1) Have been thinking about @JerryCap question on whether $DIS IP is more recurring than $ATVI $EA $ATVI IP. I think a reasonable way to measure the “franchise value” of IP is to look at the peak to trough variance within franchises.
2) i.e. More durable/recurring franchises should be less sensitive to the quality of individual releases and therefore have less variance within the franchise. On this metric Call of Duty is a more durable franchise than Star Wars over the last 10 years.
3)The highest variance within the CoD franchise over the last 10 years was between Modern Warfare 3 at 30.7m units relative to WW2 at 12.2m units; 2.51x. Per statista.com. Sidenote – very surprised they have IW outselling WW2.
4) The highest variance within the Star Wars franchise over the last 10 years was between The Force Awakens at $2,068,223m relative to Solo at $392,924m; 5.26x. Per boxofficemojo.com.
5) This makes logical sense to me. Games like Call of Duty are social networks and more important to the identity of their hard core “fans” than any movie/TV IP.
6) Videogames have secular tailwinds that other entertainment modalities do not have which makes the comparison more difficult. Perhaps a reasonable adjustment to the above analysis would make the franchise value closer to being equivalent
7) i.e. Videogame sales in 2018 were significantly higher than in 2011 when MW3 came out which effectively increases the variance within CoD.
8) Other adjustment that is impossible to make is to include adjacent revenue streams for Disney – i.e. how much of theme parks recent pricing power came from the inclusion of Star Wars IP. Although adjacent revenue streams are also coming for CoD.
9) Even with comparable franchise values (assuming generous adjustments in Disney’s favor given the prior two points), the secular growth of videogames is powerful.
10) Videogames now outsell movies and music combined (including streaming svcs like $NFLX and $SPOT) in the UK despite being a fraction of movie/music sales 20 years ago. Source: ERA
11) Main reason for this disparity in relative growth is that I would argue it is impossible to make a movie or dramatic TV series that is better than the Godfather 2, Empire Strikes Back or the Deer Hunter which were all made between 1974 and 1980.
12) While today’s videogames are incomparably better than games from even 10 years ago with lots of headroom to continue improving until they are indistinguishable from real life.
13) And Moore’s Law not only drives quality, but it simultaneously makes videogames continually more affordable with streaming a massive market expansion over the next few years. Geforce Now from $NVDA works well and streaming the new AC thru $GOOGL was also a good experience.
14) Quite bullish on videogame equities. Fortnite viewership on Twitch peaked in mid 2018. $DIS also interesting. The best IP in TV/movies although $NFLX closing fast and $DIS is the only co with a reasonable chance of turning the current $NFLX $AMZN duopoly into an oligopoly
