Sony's soft delay provides lift for video publishers.

A launch delay for a hyped product usually sends stocks into a tailspin, but when Sony Corp. pushed back the launch of its next-generation PlayStation 3 game console, Wall Street rejoiced.

Analysts upgraded game publishers Activision Inc., THQ Inc. and Electronic Arts Inc., among others, lifting stocks in the sector almost 5 percent.

What gives?

"It's because it was less of a delay than most had feared," said Michael Pachter, analyst with Wedbush Morgan Securities Inc. "A lot of cynics thought Sony would miss Christmas."

As a result, this month's rally in gaming stocks was a collective sigh of relief--the Grinch didn't steal Christmas.

Publishers have been furiously developing next-generation games for the past year, gearing up for the big launch of the new platforms. The holiday season typically accounts for more than one-third of video game industry sales, so if the PS3 was not on shelves by Christmas that would be a big loss.

The long-awaited PS3 is poised to compete with Microsoft Corp.'s Xbox 360 and was supposed to launch this spring. But news leaked out that the PS3 would not be ready in time, so Sony executives made a formal announcement pushing the launch to November.

In Japan, Sow's stock dropped almost 4 percent, and the tipple effect through Japanese gaming stocks dragged down the Nikkei Index by almost 2 percent. But the "delay" wasn't really a delay for the U.S. market. Sony had intended to ship the PS3 to the U.S. in November, so the announcement just served to reassure that the U.S. launch was on track.

The consoles will be equipped with Blu-ray DVD players, a next-generation, high-definition format that is locked in a battle with a competing technology called HD-DVD, led by Toshiba Corp. and others. The Blu-ray component is widely believed to be the cause of the later launch.

But analysts like P.J. McNealy, of American Technology Research, called the November release date reasonable.

"We believe investors should be buying these stocks," McNealy said, upgrading both Activision and THQ on the news. "This gives us increased confidence in Sony North America being able to deliver this fall."