my own experiences reinforce @ballmatthew's points:
I worked closely with a spinoff of Japanese tech conglomerate in the past. They still used laptops, feature phones made by that conglomerate even though products were all outdated. That's how strong the culture was
On the other hand, @aaronvalue's thesis highlights that Nintendo is creating surplus for consumers.
The million $ question is: how much of this surplus will they capture? (all monetization of IP is a way to do that)
Nintendo's culture is not focused on capturing this surplus.
Think of IP as a valuable, magical mine -- you can keep mining and it never runs out.
Disney keeps mining it at fast cadence, Nintendo does it at a leisurely, slow pace.
Net result: Disney captures more of the surplus than Nintendo
Nintendo still captures "some" of the surplus.. I also believe they will create more surplus over time -- simply because the Switch platform and it's successors are more hardware processing capable than all previous platforms..
Going from Switch to Switch 2 is closer to going from Iphone 1 to Iphone 2.
Going from Wii U to Switch was a bigger jump (like a feature phone to a smartphone transition)
This should enable cadence of releasing games to be faster.. This is accelerating creation of surplus.
Also the defocus on mobile with Switch being a hit isn't as bad as one might think.
Users still cary Iphones and kindle (different use cases). Shouldn't be different with carrying Iphone + Switch.
Many bulls might be over-estimating Nintendo's desire for IP monetization (or surplus capture).
But they might also be under-estimating Nintendo's hardware + software vertical integration strengths. Of course, these strengths are hampered by lack of good online play
So Switch hardware updates (eg: gen 2) + unified platform to release games faster (from gen 1 to gen 2) + online play may be the type of excess consumer surplus that gets Nintendo excited.
I find it unlikely that Nintendo mgmt will suddenly find capturing surplus that appealing
A related point on creating consumer surplus is Nintendo's focus on appealing to demographics besides the hardcore games. That's why the hardware processing power being weak relative to PS, Xbox, even iphones may not be that big of a deal.
A specific example to highlight this appeal to wider set of players: Animal crossing calls making things as "Crafting". It's as if Pinterest inspired them.
In summary: Nintendo Hardware + games + online play (hopefully) will likely create amazing experiences for players and continue creating big consumer surplus.
Nintendo is unlikely to capture bigger % of that surplus. That's not who they are!
PS: in terms of surplus for consumer, classic examples are Costco and Netflix. In fact, deliberately not monetizing too much can be the strategy.
Switch creates a lot of surplus for players. Eg: online Switch store gave me access to all nostalgic Super Nintendo games
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At the surface, this is a small W. Va. bank trading around 1.7x TBV.
But a deeper looks shows that it's a fintech play with exposure to Credit Karma, crypto (Kraken) and most importantly igaming (Draftkings, Fanduel, etc)
Gaming deposits grew 70% from Q3 to Q4!
Around 2014-15, MVB was growing loan portfolio at 20% CAGR, but the deposits were not growing.
So CEO Larry Mazza and team went towards fintech as a way to get low cost deposits.
Larry: "We get deposits nationally but still loan locally”...
They are the bank for U.S. operations of Tipico, Score (tie up with Penn National gaming), and Betfred. MVB also has clients in FanDuel, DraftKings and Credit Karma.
I was still in high school in 2000, so obviously wasn't investing.
But the more I read, the more I realize it wasn't just a using "eyeballs" for valuation problem.
Thread below:
First up Xilinx
They were the leaders (and still are) with ~40% share in FPGAs. The end market was growing. They were growing fast as shown in this chart for fiscal year 2001 ending in March 2001
The CAGR was lot higher in closer to 2000 - it was growing 50%+. Until 2001 that is. That's when revenues dropped 30% due to market correction.
Xilinx - an innovator and leader in FPGAs - did not reach same stock price until 2018!
There's been a long bear market in shipping rates. And new ship building activity dropped post 2010. And more than half of the shipyards close
/1
If we look at the sub-segment of tankers, and specifically clean tankers, in the last 5 years supply has gone up in terms of dead weight tons. In 2019, the deadweight tons went up by another 6 million, but the TCE rates have still gone up a lot.
/2
Further, demolition activity for tankers dropped in 2019 because it was high in 2018 (181 tankers) and the TCE rates for both dirty and clean tankers was high in 2019.
What this all mean? There's inflection now where supply is (finally) constrained
/3
Thread - examples of steep drops in wealth from not managing risks esp. in business with operating leverage
Reichmann wealth collapsed 90% due to the huge bet on Canary Wharf when real estate demand / pricing dropped and credit was hard to get /1
Next up: flashy salesguy Erik Bautista who lost 90%+ of his wealth in one year. His investors also lost it all because he lied about OGX offshore oil potential. Here's an article from 2013 that talks about it. /2
Perhaps the craziest saga is of Sean Quinn - who went from being the richest in Ireland to filing for bankruptcy. He used leveraged instrument to bet on 25% shares of Anglo Irish bank - the bank with really loose lending standards- prior to 2008 housing crisis. /3