NTDOY - Nintendo

[Patmo]

Anybody still following Nintendo? The new console gadget thingy is generating some buzz, and Breath of the Wild (Zelda IP) is gaining lots of anticipation in particular. I haven't been a customer of these kinds of games since the N64, preferring hardcore competitive games, but even I am getting hyped about it. Something that hasn't happened, well, since the N64... I think I'll dust off the old console and get a game of OoT going again...

 

[Dalal.Holdings]

Agree that this is one of the most promising releases since N64. Nintendo's potential is analagous to that of Walt Disney: strength in its franchises. The Mario, Zelda, and Pokémon franchises should be worth billions each. It's up to management to play to the strength of these franchises and release quality games. If this is pulled off successfully, it can be extremely lucrative. With prior console releases, the franchises didn't get the kinds of major games as done with N64 and now promised with Switch.

 

This seems to be the first major Zelda release since N64 and first major Mario release since Mario 64. Games that also derive value from the franchises like Mario kart, super smash, and Mario party can also stretch the franchise value. The company also seems to be using multiple platforms (i.e. Smartphone apps such as Pokémon and Super Mario Run) to get more value and further build out these franchises (Disney playbook).

 

Additionally, the switch seems to embrace the tablet revolution by offering a console that offers portability and big screen options in one package. PlayStation and Xbox cater to more hardcore gamers who are oriented to heavy graphics. Nintendo's potential reach is much broader.

 

Finally, unlike many prior releases, Nintendo won't be competing head on with Sony and Microsoft (as they don't have any major console upgrades coming soon), thus many of the customers who have PS and Xbox may find it in their budget to add a Switch (but most gamers would never buy a PS and an Xbox as their coverage of games and concepts has too much overlap).

[hyten1]

guys i have been following for some time, there is definitely value in ntdoy, it was much easier to own when it was trading at 13.  how do you put a value on this thing? we all know the potential to become a disney like. but will it happen? if so when?

 

i know there are sign that its happening, the new addition to theme park, etc.

 

 

[fareastwarriors]

Nintendo Plays With Fire

Nintendo's Fire Emblem introduces the controversial concept of Japanese "gacha" to Western gamers

 

https://www.bloomberg.com/news/articles/2017-02-02/nintendo-plays-with-fire

[vegaseller]

 

As some other people have said, I think there is a lot of pessimism around the company in general. I feel like people are overall focused on specs and not much on the nolstalgic factor when it comes to the Switch, which I think will be the biggest seller.

 

Some write-up i did on it:

https://etherealvalue.wordpress.com/2017/02/23/nintendo-ntdoy/

[ScottHall]

 

As some other people have said, I think there is a lot of pessimism around the company in general. I feel like people are overall focused on specs and not much on the nolstalgic factor when it comes to the Switch, which I think will be the biggest seller.

 

Some write-up i did on it:

https://etherealvalue.wordpress.com/2017/02/23/nintendo-ntdoy/

 

I agree with you w/r/t the Switch. It's not necessarily a great sample size, but everyone who is a gamer in my social network already loves Switch. My brother tried to preorder one and they were sold out everywhere. Nintendo's stock suffers from irrational exuberance and blood-in-the-streets pessimism at alternating moments, based on short term trends. I wouldn't be shocked to see this thing pop in a big way if the Switch sells better than expected.

 

I own shares but haven't been adding, may do so. I think this company is a treasure chest of undermonetized IP, which will eventually either be unlocked or not. I like the steps they're taking.

[LC]

Nintendo Plays With Fire

Nintendo's Fire Emblem introduces the controversial concept of Japanese "gacha" to Western gamers

 

https://www.bloomberg.com/news/articles/2017-02-02/nintendo-plays-with-fire

Kind of silly. "gacha" are essentially in-game purchases, which have been around for years. Candy crush, anyone?

 

[Patmo]

I think they are referring to the ingame purchase strategy, kind of like how buying skins for your character and buying powerups are both ingame purchases, but fundamentally very different.

[LC]

The only difference I see is this:

 

In Fire Emblem Heroes, as the mobile version is officially known, players can win orbs through battles or buy them, with prices for sets of orbs ranging from $1.99 to $74.99.  They're used to unlock hundreds of characters for a user's party, but the catch is users don't know ahead of time who they'll get

 

Compare that with Clash Royale, a popular game made by Finnish developer Supercell Oy. That title also has hints of gacha but money is mostly used to eliminate wait times  -- a clearer payoff.

 

So it's pretty much gambling.

 

However the bottom line between both methods is pretty much the same:

 

In Japan, studies have shown less than 10 percent of players account for more than 90 percent of revenue.

 

Farmville (remember that game?) had similar statistics.

[alwaysinvert]

I agree with you w/r/t the Switch. It's not necessarily a great sample size, but everyone who is a gamer in my social network already loves Switch. My brother tried to preorder one and they were sold out everywhere. Nintendo's stock suffers from irrational exuberance and blood-in-the-streets pessimism at alternating moments, based on short term trends. I wouldn't be shocked to see this thing pop in a big way if the Switch sells better than expected.

 

I own shares but haven't been adding, may do so. I think this company is a treasure chest of undermonetized IP, which will eventually either be unlocked or not. I like the steps they're taking.

 

I agree that the IPs have great unrealized value. I wouldn't however put too much stock in Switch hype before release. Remember that they, just like Apple, always supply constrain at initial release to feed sense of scarcity. Because of that, you will not be able to tell much by the first few weeks after release on the eventual success of the system. Chances will be the stock price is smarter than we are there.

 

Hardcore gamers are always hyped before console releases and it would be a very bad omen if they weren't. This goes doubly for Nintendo releases. The first new Zelda game for ages doesn't hurt, of course.

 

 

As some other people have said, I think there is a lot of pessimism around the company in general. I feel like people are overall focused on specs and not much on the nolstalgic factor when it comes to the Switch, which I think will be the biggest seller.

 

Some write-up i did on it:

https://etherealvalue.wordpress.com/2017/02/23/nintendo-ntdoy/

 

A 10x multiple on the Pokemon company on last year's earnings? Are you forecasting that Pokemon Go will have Minecraft's recurring revenues? Also, there won't be main series entries every year either. Much of the cash is considered operational by management too, so I wouldn't value it at 100%. You could possibly discount it less if/when they stop making hardware.

[ScottHall]

I agree with you w/r/t the Switch. It's not necessarily a great sample size, but everyone who is a gamer in my social network already loves Switch. My brother tried to preorder one and they were sold out everywhere. Nintendo's stock suffers from irrational exuberance and blood-in-the-streets pessimism at alternating moments, based on short term trends. I wouldn't be shocked to see this thing pop in a big way if the Switch sells better than expected.

 

I own shares but haven't been adding, may do so. I think this company is a treasure chest of undermonetized IP, which will eventually either be unlocked or not. I like the steps they're taking.

 

I agree that the IPs have great unrealized value. I wouldn't however put too much stock in Switch hype before release. Remember that they, just like Apple, always supply constrain at initial release to feed sense of scarcity. Because of that, you will not be able to tell much by the first few weeks after release on the eventual success of the system. Chances will be the stock price is smarter than we are there.

 

Hardcore gamers are always hyped before console releases and it would be a very bad omen if they weren't. This goes doubly for Nintendo releases. The first new Zelda game for ages doesn't hurt, of course.

 

 

As some other people have said, I think there is a lot of pessimism around the company in general. I feel like people are overall focused on specs and not much on the nolstalgic factor when it comes to the Switch, which I think will be the biggest seller.

 

Some write-up i did on it:

https://etherealvalue.wordpress.com/2017/02/23/nintendo-ntdoy/

 

A 10x multiple on the Pokemon company on last year's earnings? Are you forecasting that Pokemon Go will have Minecraft's recurring revenues? Also, there won't be main series entries every year either. Much of the cash is considered operational by management too, so I wouldn't value it at 100%. You could possibly discount it less if/when they stop making hardware.

 

Maybe we run with different crowds, but I don't recall anywhere near this much exuberance for Wii U. You may be right about supply constraint, but I was able to find a Wii (original) a few days after release. Maybe just luck though; I don't follow the mechanics of their product shipments at all. I seem to recall they did something similar to what you're suggesting with SNES, but where I read that is forgotten to me.

 

I don't think the stock price is smart about anything. This stock has been a roller coaster, basically doubling overnight because of Pokemon Go. Same with Wii - stock traded up way too much in an industry where every console generation there is a chance for 30, 40, 50 point swings in market share.

 

I think 10x for Pokemon is cheap, if anything. I played that stuff as a kid, and it's still around and doing very well. It is an enduring brand that will probably grow somewhat over time, though there are obviously game cycles associated. I'd buy Pokemon as a stand-alone entity at 10x depending on the size of the games contribution. Tons of Pokemon merch; I see kids and young adults (teens and twenties) with t-shirts all the time, so I'd have to take a look at the revenue breakdown. But I'd definitely be sniffing, that's for sure.

[alwaysinvert]

Oh, I'm totally with you that Pokemon is an enduring franchise. I just would hesitate to count last year's earnings from it as anything near normal, although I don't really know what normalized levels would be. To be fair though, there are possibilities of further monetization as an option on the upside too.

 

My point about the stock price was just that it will be a while before we know for real whether the Switch is doing well and the weeks and perhaps months after release probably won't tell us much.

 

Wii U was a dud but it actually took a while to know from sales numbers. Anticipation levels can vary wildly and be unpredictable. Some consoles are slow-starters and turn into big-sellers and vice versa. N64 was perhaps the most hyped console ever pre-release but underperformed expectations significantly.

[ScottHall]

Oh, I'm totally with you that Pokemon is an enduring franchise. I just would hesitate to count last year's earnings from it as anything near normal, although I don't really know what normalized levels would be. To be fair though, there are possibilities of further monetization as an option on the upside too.

 

My point about the stock price was just that it will be a while before we know for real whether the Switch is doing well and the weeks and perhaps months after release probably won't tell us much.

 

Wii U was a dud but it actually took a while to know from sales numbers. Anticipation levels can vary wildly and be unpredictable. Some consoles are slow-starters and turn into big-sellers and vice versa. N64 was perhaps the most hyped console ever pre-release but underperformed expectations significantly.

 

I still play my 64. My brother and I get lit and play Mario Party and Bomberman. A lot of good games there, but agreed on your point w/r/t hype. I just suspect that any positive news could send this stock on a tear. Maybe not immediately

 

It's kind of an unusual investment for me, because there are no real profits today and it's largely a hits based business. I don't care much about profitability if there's a long runway of high growth, but I think it's way too early to say Nintendo qualifies. I think it's trying the right things; also think if Disney bought Nintendo it would be a very good investment for them. That's part of the allure; I'm assuming assets this good & valuable will not be undermanaged forever.

 

But then again, this is Japan.

[Patmo]

Breath of the Wild is shaping into a huge success, every critic is giving it 10/10 scores, and it's seeing a ton of views on twitch. It's pretty Wild (hohoho...). Plenty of people are buying the console just for the game. I'd probably need to buy a TV too on top of it and I am seriously considering the whole deal... Haven't had a console since the N64 or a TV in 5+ years, imagine that... Just watching twitch streams for an hour made me want to buy this bad boy.

 

It is incredibly rare these days that a game that's super hyped before release, turns out to deliver. And so far it's been delivering big. Of course, it doesn't mean the switch itself will turn out great, but everybody so far has been raving about the game and the console doesn't seem to impede on the experience, so that's a solid start.

 

[alwaysinvert]

I disagree, this is pretty unsurprising as far as Zelda games go. Early game review scores, while probably an indication when they are this high, are subject to groupthink/hype and have some elements of being paid advertisements. Some (suspicion: most) developers punish publications that give scores that are "too low". 

 

Hyped-up games delivered in an unrushed, finished state is kind of Nintendo's hallmark. Good, but should be as expected.

[eclecticvalue]

 

I still play my 64. My brother and I get lit and play Mario Party and Bomberman. A lot of good games there, but agreed on your point w/r/t hype. I just suspect that any positive news could send this stock on a tear. Maybe not immediately

 

It's kind of an unusual investment for me, because there are no real profits today and it's largely a hits based business. I don't care much about profitability if there's a long runway of high growth, but I think it's way too early to say Nintendo qualifies. I think it's trying the right things; also think if Disney bought Nintendo it would be a very good investment for them. That's part of the allure; I'm assuming assets this good & valuable will not be undermanaged forever.

 

But then again, this is Japan.

 

Disney will screw it up somehow if it acquired Nintendo.

[Patmo]

I disagree, this is pretty unsurprising as far as Zelda games go. Early game review scores, while probably an indication when they are this high, are subject to groupthink/hype and have some elements of being paid advertisements. Some (suspicion: most) developers punish publications that give scores that are "too low". 

 

Hyped-up games delivered in an unrushed, finished state is kind of Nintendo's hallmark. Good, but should be as expected.

 

Well you don't disagree at all with what I said. You're arguing completely different points, if you'd actually disagree with me you'd have been wrong

[vegaseller]

Breath of the Wild is shaping into a huge success, every critic is giving it 10/10 scores, and it's seeing a ton of views on twitch. It's pretty Wild (hohoho...). Plenty of people are buying the console just for the game. I'd probably need to buy a TV too on top of it and I am seriously considering the whole deal... Haven't had a console since the N64 or a TV in 5+ years, imagine that... Just watching twitch streams for an hour made me want to buy this bad boy.

 

It is incredibly rare these days that a game that's super hyped before release, turns out to deliver. And so far it's been delivering big. Of course, it doesn't mean the switch itself will turn out great, but everybody so far has been raving about the game and the console doesn't seem to impede on the experience, so that's a solid start.

 

Well it turns out the hardest thing to make when it comes to video games and movies is to build a new IP. The is an incredibly large difference between the chance for success of an established IP versus a new one, and nintendo has a large number of high quality premium IPs. With mario kart coming soon and another mario game by christmas, i would not be surprised if the Switch sells similar to wii levels. Even if the switch flops, nintendo still has an incredible portfolio to monetize with through various channels (whether its pc/mobile or heck even on the ps/xbox)

[vegaseller]

https://www.wsj.com/articles/nintendo-to-double-production-of-switch-console-1489728545

 

 

[Dalal.Holdings]

Switch crushing it, as expected. This ain't no Wii U.

 

Still got a lot more games to come and the rest of the year (and holiday season).

 

And so many possibilities: ie, Will Nintendo take the Zelda BOTW engine/huge map and create a truly open-world 3D Pokemon game?

[flesh]

I recently played a dozen of the switch games, whatever they are called that come with it, those that are quite simple like boxing, tennis, etc.......the shaker bottle game.... basically, party games.

 

If they are any indication of what differentiates the switch, I think this aspect of the biz will be short lived. These games are only interesting because they are different, they aren't any good. I can't really imagine anyone playing these games beyond the honeymoon period where a new system is typically shown off for what's different about it. The games are so bad, so simple, so bland, zero skill. The obvious counter point is that maybe young children will like it, some people want something so simple, I don't buy it. These games specifically create no addiction.

 

 

 

 

[ScottHall]

I recently played a dozen of the switch games, whatever they are called that come with it, those that are quite simple like boxing, tennis, etc.......the shaker bottle game.... basically, party games.

 

If they are any indication of what differentiates the switch, I think this aspect of the biz will be short lived. These games are only interesting because they are different, they aren't any good. I can't really imagine anyone playing these games beyond the honeymoon period where a new system is typically shown off for what's different about it. The games are so bad, so simple, so bland, zero skill. The obvious counter point is that maybe young children will like it, some people want something so simple, I don't buy it. These games specifically create no addiction.

 

Have you played Zelda? That's been the top draw of the console.

[alwaysinvert]

Zelda's attach rate was reported to be above 100%. That's decent.

[Dalal.Holdings]

I recently played a dozen of the switch games, whatever they are called that come with it, those that are quite simple like boxing, tennis, etc.......the shaker bottle game.... basically, party games.

 

If they are any indication of what differentiates the switch, I think this aspect of the biz will be short lived. These games are only interesting because they are different, they aren't any good. I can't really imagine anyone playing these games beyond the honeymoon period where a new system is typically shown off for what's different about it. The games are so bad, so simple, so bland, zero skill. The obvious counter point is that maybe young children will like it, some people want something so simple, I don't buy it. These games specifically create no addiction.

 

That game doesn't come with the switch, that game is called 1-2 switch and has been panned by gamers and reviewers. That game has nothing to do with Switch's success.

 

Best Buy Surges After Nintendo Switch Helps Fuel Sales Gain

https://www.bloomberg.com/news/articles/2017-05-25/best-buy-surges-after-nintendo-switch-console-helps-boost-sales

 

Looks like selling the switch is a boon for retailers. All this does is build momentum for the console -- 3rd party developers will feel compelled to develop titles for the console and so success drives success (compare with rollout of Wii U).

 

The only criticism for Switch seems to be lack of games, but obviously a short sighted criticism as that is inevitably going to change in coming months, by the end of the year the console will likely have a critical mass of titles.

 

Other than that, right now quality of titles over quantity is driving the console's success: Zelda title is the real deal in terms of quality, franchise-building game. Mario Kart 8 Deluxe, though a revamped version of a game release previously, will drive multiplayer short-burst gamers to the console as well.

 

The company should continue to execute by building on their franchises via other platforms such as iOS/Android as these are high ROIC opportunities: the cost of developing this software is low, and the returns are more than adequate. Furthermore, these games, if made properly, only add to the popularity & longevity of the underlying franchises.

 

[flesh]

I see, ya I didn't think what I had to add was of any importance. During this same visit to my friend's his son couldn't stop talking about the open world or whatever it's called on the new zelda, and he was playing it the whole evening, he's in 6th grade I believe.

 

I've only played FPS since 97' so I don't really know much about the other stuff.