of you might be thinking "Well, this is all just hindsight and there's no proof that you would have done this at the time." So, how about we do this for another future game leak? :) I'll make a prediction and we'll see what happens. From what I can tell, the next best potentials will be Max Payne 3 and BioShock Infinite. We have to see if any of those get leaked (or the street date broken), and I can make an educated guess how the stock will react. The other option is Guild Wars 2 (or another MMO).. these require beta-tester reviews. Only problem is, I believe they're protected under NDA.

So, this brings me to a concern. What I don't know is if there's anything illegal about doing any of this? If a street date is broken, or a game is leaked publicly, and there are public reviews about the game.. if you act on that information, is it considered insider trading since you have access to materials that aren't supposed to be public yet? If you are (or know) an investment broker, I'd like to know if it's legal to act on this sort of information.

There's always other public information to act on though. If you recall, for a long time, I had been saying to expect a release date announcement during the 3 days before the Q4 2011 shareholders meeting. There was a 80% chance that it would be made on the Monday (the most logical choice), but the chances would drop considerably as the call approached, and by then it would mean that the game would be delayed to Q2. (I put my faith in Blizzard though and trusted their "promise" of Q1.) After the call, ATVI's stock immediately tumbled 30 cents. Their stock is always fluctuating, though, so it's hard to say if it will recover or how soon. This is why I prefer other companies who put all of their eggs in one basket though.

So, a news alert just went out 15 minutes ago that apparently Thomas Tippl (COO & CFO of Activision Blizzard) will be presenting at the Goldman Sachs 2012 Technology and Internet Conference today at 10:20AM PST.

A very last minute invite.. it's possible they weren't even sure if he was going to be presenting today or not.

If you're interested in this sort of stuff, you can join the webcast here.

During the course of the presentation, Activision Blizzard may make forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that these statements are only predictions and actual events or results may differ materially.

This is a pretty typical warning for any speeches regarding finances, so don't get your hopes up.

It's too soon for a release date announcement, plus Mike Morhaime said that it would be in the "weeks ahead." (Not "within the week ahead.") If any kind of release date announcement is made, it would be the announcement of another delay. :)

* UPDATE:

It was pretty much information we already knew. They have 2 releases in the pipeline, but they still might bring 3 (at the VGA, Mike had said 3 releases this year.)

Thomas did mention what I was talking about before. They're not afraid of cannibalization and they want WOW players introduced to the Diablo franchise so that they eventually play both (great way to extend the longevity of WOW in the absence of regular content additions.) By encouraging customers to play Diablo, they will use the RMAH to pay for their subscriptions and other games.

He was hesitant to talk about the revenue model for their Next Gen MMO, but I got the feeling that it won't be subscription based. "It works well for World of Warcraft, but not others." Makes me wonder if Titan will be much smaller in size and scope than WOW.

I contacted Brian Fargo, and I've made him aware of the Kickstarter service. It's a virtually unknown website that's definitely going to grow in popularity now that a professional game has been announced on it, from a well-known developer.

Brian Fargo has just tweeted that he is seriously considering using this new crowd-sourcing model to bring back Wasteland.

He also tweeted the following:

Pondering bringing Wasteland back through this crowdfunding. It's a world I have longed to work with again.

Wasteland is one of my all time favorite RPGs, and this is something I will definitely be supporting financially if he moves forwards on this.

I would recommend adding yourself as a Brian Fargo Twitter follower, and please continue encouraging Brian with this latest development.

The faster he can get something off the ground with the momentum that Kickstarter is currently experiencing, the better position he'll be in. Other game developers, like Obsidian, will also no doubt be moving to Kickstarter. Eventually, it will be saturated with video game proposals. So, whoever can get in there first will be far better off (e.g. in funding and interest.) When everyone starts doing it, Kickstarter (for gaming development) loses it's novelty, and also potential funding.

This will get a lot more traction (and fan site coverage) once DuckandCover and NMA pick up on it. If you're not familiar with Wasteland, you can learn more about the game and it's history at the (now abandoned) Wasteland Ranger HQ-Grid. I have been communicating with as many different media and industry contacts as possible, and I'm getting them to motivate Brian to release Wasteland 2 through Kickstarter. Let's see how far I can take this!