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Daniel Ahmad Profile picture
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7 May, 6 tweets, 2 min read
I was quoted in this @FortuneMagazine article about Nintendo's past year and its earnings report for FY2020/21.

It is behind a paywall, but I'll add some thoughts under this tweet.

fortune.com/2021/05/07/nin…
FY20/21 was a record year for Nintendo. The stay-at-home period led to an increasing in gaming engagement and spend across the board, as people turned to virtual worlds to stay connected with friends while the real world was off limits.

The Nintendo Switch has now sold in over 84m units and is selling faster than both the PS4 and Wii when launch aligned

Demand is still high in 2021, but supply will be impacted by the global chip shortage, which is affecting all console manufacturers

It will be tough for Nintendo to exceed these numbers in FY21/22, because of the comp with Animal Crossing + boost from stay at home period.

But that shouldn't be the focus for 2021. Nintendo's operating profit margin grew 9.5 points YoY to 36.4%, higher than the Wii / DS era.
This is primarily due to the boost that digital gaming received last year

Nintendo will need to focus on its digital ecosystem: driving players to its Eshop to buy games, selling subscriptions, growing live service revenue in order to maintain + grow its operating profit margin
Also why did fortune choose that headline....

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Daniel Ahmad Profile picture
8 May
One of the things that Eric, the former 343i artist, says in the video is that gaming news sites ran the story without reaching out to him first. Even when he reached out to sites / channels to try and clarify, no one responded.

Unfortunately that's how it goes a lot of the time
Professional outlets reporting on a video in Mandarin via a poorly translated forum post is never a good idea. It should be obvious that reaching out would be the first thing to do.

There are plenty of sites that actually do reach out of course and only a minority that don't.
But unfortunately it's still easy for misinformation to spread if one notable site reports on it and then other sites use that one site as a source. Which is what happened in the case above.

I get that the incentive to be first and drive traffic is a management issue though.
Read 6 tweets
Daniel Ahmad Profile picture
7 May
I was quoted in this @washingtonpost article about Xbox's gaming business.

Microsoft said at the Apple v Epic trial that it has never generated a profit from hardware. While this is true, the company does generate a profit from software and services.

washingtonpost.com/video-games/20…
Console manufacturers have traditionally adopted the razor and blades model.

The initial R&D cost + need for affordable pricing to reach the mass market leads to a loss on hardware.

This investment is recouped through first party and third party software / services sales.
Software and services are high margin, especially when distributed digitally, while the profit margin on hardware is low, or even negative initially

Hardware can be profitable on a per unit basis down the line, but that doesn't always offset the initial investment / other costs
Read 6 tweets
Daniel Ahmad Profile picture
7 May
I was quoted in this @IGN article about the announcement of Battlegrounds Mobile India, which is Krafton's attempt to bring PUBG Mobile back to India.

Krafton is aiming to make changes that please regulators in the country.

in.ign.com/india/158756/n…
For those unaware, India banned mobile games and apps from Chinese developers, due to tensions between the two countries.

While the PUBG IP is owned by South Korean company Krafton, PUBG Mobile is developed by Tencent and was banned.

nikopartners.com/the-impact-of-…
PUBG Mobile was the #1 most downloaded game in India and the #1 mobile game by revenue at the time. It had a growing esports scene in the country and was essentially responsible for driving overall growth of mobile gaming.

The game was banned in September.
Read 5 tweets
Daniel Ahmad Profile picture
6 May
Ok, I watched the Dynasty Warriors movie.

I think there are some really good parts that capture the spirit of the IP, especially in the second half of the movie.

But a lot of that is undone by a weak script, some questionable casting decisions and not great acting.

1/
The storyline focuses on the Yellow Turban Rebellion period to the Fall of Dong Zhuo.

The movie tries to mix in a traditional Romance of the Three Kingdoms drama / movie, with the action of Dynasty Warriors.

I do agree that it doesn't do either all that well ultimately.
I think the biggest issue is that there are parts in the movie where the story is neither from the original ROTK novel, or the Dynasty Warriors IP. It was just added to try and explain things, but doesn't do it justice.

There are also parts that are skipped over entirely.
Read 9 tweets
Daniel Ahmad Profile picture
6 May
The Nintendo Switch has sold in 84.59m units as of March 31, 2021.

Total software sell in for the console has reached 587.12m.

Nintendo sold approximately 28.83m units of hardware and 230.9m units of software in the past fiscal year.
Here is a breakdown of quarterly hardware sell in

The original Nintendo Switch console has sold in 6.89 million units while the Nintendo Switch Lite has sold in 14.7 million units in total

OG Switch continues to be the better seller

Pandemic boost still in effect this quarter
Here is a breakdown of quarterly software sell in.

There were 54.77 million units of software sold in during the quarter ending March 31, 2021, up from 45.58m units in the same period last year.

There has been ~7 games sold for every console sold.
Read 4 tweets
Daniel Ahmad Profile picture
5 May
This isn't too unusual for the console space

The console is sold at a loss initially & usually for some time after

The platform holder recoups the investment in hardware via its own first party game sales + services + the cut it takes from third parties that sell games / DLC
Hardware being unprofitable certainly played a bigger role in the late 90's and early 2000's (oh and PS3 era lol).

Both the PS5 and Series X/S are being sold at a loss right now, but will become profitable down the line most likely.

Nintendo is somewhat of an outlier.
The PS4 was probably the first Sony console to flip the above concept somewhat.

While Sony aggressively cut the price of PS2, for example, down to $99, the PS4 maintained a $299 price point for multiple years and was profitable.

Switch was built to be profitable asap.
Read 8 tweets

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