1/ Nintendo $NTDOY, a multi-generational icon, with 26 of the top 50 best selling titles, an IP portfolio 2nd to only Disney, trades at just 12x ex-cash earnings.
2/ Margins have only been improving because of the shift to digital, and they have over 30mn paying online subscribers--their first recurring revenue ever.
3/ Not to mention, their initiatives with DLC extends a game’s monetizable life and drives consumer spending higher, while increasing engagement.
4/ The Switch is on pace to be their best selling console ever. Some think it might also be their last new console line, and moving to a “continuous iterative hardware” model has a massive implication for the quality of the business…
5/ … however, even if game streaming supplants consoles, Nintendo is in a race of their own with 80% of all game sales on their platform from proprietary IP.
6/ But could the real story be their monetization of IP with movies, theme parks, and licensing deals like with Lego? What makes Disney such a good business is that their…
7/ … virtuous cycle effectively allows them to amortize CAC across multiple different business lines. But it is often even more powerful than that: what would be standalone acquisition costs for one business actually become profit pools for another.
8/ Nintendo has the IP to execute and is taking baby steps, but could their cultural DNA stand in the way? Even if they are not the next Disney, a more stable business from a…
9/ … continuous iterative hardware cycle would eliminate the extreme vicissitudes of their earnings cycle, making them a drastically better business and warranting a much higher valuation.
End/ We explore all this and more in our 10,000+ word write-up with full financial builds here:

djyresearch.com/2021/09/02/nin…

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