Nintendo (NTDOY US)

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Bull case:
• Digitalisation
• Monetising IP
• Mobile games
• China market
• Switch OLED
• Hidden assets

Bear case:
• Console cycle
• COVID-19 end
• Playstation 5
• Hit game reliance
• Weak game pipeline
• Capital allocation

Link to the full write-up here: The bull & bear case for Nintendo
To my knowledge, Nintendo and Microsoft in the 1980s were probably the first software 'platform monopolies' which demonstrated how a monopolistic position can be leveraged to squeeze both the consumer and the supplier.

The rewards enjoyed by Nintendo's early console conquest attracted the likes of Sega, Sony, Microsoft, and even Panasonic/Matsushita, to enter the fray. And for awhile, these players (with the exception of the last) shared the spoils of the video gaming market (some more than others, of course).

But producers and consumers of video gaming have much more options now than before. Before, there was console and PC. Now you have mobile phones too, and that has made games more accessible to both developers and consumers. For traditional video game purveyors like Nintendo, holding onto market share (and squeezing developers and consumers) has thus become more difficult.

Given the much more egalitarian access that both developers and consumers has to the video game market, I will argue that the greatest asset of Nintendo is its IP (as it is for probably all other entertainment companies). But if the data from fritz's presentation is accurate -- that Mario-related games are not selling very well -- then this IP may not be worth very much.

Mario/Nintendo theme parks might sell tickets. But the success of Mario movies look less likely. Blizzard's Warcraft had a very rich story and that didn't stop their first movie from flopping. Maybe there's Mario manga or cartoons, but if so, it is probably not widely circulated.

Even as the market has become more competitive, for console purveyors, the success formula has not changed. Only a great hit can create the positive flywheel effect needed to drive hardware and software sales. For Nintendo, it was Mario; for Sega, it was Sonic; for Xbox, it was Halo; for Sony, it was probably Final Fantasy. Somehow, somewhere, a great hit will be born. But to whom will it belong? And how long will it last?

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