Research on the Video Game Industry Released

Over the years we've had the good fortune to interview and work with Patrick Murphy,CFA, who heads up the research department at Murphy Analytics. 

Today we're pleased to bring you hot-off-the-press research and analysis from Murphy on a company with a strong footprint in the gaming and video game industry.
We know that research is a little more dry than the usual breaking news and headlines seen herein and on the web but it's also a much deeper look at a company than an investor normally sees.

So, grab your coffee and take a few  moments to review this interesting report on SouthPeak Interactive Corporation (OTCBB:SOPK), an intriguing video game company well-positioned in one of the more lucrative sectors of the entertainment market.

SouthPeak's games cover all major genres including action/adventure, role playing, racing, puzzle strategy, fighting and combat. SouthPeak's products are sold in retail outlets in North America, Europe, Australia and Asia. SouthPeak is headquartered in Midlothian, Virginia, and has offices in Grapevine, Texas and Leicester, England. Model: SOPK serves as a publisher for the legion of game developers looking to maintain their creative and operational independence. This outsourced model enables SOPK to consider a wide range of game prospects from studios and small developers across the globe. 

As the larger publishers focus on extending existing brands and producing mega-hit games, SOPK has a growing pool of highly attractive publishing prospects from large and small development studios, resulting in a pipeline of over two dozen games and 60 distinct SKU’s. At the recently completed E3 Expo, SOPK’s Raven Squad™1, a first person shooter / real-time strategy game to be released this summer, earned the “Best Strategy Game” award of E3 2009 from 411mania.com, and Roogoo™ Twisted Towers won the 411mania.com award for “Best Puzzle Game”. 

SOPK also reported excellent reviews from outlets like GameSpot, IGN, GamesRadar and Playboy for Section 8™, and favorable reception for other upcoming titles including My Baby: Next Steps™, Fast Food Panic™, Sushi Go Round™, Dementium II™ and Brave: A Warrior’s Tale™. Outlook: 

• An industry growing in the mid to high 20% range,
• An increasingly important conduit for the distribution of film / music / TV content, and
• An increasingly frequent outlet for consumers’ available entertainment hours.

The outsourced SOPK model is designed for consistent and profitable singles and doubles rather than the high risk / high reward mega-hit approach adopted by some of the larger publishers. Driven by the strength of the management team, the viability of the business model and a highly favorable outlook for the sector, Murphy Analytics is initiating coverage on SOPK with a 12-month price target of $3.00 based on the expectation that SOPK earning power for fiscal 2010 and beyond will become clear over the coming quarters.

Please review the risk factors outlined later in this report and the important disclosures and disclaimers at the end of the full report.

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