WEBVTT
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Roblox grew, users, revenue, and payers, and still got punished by the market.
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Nintendo beat expectations.
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Take two offered almost no detail on its unprecedented GTA 6 pre-orders, and EA is officially private.
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So what are the numbers telling us that the headlines aren't?
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Welcome to Player Driven Live, Greg here.
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This week we're running back last week's conversation with Colin and our special guest, Simeon McMillan from Accrued Interest.
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A number of major game companies recently reported earnings, so we brought Simeon in to help break down the results.
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We cover Roblox, Take Two, and Nintendo, and we touch on EA officially becoming a private company.
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What makes this conversation so much fun is a mix of perspectives.
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You get a finance expert talking with someone from the gaming industry, and they look at the same companies and the same results, but they notice different things.
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One person might focus on the financial outlook, while the other sees those numbers can mean for the games, the players, and the people building them.
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And honestly, your read can change depending on where your heart and your fandom lies.
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Before we jump in, a quick player-driven update.
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We're heading into the dog days of summer, and we have some travel coming up over the next few weeks.
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You'll still see the same amount of content coming out from us.
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We already have new podcasts scheduled to release.
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It may be a little slower in responding while we're on the road, but we'll be staying on top of things.
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If you're not already in the player-driven Discord, come join us and be sure to check out the player-driven Academy.
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We've just launched six new Academy lessons.
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They come from Games for Change and two focused on trust and safety, building on top of their Roblox coverage and lessons coming out of it.
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If you're looking to sharpen your skills and level up what you can do in the games industry, visit academy.playerdriven.io.
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Everything is free and every lesson is broken into bite-sized pieces that you can just take on the go.
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Alright, let's jump into the conversation with Colin and Simeon.
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I hope you guys enjoy this episode and I'll catch you next week.
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Welcome to Player Driven Live.
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It is Thursday.
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We are here.
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We have a guest and we'll get into all this.
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Today we are talking about earnings, earnings everywhere.
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Nintendo's numbers hit this morning, their profits nearly doubled as everyone expected.
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We're gonna ask a finance guy what that means.
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We're gonna ask a games guy, Colin, what that means, and get each of their takes because I think it'll be interesting how different each of their takes look.
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We're going to talk about Netflix.
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Netflix did some crazy stuff with Grand Theft Auto.
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They announced today.
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They did some stuff with FIFA.
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Uh, this is a place where Colin and I disagree, and it will be fun to talk about that.
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We're going to talk about Roblox because Roblox reported earnings yesterday and talk about how well those look.
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And of course, as I mentioned, we have uh guests.
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We have Simeon McMillan.
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He is from Accrued Interests, a really great Substack that takes a look at long-term stocks.
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Simeon, say hi.
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Introduce yourself.
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Hello, everyone.
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Thank you for having me.
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Happy to be a guest of the show, friend of the show.
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So um, so per the intro, my name is Simeon McMillan.
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I'm the author, founder of the newsletter, substack website, and sometimes podcast called Accrued Interest.
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Um, I like to tell people I write a newsletter about uh media stocks and tech stocks made for people who um made by so when I worked in television and radio.
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I come more from a corporate background.
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I spent more time in operating roles, doing ad sales.
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So I like to tell people, like to try this to five, stop um, you know, take it from there.
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Cool.
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We are excited to hear your takes on it as long as your internet holds up.
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You have what we call Colin syndrome.
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Colin had this in the first six months of our filming until we realized the VPN broke it.
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But uh, we could hear you loud and clear, and that's I think what's most important right now.
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So, first of all, thank you for joining us.
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I think it's awesome uh to kind of break down stocks as you and I talked about.
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When I started this whole thing years ago, I was a stock person.
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I love breaking down stocks.
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It turns out I'm just not smart enough for it.
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But I'm good at putting my money into stocks, and I think at the end of the day, as long as you pick the right stocks, you're good there.
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Um, Colin, how are you doing, man?
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I'm good.
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Well, first off, I figured out it was a VPN issue, although no we um and uh fixed it.
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But um no, I'm doing great.
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I'm doing great.
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Um, just to background myself because uh we have a guest today.
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Uh I'm Colinese, SVP of gaming at a research agency in LA called Screen Engine ASI, and also the kind of uh lead uh BD person on our behavioral uh attention uh tracker called Mind Game, where we analyze hundreds of thousands of games across the gaming industry and report on their attention share on a weekly basis, um both unreleased and released.
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Um so not and I also write a newsletter mostly on LinkedIn.
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I picked the worst platform to build it on, like honestly.
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Like LinkedIn is punishingly uh hard, but you know, it is where my audience is, I suppose.
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So uh I also write uh a newsletter on a weekly basis.
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And I am writing about Nintendo this week, so excited to have this conversation because it's gonna be a chunk of my newsletter for sure.
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Great, yeah.
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So, Colin, I'm gonna let you decide where do we want to start today?
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Well, let's start with the GTA.
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Everyone was here for the GTA takes, man.
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This is what's broke the internet today.
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So um, why don't you kick off with saying what happened and then we can give our takes on it.
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But I think everyone's let's talk big picture because tomorrow morning, Take Two Interactive, the parent company to Rockstar, is gonna have their earnings call.
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On this earnings call, we've predicted the last few weeks.
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I've been talking about is GTA gonna drop their next trailer because historically it's around their earnings call.
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You're about to tell your entire investment group about how many games you're selling.
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You probably want to drop a trailer, get people excited, and sell that number until this morning when uh Rockstar decided to drop uh what do you call it now?
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A tweet, an X letting us know that they're going to announce uh a new trailer, a background on GTA 6 on August 27th, uh in an exclusive.
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And it seems wild.
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So break this, tell tell a little better than I did there, Colin.
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Um, I mean, you nailed it, right?
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Um, it was a tweet, uh pretty trailer, um, announcing that they're gonna um do a a kind of show of sorts on Netflix exclusive, which I have so many thoughts on that.
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I saw it this morning, I was waking up and I was I always just scroll X and I'm like, what's going on?
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And I spent like drinking my coffee and almost spit it.
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I was like, what?
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Um I found it so fascinating.
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So, Greg, you were right last week you said they were gonna do something before earnings.
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They did.
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So congrats.
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They didn't drop a trailer, they dropped the news about a trailer, which would probably generate as much interest in their game as like like more interest in that than people trying to sell their game right now, which is like in a like a weird thing in of itself.
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Um I took away two things off the news.
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Um, one, this is the the most made sense uh gaming strategy Netflix has ever had.
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I was like, yeah, they should be buying more of these type of events.
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Like, what's what's Keely's number?
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How much would he take for the game awards for the exclusivity?
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I mean, I know he probably wouldn't do it because he likes having a huge number off YouTube, but also everyone has a price.
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So um, if this works out, do they go knock it on Keely's door for Summer Game Fest, the game awards, Gamescom, uh uh night one or whatever opening night is it calls it, like I assume.
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Um, so and that actually makes sense for Netflix.
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That's my point one.
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Point two is how much did Netflix pay Rockstar for this?
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Um, because Rockstar would reach more people on YouTube, was the next question I was like, they paid.
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Um now I don't think cash passed hand.
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Um, you know, I think it's probably more tied to uh uh add added value media uh in the NFL package that Netflix sits on.
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I've told Greg this for months, like expect a media blitz like you've never seen of Grand Theft Auto trailers across every NFL game this fall, um, and any other live sporting event.
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They will reach every normal American they can reach, uh leading up into November.
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So I think this is part of that in terms of we don't want to pay this much money for it.
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And they're like, well, what do we um you know?
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So some sort of value exchange there where the Rockstar is paying less for the media spend on Netflix and in kind they're also getting this promotional thing.
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So I think there's some value exchange there, would be my guess.
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So that's the two things I kind of caught out of it.
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But thoughts.
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Simon, you got a thought before I jump in?
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Sir, yeah.
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So I'm I'm reacting to this live.
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I I literally was Googling the uh the announcement.
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I was reading my notes before I came on here, so I did not see this.
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I agree with everything that um I agree with everything you just said before.
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I would say I would add on on my side, um, accrued interest.
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I've actually been positive on Netflix after a lot of people have been dumping on them, saying that no one watches them and engagements down.
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And I I've been taking a different point of view.
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I think at Netflix, I to give them credit, I think they've been expanding the uh the day parts and the different types of content that that that that they're going after, going after, excuse me.
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We when people talk hits, they're usually talking prime time dramas, which are important.
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But you know, just last year we saw K-pop Demon Hunters, which again was literally less than one year ago, and it took the world by storm.
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And now we've been seeing earlier this year Netflix is adding podcasts, they're adding digital, um, more short form things.
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In many ways, I think Netflix is creating more of an entertainment super app, and they're converging more and more to YouTube, which is I think their only true competitor.
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So I think it's a great idea.
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I I think I I think what you just said is right, it'd be cool if they got the game awards.
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But um, I I think that you know, they're still going to release the trailer and the stuff on YouTube.
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It's not either or, but I I think it's I think it's definitely a signal.
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You you know, you you said what does this mean?
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I think it's a signal to the rest of the industry.
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Hey, we're a place where you could premiere anything, you could debut anything.
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And I think it also adds some prestige, you know, because more and more people are are watching um content on the big screen television.
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And I think that this adds a certain level of prestige to a video game thing.
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And that that's what you want because that they're gonna, you said it best, they're gonna want to hit every person in America, and certainly every male 18 to 49 in America over the next three uh three three three months.
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So let's go.
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Let's go.
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And then just to add to that, I think I totally agree.
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And I think Strauss being a Hollywood guy plays into that.
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Like, how do I make GTA feel more like a entertainment, like premiere, the biggest thing Hollywood's ever seen, and this is a component of that.
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So I definitely think executives like seeing themselves on prestigious platforms, and Netflix has the sheen of a prestigious platform.
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So I actually completely agree with that too.
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There's there's a bit of boardroom politics going on.
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And one thing I would say, um uh I'll I'll give the mic back to you guys is I think for the game companies, I think the game companies, particularly um GTA, I think they want Americans and everyone to see them as an entertainment company because while most of their sales are dry are driven, excuse me, by you know, I was gonna say disc, it's all it's multi-downloads now.
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RIP.
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RIP.
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Yeah, R I P.
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But still, most of the sales are driven by the units.
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And you know, a lot of people are finding consoles are expensive.
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You you got a lot of people who are complaining about game prices.
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So you want to be a platform where you can sell lots of copies, and eventually they're gonna want to get a lot of people on the online, on the online version, and have that be its old community.
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So good idea.
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All right.
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I'll be the I'll be the realistic one here.
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This is so freaking stupid.
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You're paying for a six-hour exclusive on a 3 p.m.
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on like a Thursday to get access to a trailer that's gonna drop on YouTube six hours later, and that's where most people are consuming this content.
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Like, if no money passed hands, that's fine.
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If money passed hands are some sort, like if Rockstar was able to say, Hey, I'll charge you to watch my third trailer, like, hell yeah, good for Rockstar.
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That means they made a game good enough where people want to pay to premiere the trailer.
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Like, this should not be something that's celebrated.
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Man, a game trailer is a marketing thing where we want to watch it, and I get Netflix is the one paying for it, but like that is so stupid in my book.
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It's like it's like the macho man at the gym flexing like his new protein powder or something.
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Like, you don't need to be doing this, man.
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You're just showing off at this point.
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I see, I I gotta push back because like I I the more I think about it, the more I think it's maybe a brilliant lane for Netflix to kind of occupy.
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Because again, if there if like I assume if there was a trade of value, it's gonna be through ad inventory.
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And so it basically it's like monopoly money almost.
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It's like, yeah, this could have value to someone else, but we'll we'll take it and we'll also do this thing.
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But like for Netflix, the ROI of this event would be do people that couldn't jump on Netflix then stay to watch more Netflix afterwards?
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Like, that's the whole point, right?
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So if the event of GTA is over, does 10% of them go watch Arcane afterwards?
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Then if so, then that's the win for them.
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They're driving up engagement.
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These like almost like engagement shots, right?
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Like, you know, they're getting hammered in the market for uh a decline or a flattening of growth and engagement, so they're looking for shots in the arm to boost engagement and eventizing things to get people into the platform to then have your platform algo take over.
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Not a bad idea.
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I mean, like, we'll see how it works, but not a bad idea.
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It's not a bad idea, but uh again, it's a Thursday at noon Pacific, meaning that most of those people at Pacific time are gonna get home from work at 6 p.m.
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and be able to just turn it on a YouTube.
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So Greg, their audience is not people that work in their day-to-day, and those that do will still watch it.
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Their audience is a bunch of kids in college.
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Like, come on, um fine, we'll see.
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I mean, after that same logic, should I like pitchfork in my like in torches of Nintendo?
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They drop their their their Nintendo directs like 5 a.m.
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PTSD.
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They don't care I exist, they're like playing to Japan, like ah Japan, better drop this out there for now.
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Um but I'm let's let's give it extreme, extreme credit to Rockstar.
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Not that anyone needs to give the multi-billion dollar company lots of kudos, but they don't need to spend a cent in marketing this game other than making a couple trailers.
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Even today, they probably charge to IGN.
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You see IGN's like pre-trailer of the pre-thing coming out in August.
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They probably charge them like this is a money-making machine.
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This is gonna be a disgusting game in a good way when it comes out because of what it's doing.
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And it's just fascinating.
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It this is an outlier in every place you look at.
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Yeah, I mean, totally.
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I like I wrote like last week, like the fall is GTA, you're already seeing the impact.
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So um I track attention, and we're pretty good at modeling out like how that it like affects like games that are coming out, and pretty predictive on more games, how they'll fall coming out, right?
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And GTA is creating a black hole, not just on games that'll come after it, which will be pretty bad, but like games coming before it are also seeing a decrease in demand share going down um or being flat.
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Um because yeah, and you think of the logic, people will buy one or two premium games a year.
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Well, one of them is this game, like exactly.
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So, what's everybody else do, right?
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Um, certain people are kind of escaping that lane, um, and I wrote about last week, but others are not, and they're gonna get crushed by the quicksand.
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Like there'll be like five winners on a curve, as it were, this fall, and then GTA will be so far above everything else, and I think everyone else loses.
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And and that's on top of the fall already having a pretty light lineup, like August, September, October, November, November, especially is just like a graveyard of lot less titles coming out this year um relative to years past.
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Never mind, outside of shovel wear on steam, and it'll cut that.
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Like, that doesn't matter.
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That's shovel wear on steam.
00:15:25.519 --> 00:15:40.799
Um I was just thinking an another another thing I think that is important from from um um some of the things important from Russell's point of view is that basically uh everyone knows GTA is really big, but it's really been 13 years since we premiered a new one.
00:15:40.960 --> 00:15:53.279
And so I think that in some ways they probably want to go over the top because for a lot of their audience who either wasn't alive or they were too young, they've never seen a new version come out before.
00:15:53.440 --> 00:15:54.879
So this really is, you know.
00:15:55.039 --> 00:15:59.600
Um I was talking to some friends about the the new Spider-Man movie that we saw.
00:15:59.840 --> 00:16:03.679
And for a lot of people, um, I just turned 40.
00:16:03.840 --> 00:16:10.639
Um, a lot of people only remember Tom Holland, and they never they never were there when we changed when we changed Spider-Man and had a new franchise.
00:16:10.799 --> 00:16:14.240
So I think sometimes when you have a new franchise, you got to go over the top.
00:16:14.399 --> 00:16:31.519
Um, I I think one of you mentioned that you know the end of August, the beginning of the NFL football season, you know, you can have a lot of people who um who are gonna be buying Madden um and you know the the seasonal games, but yeah, but for everyone else, it it's it's pencils down until until they get past the GTA window.
00:16:31.600 --> 00:16:38.799
So they're really gonna own the fall and they're gonna try to push as much engagement as they can until until um Thanksgiving, Black Friday shopping.
00:16:39.039 --> 00:16:40.000
Yeah, all right.
00:16:40.240 --> 00:16:41.440
Let's play a game here.
00:16:41.600 --> 00:16:45.840
I want to introduce a game for this week, and if it works, forever.
00:16:46.080 --> 00:16:49.120
Um the game is called Bull or Bear.
00:16:49.360 --> 00:16:52.960
And if you're not a finance person, can you use a Jim Kramer guy?
00:16:53.039 --> 00:16:58.080
The little like my sound effects forward.
00:16:58.559 --> 00:17:06.079
Um for those that don't know much about finance, bullish means you're excited, you see a lot of positivity in this company, you want to invest because it's gonna go up.
00:17:06.240 --> 00:17:14.240
If you're bearish, you think the exact opposite, you have bad feelings about this company, they're not gonna hit their numbers, and the stock will go down.
00:17:14.400 --> 00:17:21.440
So the idea of this game is that I am going to give you a hypothetical that you have to you have to prove your point.
00:17:21.519 --> 00:17:29.039
You're either going to be the bull for it and say, This is why I'm hyped about it, or you're gonna have to be a bear and say, This is why I'm not so hyped about that.
00:17:29.279 --> 00:17:31.359
Any questions before we begin?
00:17:32.000 --> 00:17:33.359
No, pretty clear.
00:17:34.720 --> 00:17:40.160
I don't know if I should assign you guys the role, but I will this time and then we'll play it over the rest.
00:17:40.400 --> 00:17:41.119
Yeah, it's your show.
00:17:41.200 --> 00:17:41.440
Yeah, yeah.
00:17:41.519 --> 00:17:42.960
I could do college, do what you want.
00:17:43.119 --> 00:17:46.240
Colin with the bull, you're going to be for this.
00:17:46.480 --> 00:17:48.559
Okay, Simeon, you're going to be the bear.
00:17:48.799 --> 00:17:56.319
And the question is going to be is GTA 6 going to live up to this impossible expectation that investors expect.
00:17:57.200 --> 00:17:58.160
I'm the bull.
00:17:58.720 --> 00:17:59.680
You're the bull.
00:17:59.759 --> 00:18:00.400
You're excited.
00:18:00.480 --> 00:18:04.000
Why is GTA 6 gonna hit those numbers and then and then some?
00:18:04.640 --> 00:18:05.839
Well, um, this is a good thing.
00:18:08.559 --> 00:18:09.119
All right, I'll go.
00:18:09.200 --> 00:18:10.240
I'm gonna go.
00:18:10.400 --> 00:18:10.880
I got it.
00:18:11.039 --> 00:18:12.400
I I mean, like I written about it.
00:18:12.559 --> 00:18:14.240
No, no, you can't start your answer yet, Colin.
00:18:14.319 --> 00:18:15.279
It's 60 seconds.
00:18:15.359 --> 00:18:19.200
This isn't one bite, everyone uh one bite pizza, whatever it is.
00:18:19.440 --> 00:18:21.119
Um you ready to go?
00:18:21.200 --> 00:18:22.640
I gotta see if I have a timer on the page.
00:18:22.880 --> 00:18:23.200
Do my best.
00:18:26.400 --> 00:18:27.839
Actually, give me one one second.
00:18:27.920 --> 00:18:32.319
I'll I'll just I'll just pop up something right now, just uh give you context.
00:18:32.720 --> 00:18:35.359
Uh oh wow, we're gonna have visuals.
00:18:36.160 --> 00:18:37.039
Well, I'm not gonna do a visual.
00:18:37.440 --> 00:18:38.640
I'm just gonna create a data point.
00:18:38.799 --> 00:18:39.839
I load up a data point.
00:18:40.240 --> 00:18:44.240
All right, which is gonna sound like gibberish to those who don't know what I do, but that's fine.
00:18:44.640 --> 00:18:47.920
Let's see, there's gotta be a countdown overlay.
00:18:48.000 --> 00:18:48.960
Come on now.
00:18:50.000 --> 00:18:50.559
Logos.
00:18:50.799 --> 00:18:55.519
All right, well, I'll just have to keep my own timer here and put it on afterwards so you can see it.
00:18:55.839 --> 00:18:57.839
Um he's pulling up stuff.
00:18:57.920 --> 00:18:59.039
Simeon, if you I got it.
00:18:59.119 --> 00:18:59.680
I'm ready, I'm ready.
00:18:59.759 --> 00:19:00.319
Go, I'm ready to go.
00:19:00.400 --> 00:19:01.599
Yeah, oh I'm I'm all set.
00:19:01.759 --> 00:19:02.640
I have a little timer right here.
00:19:02.720 --> 00:19:03.200
I'm all set.
00:19:03.359 --> 00:19:03.839
So okay.
00:19:04.000 --> 00:19:05.119
I'm gonna let me be honest.
00:19:05.200 --> 00:19:05.359
I ran.
00:19:05.680 --> 00:19:08.480
I'm gonna let the bear Simeon go first.
00:19:08.640 --> 00:19:09.039
Okay, cool.
00:19:09.200 --> 00:19:14.480
All right, this is why GTA 6 won't hit expectations from investors, and you may start.
00:19:15.759 --> 00:19:16.240
Sure.
00:19:16.400 --> 00:19:32.880
So I think that the expectations are so high, they're probably not gonna hit it just because even though GTA still is one of the biggest franchises out there, there are a lot other gargant franchises out there that they have to compete with that weren't around when they debuted in 2013.
00:19:33.039 --> 00:19:42.000
You know, you have Fortnite, you have a lot of these other um free to free-to-play games uh that that have their own social ecosystems.
00:19:42.160 --> 00:19:49.119
Um, you have the Call of Duty uh ecosystem, you you you have games like Marvel Rivals, you have PC games.
00:19:49.359 --> 00:19:53.680
The GTA 6 is not gonna debut with the PC game, I think, for a while.
00:19:53.759 --> 00:19:56.640
It's gonna be mostly on PlayStation Xbox for the beginning.
00:19:56.799 --> 00:19:59.599
No one's playing on Switch, so it might take a while.
00:19:59.759 --> 00:20:05.920
If you really want the online to go, you want to get that online community going, and they're eventually going to have to get the PC.
00:20:06.160 --> 00:20:09.279
But there's just so much fragmentation of the media ecosystem.
00:20:09.440 --> 00:20:12.559
I don't think you can live up to the hype, but it's definitely going to be a hit.
00:20:12.880 --> 00:20:13.599
And time.
00:20:14.079 --> 00:20:15.119
Beautiful.
00:20:15.599 --> 00:20:20.160
All right, that was the bear case on why GTA 6 will not live up to expectations.
00:20:20.720 --> 00:20:23.839
Let's hear the bold case, Colin, and on whenever you're ready.
00:20:24.079 --> 00:20:24.799
I'm ready.
00:20:25.039 --> 00:20:25.839
Go, go.
00:20:26.079 --> 00:20:30.720
Um, so GTA 6 is a unicorn, a 101, a monocultural event of gaming.
00:20:30.799 --> 00:20:32.480
So, what does this mean right now?
00:20:32.640 --> 00:20:35.519
It's going to be the only game that reaches maybe four generations.
00:20:35.599 --> 00:20:43.599
You're going to have your millennials and obviously your Gen Xers of a certain age that like opine from the classic GTA era, from the PlayStation 2 onwards.
00:20:43.759 --> 00:20:49.039
You have your Gen Z audience, which basically grew up on one GTA, GTA 5, and then GTA Online.
00:20:49.279 --> 00:20:52.079
And this has basically been the backbone of Twitch for the better part of a decade.
00:20:52.160 --> 00:20:53.599
Uh company I came from.
00:20:53.759 --> 00:21:04.799
And then landing on the alphas, the older alphas are gonna like yearn to play the cool game for the older kids, which is like you know, the 10-year-old, 12-year-old, that's like, I really want to play Grand Theft Auto, like my older brother or the cool kids at school, and so they're gonna want to play that.
00:21:04.880 --> 00:21:08.240
So this is literally a one-on-one event, and we'll never see it again.
00:21:08.319 --> 00:21:13.599
Um, it's an attention in our tool and like everybody else that's in the gaming analytics space, it's unmeasurable.
00:21:13.680 --> 00:21:14.400
There's nothing compared.
00:21:14.640 --> 00:21:18.319
Like, I'm looking at the fall lineup, everything has like a two percent attention share.
00:21:18.480 --> 00:21:20.640
GTA sits at 13% in climbing.
00:21:20.720 --> 00:21:22.000
It's just it's unmeasurable.
00:21:22.079 --> 00:21:24.240
It's like, which is why you see silly numbers out there.
00:21:24.319 --> 00:21:26.480
Like, will it make 15 or 5 billion in day?
00:21:27.440 --> 00:21:27.839
Yeah.
00:21:28.079 --> 00:21:30.480
I could go right, but all right.
00:21:30.640 --> 00:21:32.720
So I guess my role is judge, right?
00:21:32.799 --> 00:21:36.640
And I think you constrained me to admit it, it killed me, but that's okay.
00:21:37.599 --> 00:21:39.440
No, it's people attention economy, man.
00:21:39.519 --> 00:21:40.559
You should read about it.
00:21:40.960 --> 00:21:42.160
Short form, short form.
00:21:42.480 --> 00:21:45.119
Uh, you know, I think it's a tough place to say.
00:21:45.200 --> 00:21:59.680
I I think you have impossible boots to fill, and I don't know if any games ever truly lived up to the expation expectations and sales hype that it's planned, but I think GTA 6 has things planned that they haven't that no one even expects when it comes to even GTA 6 online.
00:22:00.240 --> 00:22:01.279
Like you were talking about, Colin.
00:22:01.599 --> 00:22:07.519
I think we'll need some answers about that sooner than later, which maybe the investors call tomorrow will talk about when there's a potential dates.
00:22:07.599 --> 00:22:08.000
Who knows?
00:22:08.079 --> 00:22:08.319
Yeah.
00:22:08.480 --> 00:22:10.960
But I do think bullish is the case to go on this one.
00:22:11.039 --> 00:22:14.079
I think for GTA 6, the sky is the limit.
00:22:14.160 --> 00:22:16.480
And I think they can kind of define where the sky is.
00:22:16.880 --> 00:22:18.000
And I'm on a stock guy.
00:22:18.079 --> 00:22:18.720
I love your take.
00:22:18.799 --> 00:22:26.799
I think well, I I am uh I I think when the GTA when the take two stock dipped, it was definitely a buy time because it made absolutely no sense.
00:22:26.960 --> 00:22:27.519
Um right.
00:22:27.680 --> 00:22:38.480
And I expect whatever press release they put on uh GTA six uh thereafter is gonna be a huge upswing in in in stock price, and that would be kind of the the buy side is like, well, there's gonna be upside.
00:22:38.559 --> 00:22:49.920
They're gonna put out a ridiculous number that most people don't even realize is possible, which will probably make the stock go up substantially in in a run, and then it'll probably peter off after that as they have to release financials about it.
00:22:50.000 --> 00:22:53.839
But I do think there's a there's a bubble there that has not hit its ceiling yet.
00:22:53.920 --> 00:22:56.880
Um, I know certain people have told me, like, oh, the market's already priced at in.
00:22:57.039 --> 00:22:58.960
I'm like, not retail sellers, not retail.
00:22:59.039 --> 00:23:05.039
They'll see the press release in IGN or Wall Street Journal, and they'll be like, and the newscast on every like I like we'll cover this.
00:23:05.119 --> 00:23:06.880
Like, can you believe games are this popular?
00:23:06.960 --> 00:23:08.799
As always happens with these type of events.
00:23:09.039 --> 00:23:13.680
Like it's like, wow, like wow, gaming out outgrow Spider-Man in like a minute.
00:23:13.759 --> 00:23:15.920
And I'm like, Yeah, I know unsurprising.
00:23:16.079 --> 00:23:19.839
But you know, that's just gaming is always the stepchild of media.
00:23:19.920 --> 00:23:23.440
It's like, oh, you're over here, you're for the weird kids in their in their basements.
00:23:24.000 --> 00:23:26.319
Um, so I do think there's yeah.
00:23:26.559 --> 00:23:30.559
Um, but like as I've told Greg, like the numbers are ridiculous that people are putting out there.
00:23:30.640 --> 00:23:32.559
Like the TAM of consoles, it's a tanker.
00:23:32.799 --> 00:23:37.519
It's oh, it's gonna sell you know billions of copy or milli billions of dollars in copies.
00:23:37.680 --> 00:23:55.200
I'm like, well, the console universe is smaller than it was when GTA 5 came out entirely because Xbox lit its business on fire and right and there's no Xboxes, so PlayStation is bigger than it was, but Xbox is substantially smaller than it was, so there's less devices in and out there.
00:23:55.359 --> 00:24:00.880
So it you know, I'm not saying they can't capture that share of voice, but like it's not a done deal.
00:24:00.960 --> 00:24:05.680
It's not like the universe grew until they get it on PC, which is absolutely right.
00:24:06.160 --> 00:24:08.480
So maybe Simeon, you can explain this to me.
00:24:08.559 --> 00:24:09.440
I'm putting you on the spot.
00:24:09.519 --> 00:24:10.960
So if you can't, that's perfectly fine.
00:24:11.039 --> 00:24:13.039
But just a little bit about Take Two.
00:24:13.279 --> 00:24:16.799
Tomorrow morning, Take Two's reporting their earnings at 8 a.m.
00:24:17.039 --> 00:24:17.519
Eastern.
00:24:17.680 --> 00:24:23.359
That's the first time they're ever doing that, that that they're releasing the numbers before the market opens on a Friday.
00:24:23.519 --> 00:24:30.319
So that can go either two ways that they want to hype the price up before the stock starts on a Friday, or they're looking to bury it before the weekend actually begins.
00:24:30.480 --> 00:24:33.279
Say the news, let it happen, let the market open and close.
00:24:33.440 --> 00:24:39.119
And the consensus is that there's gonna be a loss of 21 cents per share on$1.36 billion.
00:24:39.680 --> 00:24:43.599
The quarter ended on June 30th, so it captured the entire pre pre-order window.
00:24:43.759 --> 00:24:54.720
When it says loss of 21 cents per share on$1.36 billion, in layman's term, can you kind of explain to me what that means and if I should should be something that worries me or not?
00:24:55.759 --> 00:24:56.160
Sure.
00:24:56.319 --> 00:24:57.759
So um, excuse me.
00:24:57.920 --> 00:25:00.799
Well, I'll just say off the rip, it shouldn't worry you.
00:25:01.039 --> 00:25:14.160
I think that when they talk about losses on a per share basis, a lot of that is honestly accounting minutiae, that it has lots of puts and takes that don't necessarily tell you much about the quarter.
00:25:14.319 --> 00:25:19.119
What is gonna matter really is how the company performs relative to expectations.
00:25:19.279 --> 00:25:24.079
And the big, the big categories you're gonna be looking for are, you know, obviously revenues.
00:25:24.240 --> 00:25:34.400
Um, instead of looking at EPS per share, because that has lots of, you know, yeah, one-offs for taxes and other little one-time non-occurring items, you're gonna want to know about sales.
00:25:34.480 --> 00:25:39.440
And this is the type of call we listen to a lot of sales and pre-sales.
00:25:39.759 --> 00:25:43.680
Um, they're often known as KPIs, key performance indicators.
00:25:43.839 --> 00:25:47.599
These are metrics that aren't necessarily money, but tell you how things are going.
00:25:47.759 --> 00:25:55.279
And lastly, I would say when it comes to scheduling it on a Friday, scheduling scheduling earnings calls on Fridays are atypical.
00:25:55.680 --> 00:26:06.400
I don't necessarily know if I'd read into it just because right now, this week, today, for example, there are so many companies all announcing earnings at the exact same time.
00:26:06.640 --> 00:26:14.079
So honestly, I could see Take Two wanting to move to Friday just so they could have the news cycle to themselves.
00:26:14.240 --> 00:26:26.559
Because Nintendo went this morning, or I guess if you adjusted for Japanese time, yeah, for last night, you got Meta, Microsoft, a whole bunch of companies are doing earnings.
00:26:26.640 --> 00:26:29.920
I could see them saying, hey, let's just go off to Friday.
00:26:30.079 --> 00:26:32.160
But you know, we'll find out.
00:26:32.319 --> 00:26:33.839
We'll find out soon enough.
00:26:34.160 --> 00:26:35.119
That's interesting.
00:26:35.279 --> 00:26:37.759
I I part, I mean, I don't know nothing.
00:26:38.000 --> 00:26:44.559
I'm like, if they've never done something and they're gonna change behavior before they do it, and they're like, I feel like they're peacocking right now.
00:26:44.640 --> 00:26:46.160
Like, why announce the Netflix thing?
00:26:46.319 --> 00:26:52.480
I just every analyst asking questions is gonna ask, how many pre-sale orders have you had for GTA 6?
00:26:52.559 --> 00:26:53.359
That's number one question.
00:26:53.440 --> 00:26:55.759
And then the number two question is once it's going on PC.
00:26:56.240 --> 00:26:57.680
That's that's one and two.
00:26:57.839 --> 00:27:00.400
Um, and they're like, What about the 2K business?
00:27:00.480 --> 00:27:01.039
Like, I don't care.
00:27:01.440 --> 00:27:03.359
How much money did Zenga make this quarterback?
00:27:03.440 --> 00:27:03.759
Who cares?
00:27:03.839 --> 00:27:05.279
Uh, like none of that matters.
00:27:05.359 --> 00:27:06.880
Um, it's all about GTA.
00:27:07.039 --> 00:27:10.960
Um, so I I imagine they're gonna I will maybe it's wishful thinking.
00:27:11.039 --> 00:27:13.759
I hope they would say an outrageously large number.
00:27:13.920 --> 00:27:18.960
Um, I think they've broken every pre-sale record there's ever been today.
00:27:19.200 --> 00:27:24.559
And so if they know that, they might say something about it to drive up interest in them.
00:27:24.880 --> 00:27:26.000
I could see that.
00:27:26.480 --> 00:27:27.039
All right.
00:27:27.759 --> 00:27:33.119
I think that's gonna wrap everything we talked about when it comes to Rockstar, unless there's anything you guys want to add to talk about with them.
00:27:33.599 --> 00:27:44.079
No, I might if I were a betting man, I would say the PC, if they're if they were really trying to make this this fiscal year for them hit, like I I told Greg this before.
00:27:44.160 --> 00:27:52.480
Uh, if I were a betting person on polymarket, an interesting bet would be does the PC version come out next March before the end of their fiscal year?
00:27:52.559 --> 00:27:56.160
So they could just you know have another victory lap on everything.
00:27:56.319 --> 00:27:58.640
Um, I would not be surprised if that was the case.
00:27:58.720 --> 00:28:03.039
But if it was gonna come out, it'd probably come out in like February, March next year.
00:28:03.279 --> 00:28:12.640
Oh, and after the holiday season, so it doesn't cannibalize the the console sales, which which are are more expensive on PS5.
00:28:12.960 --> 00:28:14.240
Yeah, yeah.
00:28:14.640 --> 00:28:16.720
Why would you not wait until after the physical year?
00:28:16.799 --> 00:28:21.920
Because I mean, GTA six is your bump for the next rock star time.
00:28:22.000 --> 00:28:25.200
I mean, once the next game gonna come out four, five, six, ten years, right?
00:28:25.279 --> 00:28:26.799
So why not set it out to your next year?
00:28:26.880 --> 00:28:31.680
And your next year's the hype for GTA online and then PC and then whatever.
00:28:32.559 --> 00:28:34.559
Yeah, I I mean I could see that too.
00:28:34.720 --> 00:28:37.680
I I mean I mean I'm again, I'm just kind of shooting from the hip here.
00:28:37.759 --> 00:28:57.839
I just think um they had put a pretty large guidance out there like years ago about what they expected to happen, and I guess right in that vein, like there's like billions of dollars of just magical profit, and to hit billions of dollars of profit, I imagine they just have to go guns blazing and they they can't lose steam.
00:28:57.920 --> 00:29:08.880
I mean, the argument would be they can't lose momentum to ensure that they transfer those GTA online people off of five into whatever the six version is gonna be on Steam, right?
00:29:09.039 --> 00:29:12.400
And get their game in China would probably be doing a bit, right?
00:29:12.480 --> 00:29:17.759
Like Steam's weird, true, like you know, PlayStations exist in China, but it's harder.
00:29:17.920 --> 00:29:26.559
Um, for whatever reason, Steam lives in this world of no censorship with the CCP and it's like okay, and you want to get your game in China to goose those numbers too.
00:29:26.720 --> 00:29:27.440
So yeah.
00:29:27.759 --> 00:29:29.599
Makes sense, makes sense to me.
00:29:29.920 --> 00:29:40.480
All right, let's switch gears to the earnings that we just started talking about, but our friend Nintendo, it's interesting earnings that I'd love to hear broken down.
00:29:40.640 --> 00:29:43.119
Profit basically doubled against the expectation.
00:29:43.279 --> 00:29:45.759
They didn't raise the forecast a single unit.
00:29:46.000 --> 00:29:47.519
Simian, why not?
00:29:48.720 --> 00:29:49.039
Sure.
00:29:49.200 --> 00:29:51.680
So I was reviewing Nintendo's numbers too.
00:29:51.920 --> 00:29:56.799
Um, I a big asterisk, and this is not a scandal, this is just reality.
00:29:57.039 --> 00:30:10.000
Nintendo got a huge benefit from getting a lot of, I think effectively all of the tariff charges that the company was was charged by um the US government refunded to them.
00:30:10.160 --> 00:30:15.200
Um I think Nintendo came out and said that they will not be passing that along to the to the customer.
00:30:15.359 --> 00:30:19.519
So I would not get your uh too too much.
00:30:19.680 --> 00:30:25.119
But um, so yeah, so a lot of that gain are you know a one-off in the tariff money that came.
00:30:25.359 --> 00:30:31.680
Um to their credit, they had very strong sales of Switch 1 titles.
00:30:31.839 --> 00:30:39.359
The Switch 1 titles I I was reading, I think were up um, I think over 30% year over year, and were actually selling better in the switch two side titles.
00:30:39.599 --> 00:30:51.119
And secondly, that they have good sales for Switch 2, but some people like myself are a little concerned that it might not be good enough.
00:30:51.359 --> 00:31:06.960
I I will um I want to get your guys' views on this, but something that worries me reading this earnings is I wonder, is Nintendo squeezing more and more money out of a pool of gamers that's not really growing?
00:31:07.119 --> 00:31:16.720
I was looking at their total um um, I think total player relationships, total game relationships, and it's been stuck around 130 million for about three years now.
00:31:17.039 --> 00:31:31.440
And I'm a little bit worried because I saw, look, you just the biggest debut of all time, but you you have 25 units out there, and I I don't even see a 1% spike in in your total game.
00:31:31.519 --> 00:31:39.759
So it feels like they're replacing it feels like they're replacing um current games with you know it's like a restock, a refresh cycle.
00:31:39.839 --> 00:31:45.440
Um, I want to see more evidence they're expanding the um the pie, the pool of players.
00:31:45.599 --> 00:31:47.839
But uh, I'm curious your guys' take.
00:31:48.400 --> 00:31:50.480
Um yeah, that's interesting.
00:31:50.720 --> 00:31:56.640
I'm more bullish, uh, as Greg has heard ad nauseum on me on Nintendo um for a lot of reasons.
00:31:56.799 --> 00:31:59.920
Uh, but like let me go to the device side.
00:32:00.000 --> 00:32:05.920
I I mean with this switch to it, it's like still the fastest selling console ever, so they're they're they're they're growing.
00:32:06.079 --> 00:32:09.599
Um, the kind of replacement thing is an interesting thought exercise.
00:32:09.680 --> 00:32:18.640
Um, which you know, I look at you know, I read your piece, and the way I see Nintendo is like Apple is I think they have a form factor, they're not gonna move off that form factor.
00:32:18.720 --> 00:32:29.039
And why would you um it just increase battery life, improve screen resolution, um, better processor, like that's the iPhone model, which is what the switch is now, and it won't come out annually.
00:32:29.200 --> 00:32:37.519
They'll probably you know it cycle it out every six, seven years, like it'll be like new switch, and then in between that'll be an OLED or a high resolution version with a better battery, right?
00:32:37.599 --> 00:32:49.519
So they'll have the the switch to the switch 2.5 and the switch three, and like they'll probably continue on until there's a massive technology paradigm shift, which I don't see coming um to devices anyway in the near future.
00:32:49.920 --> 00:32:55.519
Um, uh so that that that is that makes me bullish on their model.
00:32:55.759 --> 00:33:03.680
Um, the TAM side, I would want to know what that looks like what's the switch two is inside China because that's not in China yet, right?
00:33:03.759 --> 00:33:08.079
So they have not gotten it through the regulatory, um, and I don't know if they want to.
00:33:08.160 --> 00:33:15.599
The only switch twos in China right now, to my knowledge, are the ones that are they fly over to Japan, they buy everything, and they fly back to China to them and play them, right?
00:33:15.839 --> 00:33:18.079
Which is not having it in China, right?
00:33:18.160 --> 00:33:20.160
It's just like a it's a it's a workaround.
00:33:20.240 --> 00:33:22.400
So um, but the switch one is in China, right?
00:33:22.480 --> 00:33:31.920
So it's a matter of time, I'm assuming that the switch to, and once the switch two is in China, I expect this the that number to grow drastically um on top of itself, right?
00:33:32.079 --> 00:33:33.279
Um, so that'd be my hunch.
00:33:33.519 --> 00:33:38.799
You're right about the switch one titles outpacing the switch two because the TAM is bigger, like there's more devices to sell to, right?
00:33:38.960 --> 00:33:50.799
So Tomogachi Life outsold Pocopia, but Popopia on a percentile uh basis owns more Switch 2 devices own Pocopia now than Tomogachi Life does on the Switch 1, right?
00:33:50.960 --> 00:33:56.319
But because Tomagotchi Life was on the Switch 1 and Switch 2, it sales out past Pocopia, which like well yeah, duh.
00:33:56.400 --> 00:34:02.960
It's selling in a more epicer universe, it's going to outpace Pocopia, which still sold very, very well for what it was.
00:34:03.119 --> 00:34:10.480
Um, and you know, if I would have most people in the gaming industry don't realize that Nintendo um owns most of the sales records every single year.
00:34:10.639 --> 00:34:13.679
Like, oh, isn't it great that this game sold seven million copies?
00:34:13.760 --> 00:34:21.039
It's like, well, yeah, but like Tomogatch Life is like one of the top three selling games of the year so far, and nobody probably knows it exists, right?
00:34:21.119 --> 00:34:22.960
It just breaks everyone's brain when you tell people that.
00:34:23.039 --> 00:34:31.199
Like, um, so that's part of my racket with Nintendo is I think it's undervalued in gaming circles because they belittle it and they spend a lot more air and time thinking about Xbox.
00:34:31.280 --> 00:34:38.320
So, like Xboxes and their own IP outside of Call of Duty and Blizzard titles isn't consequential to what Nintendo does on tier two titles.
00:34:38.480 --> 00:34:44.320
And this is not them putting out a new Smash, it's not them putting out a new Mario, it's not them putting out a new Zelda, it's none of those things.
00:34:44.480 --> 00:34:45.760
Um, so yeah.
00:34:46.000 --> 00:34:56.079
Um, so that's my initial read of their financials as like, oh yeah, they're continuing on the stretch that they continue doing, and then in the gaming journalist space, specifically IGN, shout out to them.
00:34:56.159 --> 00:34:58.079
They never cease to make me irked.
00:34:58.320 --> 00:35:00.559
They go, is Nintendo losing their imagination?
00:35:00.719 --> 00:35:01.840
I'm like, my god.
00:35:01.920 --> 00:35:05.679
Um, never I saw that I saw I I saw people reacting to that.
00:35:05.760 --> 00:35:08.800
I just thought I was gonna ask you as an eye roll.
00:35:09.119 --> 00:35:11.760
Because like they're like, Yeah, Nintendo losing their imagination.
00:35:11.840 --> 00:35:18.159
I'm like, they came out with a Mario Kart game that was open world a year ago, which is the most successful Switch title was Mario Kart.
00:35:18.239 --> 00:35:24.639
Like people like that say things like, Oh, Nintendo doesn't uh doesn't end you know invest in its biggest IP, Mario.
00:35:24.719 --> 00:35:28.960
I'm like Mario units-wise doesn't move what people think it moves, I think.
00:35:29.039 --> 00:35:31.039
There's like a myth of like what Mario does.
00:35:31.199 --> 00:35:33.280
I mean, Mario as a franchise, yes, right.
00:35:34.639 --> 00:35:53.519
But Mario mainline titles, no, they sell like 25 or 30 million copies, which is really, really good, but it's not like Smash, it's not Animal Crossing, it's not Mario Kart like levels of movement, like they do like laps around that game, but I think there's a PR piece of it, right?
00:35:54.159 --> 00:35:56.639
So thank you for for bringing up the IGN piece.
00:35:56.719 --> 00:36:02.239
I I saw I bookmarked and I read last night, and I saw a lot of people were angrily reacting to it.
00:36:02.480 --> 00:36:09.840
And I I understand maybe the title might have come across as a bit harsh, losing your soul is is a little hyperbolic.
00:36:10.000 --> 00:36:23.519
Um, but what I appreciate from the title, at least the question that I had, is that Switch has all these great franchises, and I've just been a little disappointed that more Marquee games weren't ready closer to launch.
00:36:23.679 --> 00:36:27.599
And it feels like the slate is a little it's a little dry in 2026.
00:36:27.760 --> 00:36:30.480
So you you have Mario Kart World, which was big.
00:36:30.639 --> 00:36:36.960
Personally, as a stock guy, I'd ep for them to bundle it or to give so many copies away for free, effectively.
00:36:37.119 --> 00:36:42.159
Um, I I think that I think Mario Kart would have sold really well on on its own.
00:36:42.320 --> 00:36:44.880
Um, but you know, I I understand the strategy.
00:36:44.960 --> 00:36:46.960
It was the first time they ever bundled a free game.
00:36:47.039 --> 00:36:50.239
So I was like, huh, okay, that that's that that that's interesting.
00:36:50.400 --> 00:37:07.280
And then when and then for what they have coming up, you know, you have a um the Legend of Zelda or Karina of Time remake, um which I I remember playing the original, but I you know, the and and and the Star Fox remake or the update.
00:37:07.440 --> 00:37:21.679
I now I know everyone's saying wait until 2027, we got a new Pokemon on the way, you know, we got a new Pokemon on the way, but I I I think I just wish I saw more unique, more of their heavy hitter original titles in the beginning.
00:37:21.840 --> 00:37:28.400
So when you start off with remakes of your old game, you know, it doesn't scream it doesn't scream innovation, if you know what I mean.
00:37:28.880 --> 00:37:32.320
Yeah, uh and I I'll comment back and I'll let Greg jump in.
00:37:32.400 --> 00:37:34.559
But like my read of the Zelda franchise.
00:37:34.639 --> 00:37:49.199
I mean, one, uh, so when I said I I wrote about this last week, but like um the only thing that's zagging against a GTA tornado or black hole is kid games, and Zelda is pacing to be the same size as Tears of the Kingdom, which you like it's a remake.
00:37:49.360 --> 00:37:50.559
Um, and you're like, dang.
00:37:50.719 --> 00:37:58.320
And I'm assuming it's coming out in uh October on my end, because given how they help calendar things out, Pokemon typically comes out with their mainline series in October.
00:37:58.480 --> 00:38:02.800
I assume that this year is just the Zelda, it's gonna come out in October at some point, which makes a lot of sense.
00:38:03.039 --> 00:38:10.480
So, and if it continues its demand share curve, um it'll do Tears of Kingdom members, which is again a 25 million unit mover, so not nothing.
00:38:10.559 --> 00:38:14.079
Um, and I think for most people, they never played Ocarina of Time to your point.
00:38:14.159 --> 00:38:23.519
So it is a remake, but I also think it's a remake of a game that most young people, which is their main target, have never played, only heard about it as a myth.
00:38:23.679 --> 00:38:31.280
And ultimately, I also think it's a movie tie-in, because if I had to bet anything, it's the the plot of the Zelda movie coming out next spring is going to be Ocarina of Time.
00:38:31.360 --> 00:38:32.239
It just makes the most sense.
00:38:32.320 --> 00:38:33.280
It's the beginning of everything.
00:38:33.440 --> 00:38:36.400
So I think it's all just a bunch of synergy there going on with Nintendo.
00:38:36.559 --> 00:38:46.159
Um, in terms of their uniqueness, I you know, I what I will probably say is I I hear that like, why don't we have more exclusives?
00:38:46.239 --> 00:39:00.639
And I wonder, as like a business, like on your end, there's a bit of hedging going on with Nintendo, and I understand the hedge, which is like we have this device that still sells very well, um, faster than Xbox does that has more graphics and everything else.
00:39:00.960 --> 00:39:13.920
And do we want to abandon this like really, really um money printing Tam of our Switch One to force everyone on Switch 2, or are we gonna have both feet and both pawns for some period of time and support both?
00:39:14.079 --> 00:39:19.760
And at some point they're going to have to move people up, but like that's probably what you're seeing is a hesitancy to do that.
00:39:19.840 --> 00:39:36.000
Like, you know, they come out with two um similar games in Pokopia and Tomogachi Life in the same month because they want to give the Switch 1 owner something that's akin to like uh you know Animal Crossing style cozy game and give Switch 2 owners justification that they bought this device with their own version of it.
00:39:36.079 --> 00:39:42.880
So they're again they are having their feet in both ponds at the same time, and that that I think is a bit of a fair criticism, but I also understand the the reason.
00:39:43.280 --> 00:39:44.000
I can understand that too.
00:39:44.239 --> 00:39:51.599
Yeah, I can understand from uh we just can't light this entire thing on fire because uh you know we're we're making a lot of money on it still.
00:39:51.760 --> 00:39:54.559
Oh, totally, totally, which is like iPhone upgrades, right?
00:39:54.639 --> 00:39:56.079
Not everyone upgrades a new iPhone, right?
00:39:56.159 --> 00:39:57.039
So same thing, right?
00:39:57.119 --> 00:39:59.199
People sit on older generations for a long period of time.
00:39:59.360 --> 00:40:08.239
Um absolutely now um, but again, but I go back to like and Metroid Prime 4 was a disaster on their own scale.
00:40:08.320 --> 00:40:12.719
Like it didn't do what it was supposed to do, which is bring more fans than Metroid to the Metroid universe.
00:40:12.800 --> 00:40:23.119
So, like that game was in development hell for as long as it was, came out in December, did meh, reviewed meh, and that was probably the big miss of the Switch 2, in my opinion, is like the Metroid Prime 4.
00:40:23.280 --> 00:40:29.039
It didn't do what it was supposed to do, but um, you know, I think it'll be just fine with Zelda and Pokemon coming out next year.
00:40:29.119 --> 00:40:32.079
Um, and as they go up and to the right.
00:40:32.159 --> 00:40:35.360
Um, I want your thoughts on the other part of the strategy, which is the flywheel.
00:40:35.440 --> 00:40:37.360
I read your piece, and you were not poo-pooing.
00:40:37.440 --> 00:40:44.559
I understand, like, and I agree, like Mario does a billion dollars in box office, doesn't matter to gaming companies, they make more money doing almost anything.
00:40:44.639 --> 00:40:46.320
I always thought it was a marketing expense.
00:40:46.400 --> 00:40:50.079
Evergreen content draws more fans into the universe than ads.
00:40:50.239 --> 00:40:58.960
So if they're gonna spend a lot of money on ads or they can co-produce a movie than have like a grid of control with uh illumination and universal, then do that.
00:40:59.119 --> 00:41:01.360
Like it will get your brand out there more.
00:41:01.519 --> 00:41:05.119
But to me, it's like Nintendo's finally Disney fying their business.
00:41:05.199 --> 00:41:16.719
Well, if their core business is selling games and and devices to support those games, and the flywheel is merchandise outside that obviously theme parks, uh, movies and TV shows.
00:41:16.800 --> 00:41:22.880
Like it feels like they're becoming the Disney, I mean, uh the more like Disney than maybe Apple, like the Disney of gaming.
00:41:22.960 --> 00:41:28.800
Like, yeah, we'll we'll extend ourselves and build multiple uh areas so long as it moves the flywheel in a circle, right?
00:41:28.960 --> 00:41:30.559
Which is the IP flywheel.
00:41:30.960 --> 00:41:36.079
So so where I give where I give Nintendo credit is I think I think the brand is as strong as ever.
00:41:36.239 --> 00:41:47.119
I I think the brand's as strong as ever, and I think that the the name recognition and and it's it's touching people of different generations, and that's undeniably good.
00:41:47.280 --> 00:42:06.000
Um, where where I just become a little more skeptical is that I think I think when we compare Nintendo to Disney, I think it makes me realize maybe we're selling Disney a little short because I I I think in order for for me to really get on board on this flywheel, I'm just gonna need to see a lot more content.
00:42:06.159 --> 00:42:11.519
I'm gonna need to see, you know, a lot more than one movie every every three years.
00:42:11.760 --> 00:42:12.559
You know, that's fair.
00:42:12.719 --> 00:42:23.039
Uh and um I I also think I think the holiday season is um is going to be a big test for the Switch too, because I loved your analogy of them having a foot in two in two ponds at the same time.
00:42:23.119 --> 00:42:25.760
And I understand why they didn't, I think it was the right call.
00:42:26.079 --> 00:42:35.840
But the tricky part is that as you said, eventually, eventually you have to bring the audience over to that second uh that second ecosystem.
00:42:36.079 --> 00:42:40.159
And historically, Nintendo has had a lot of ups and downs.
00:42:40.320 --> 00:42:47.760
They've had some great consoles, but they've also sometimes had some have some misses, you know, the you know, from uh from from the Wii to the Wii U.
00:42:48.159 --> 00:42:58.960
And what I've one thing I've I've noticed is that it can be a problem if in year two your console sales are not still growing.
00:42:59.280 --> 00:43:08.000
And where we are right now, and I know there's timing, okay, maybe maybe if Pokemon didn't come out in 2027, this wouldn't be a big deal.
00:43:08.159 --> 00:43:14.960
But right now, Switch 2 is tracking lower sales in year two than it is in in year one.
00:43:15.119 --> 00:43:33.119
And that and that's and then the other part that gives me a little pause is that when I look at it from a stock analyst, the history of consoles, where you get that extra bit of growth is when you're in year three and year four, and you can sometimes like give a price cut to you know expand the market.
00:43:33.440 --> 00:43:41.599
And for lots of reasons, outside their control, they had to hike prices really early um that they never had before.
00:43:41.920 --> 00:43:45.360
And then so you know, you're trying hard to bring over people.
00:43:45.519 --> 00:43:50.800
And and look, let's not forget, too, that Nintendo, I'll say I think they got a little lucky.
00:43:50.960 --> 00:44:04.000
Um, I never want to say lucky in COVID in the same sentence, but I think that during during the pandemic, you had a lot of people who found the Switch One as an affordable entry in into gaming.
00:44:04.239 --> 00:44:06.320
And it was it was really, really big.
00:44:06.480 --> 00:44:22.239
And I I just I just wonder you know a lot of people who got into it with a$199 console in year three and four if memory prices stay up or get more expensive will they come back for 500 in 2027?
00:44:22.400 --> 00:44:23.360
I I don't know.
00:44:23.679 --> 00:44:44.079
I I want to respond to two points you bring up one of my favorite talking points on Nintendo like which is uh well one two actually one the Scarlet Leather of the Wii U will never leave them man they can never live that down like if we just erased it from history they would have gone from the Wii to the Switch in between that the 3DS and the DS and to now the switch too it's like an incredible run.
00:44:44.480 --> 00:44:48.480
But they did the Wii U and they'll never live it down at least in the gaming industry they'll never live it down.
00:44:48.719 --> 00:44:48.960
Right.
00:44:49.920 --> 00:45:01.039
My second point is like on the on the you're right about the the price increases but if if Valve is going to increase their machine prices by double because they don't have the supply chain to eat it so they're just going to increase their prices by double.
00:45:01.280 --> 00:45:16.719
If PlayStation on a dollar basis is going to increase their prices by two three hundred dollars same for Xbox if the Switch is going to continue to increase its price by 50 it's still the value machine so and you look at their um earnings call in their letter like they're going to have Call of Duty Modern Warfare 4 on there.
00:45:16.800 --> 00:45:33.519
That's really on launch like at some point people are going to look at that as saying I could play most maybe not Grand Theft Auto 6 but I could play most of my premium games on this handheld device that I could put in my backpack and take with me as I go it's going to become the value machine which I think is again you want to say COVID was an accident.
00:45:33.599 --> 00:45:40.800
I think the current era of memory chips is a happy accident for Nintendo because their competitors are raising prices at a higher dollar value than they are.
00:45:40.880 --> 00:47:01.599
They're going to win the value argument very quickly and it's like well if I want to have a console machine I will make good with Nintendo um and play my third party games on here while also getting the benefit of the first party library which they're very known for um and as the gaming industry is trying to figure out how to rein in costs on games right Nintendo has always made games cheap man and they always graphic fidelity is never a big thing for them they always scale down their games so they are easier to make cheaper to make and on devices that are technology behind quote unquote the leading edge of consoles but and PCs but that is sliding back down in their favor too it's like well we we have the infrastructure and the capability making games better than anyone else in the modern era because it's what we always done um and like I and then lastly like I get the well what about PC as someone who's both built a PC and bought a rebuild PC many many times uh I bought one in Q4 I write about this all the time that price of my machine they like Best Buy I bought it on Black Friday if I didn't buy it then they actually if you bought it in December they canceled your order like just straight up cancel everyone's orders for the same machine in in uh in December and the price has gone up double but effectively since then so it's I PCs are also wildly more expensive than they were um and if you have a PC amazing if you don't good luck to you man.
00:47:02.800 --> 00:48:38.719
And that's the unfortunate part like about PC gaming is to play the latest and greatest games like GTA 6 you're gonna have to have a high end gforce graphics card and yada yada yada things that are incredibly expensive now for consumers who afford yeah no the no the the prices are expensive everywhere and I definitely concede that I I I just worry too if if the Switch is the cheapest console like that's good but I I still I still I still wonder are we are we in the twilight era of the console you know holding everything up so we just we said and begin the conversation that that you know Xbox is is is kind of out the the the picture fine um how much how much longer does this yeah you know go ahead sorry I think that's an interesting question because I I would agree and this is another talky hobby horse of mine is like I think the problem is not devices it's the business model of distribution and I think Xbox is incredibly interesting here going toward an ad-supported fast model because I think that's where I think that's where gaming is going to go and I think Xbox is going and I felt this for a very long time now that we're always gonna be the first ones there because they they had no nothing else to try they had to try the free ad supported uh game pass model which is I think where they're gonna end up and I think that's interesting because that it that is it that is a risk to Nintendo long term if if everyone can get a free version of Xbox games via the cloud on their TV set and only have to pay via their time on ads that's a that's a huge seismic shift in Nintendo's business model.
00:48:38.800 --> 00:48:46.000
But if it's continually based on devices and components of those devices and exclusivity then I think Nintendo's in a solid position.
00:48:46.400 --> 00:48:55.360
I'll end on I was a I did a thing yesterday where I was a firm and long on Nintendo like buy and hold or hold and and long but that's based on their price already collapsing.
00:48:55.440 --> 00:49:34.960
So they were they were like what 20 bucks something like a share yeah yeah it went and it collapsed all the way through it collapsed on itself and I was like well this is silly I I'll I I'll buy and hold on this for a while because it'll go back up um so I I'm on the current pricing model of like I think they'll go back up because and they're already on the climb back up because you know nothing fundamentally changed in their business other than people freaking out about the cost of hardware which is the main reason that I in my opinion the stock collapsed on itself but like I ask you a question yeah sure yeah and and I'm not I I'm I'm sincerely asking this do you think that people will will play Call of Duty and and these other third party titles on on switch because that's something that I've I've just a little bit skeptical on.
00:49:35.679 --> 00:49:50.800
Over time I I don't think it'll be media but I do think like again they're not playing it on Xbox because there's not many of them I think the switch to will probably pass the Xbox in units sold in what sometime this year early next year um which is an insane thing to say out loud.
00:49:51.360 --> 00:50:00.159
So over time yeah I I I do think it we'll see how it runs is the other piece like you know we'll see how it runs in the reviews that are coming out of it.
00:50:00.400 --> 00:50:17.840
Everyone says the switch to can run uh you know Resident Evil Requiem just fine and Final Fantasy um seven rebirth okay great um these are current gen games and it can run them just fine let's see if it can run a multiplayer game just fine um and also my big knock on Nintendo is their their online ecosystem is hot garbage.
00:50:17.920 --> 00:50:20.719
I mean like God um I know they don't care that's not good.
00:50:20.800 --> 00:50:29.199
Well that's not I know no 100% which is why they're at risk of anything that's online cloud is a weakness of Nintendo.
00:50:29.280 --> 00:50:31.039
I would for I firmly stand behind that.
00:50:31.119 --> 00:51:45.360
Like they are so bad the e store is bad their online stores like they just it's never been a strength of theirs and that has always been their big weakness is their um lack of adaptability to modern technology via the internet um all right let's jump to round two of our game all right this is bull or bear this time simian you are the bull you are all for this colin you are the bear has the switch two already proven it's a success again Simeon you're gonna be the bull here sure you're gonna be the bear here Colin oh we're flipping rolls okay yeah you're flipping roles so you want you want you're good to go no no I'm I'm good to go so look I I I think the switch two has proven its success in that its its standard of success I think has been to to to ignite um ignite excitement in the current in the current um switch uh gaming base and I think you see that by the fact that you had you know backwards compatibility gave a whole lot of switch one users a good reason to upgrade on day one you know they didn't have to wait for the exclusives so I think that it's been a success because it gets people in the ecosystem without having to have a big hit like a new Mario or a new Pokemon.
00:51:45.519 --> 00:51:47.599
So I think it's good for from that point of view.
00:51:47.760 --> 00:52:07.920
And I think it's I think it's been successful that they are the first next gen console to you know to debut um you know in this higher price memory market that they got out there you know who knows when we're going to get PlayStation 6 and how expensive that's going to be so I think it's success that switch to did what they had to do and they got out there.
00:52:08.239 --> 00:52:11.920
But I don't know if they're going to be spying the pie.
00:52:12.079 --> 00:52:13.440
I I worry I worry.
00:52:13.760 --> 00:53:47.840
All right one minute you went with uh Simeon goes with the uh first movers advantage and then a strong back catalog to make upgrading easy colin why are you bearish on switch to I'm bearish on switch to because I don't think Nintendo realizes uh the business model is not going to be devices it's gonna be cloud um I'm a buyer of the bubble I think the AI bubble is going to pop in the next two years and like what happened with the dot com and the fiber optics being run across the country and world um is going to happen on the cloud and what happens when there's a bunch of XX capacity cloud it's already built out there's gonna be the need to use that cheaply enter cloud gaming and that is an area that Nintendo is not suited to kind of manage and handle right and Xbox and PlayStation are much more equipped to handle what the online cloud based world would look like as opposed to Nintendo and that's that's the risk they don't know they're walking into all right that's well played for this round I am going to give it to Simeon because you got to have faith in Nintendo man Nintendo is like the gamers game company at the end of the day and maybe that's why it's not as exciting as some of the other numbers that you see because they're not running live service games but I think when you look back to the history of gaming Nintendo makes video games for people that want to play video games not for every game and I think that is a strength they'll forever be able to ride that high of and again I think trans media moving to movies is having more of an impact even if they split the cost with Illumination and whoever dreamworks but I think you're you're planting the seeds in the next generation to want those plushies to want to buy that stuff and go crazy like that.
00:53:48.079 --> 00:53:52.880
Mm-hmm all right so last I hate you putting me in that awkward position Greg.
00:53:52.960 --> 00:54:04.239
You know that makes for good we switch it up we switch it up and now I want to talk about Roblox because well actually before we talk about Roblox let's talk about some house notes just about player driven.
00:54:04.400 --> 00:54:11.599
First off thank you for listening if you're still listening we love having you listening uh this week's podcast was with Andre Pimenta of Anybrain.
00:54:11.679 --> 00:54:16.800
I don't know if you know anybrain Colin but they've created an AI cheat anti-cheat platform.
00:54:16.880 --> 00:54:17.679
It's not AI.
00:54:17.840 --> 00:54:21.679
It uses AI to help track people who are using AI to cheat.
00:54:21.840 --> 00:54:27.679
So do you know people are using Claude and Gemini to build cheats that allow you to build wall hacks and being able to see people through there.
00:54:27.920 --> 00:54:37.119
So what Anybrain is actually using is watching mouse movements and keyboard movements to see if they remain human or if they see different kinds of outliers to how people are moving within game.
00:54:37.280 --> 00:54:46.639
And I think it's a fascinating technology when you start taking user input and trying to see is that user input actually human or not and that's cool stuff.
00:54:47.760 --> 00:55:04.880
On Design Desk Lewis's piece which came out yesterday he did part two of his games for change segment uh you can check it out at slash desk I guess player driven IO slash desk and next week we're probably just gonna launch this because this is going to be a good podcast with people loving to do finance.
00:55:05.039 --> 00:55:27.360
So uh we will be putting all of our predictions on Intel.playerdriven.io but this next piece is important to me because it has to do with Roblox and I want to talk about Roblox's earnings but the whole preface I would like to do this because my world is kind of about trust and safety is that Roblox implemented a lot of trust and safety tooling into their platform over the last year.
00:55:27.599 --> 00:55:40.400
This is something everyone's heard people mention the P word with Roblox which might be a pedophile but uh they've been doing a lot of work to make sure that their game is safer despite what the community kind of sentiment is around.
00:55:40.719 --> 00:56:33.039
And I think now you're seeing actual numbers which will show you does implementing safety tooling actually cause bottom line changes and I know Colin you were big into the Roblox numbers maybe you want to give us kind of high level on how how Roblox is did this quarter I mean uh not I mean not great their user uh their user uh pool has plateaued um they've kind of like you know and their their daily they're they're they're kind of daily users are decreasing I believe I I kind of want to get make sure I'm right about this and although they're saying the algorithmic change of the platform is driving people to more meaningful experiences instead of hyper virable viral snackable things um yeah I mean I I'm I'm just sad on that I mean Roblox is just just taking a hammering and a beating um and I've always been a bit more bearish on the platform although it's so big I was like wait to kind of almost too big to kind of completely collapse on itself.
00:56:33.519 --> 00:56:33.679
Right.
00:56:33.840 --> 00:56:35.519
My biggest issue is the kid problem.
00:56:35.679 --> 00:56:38.400
Like they like trying to roll this out as an advertising business.
00:56:38.480 --> 00:56:49.920
I know you know this like advertisers want to reach 18 to 34 year olds that's it and right they don't have a majority 18 to 34 and they never will because I'm not I do not buy that people age into Roblox as they get older.
00:56:50.000 --> 00:56:51.840
I think they age out and go play Grand Theft Auto.
00:56:52.320 --> 00:56:52.800
I agree with that.
00:56:53.199 --> 00:57:01.679
So they're trapped in Kid Land and the advertising pool of Kid Land is pretty limited to Hasbro Funko you know you can name the brands it's so on my two hands.
00:57:01.760 --> 00:57:06.320
So it's not not a huge Tam there and so they're kind of trapped by that.
00:57:06.480 --> 00:57:11.519
Now they're saying they're investing in AI to build more high fidelity experiences.
00:57:11.760 --> 00:57:26.719
Sure I generally buy that UGC is a huge opportunity and we'll eat the world when it kind of scales but I'm just not mentally there yet with Roblox um it's going to be that solution it's current iteration although they their investments in technology could change my opinion on that.
00:57:27.039 --> 00:57:33.199
I think what you said about the audience aging in aging out I agree very much with that.
00:57:35.119 --> 00:57:43.199
I didn't predict this I I I wouldn't have thought if you asked me two or three years ago that Roblox stock would have gone straight down all this time.
00:57:44.079 --> 00:58:00.960
But I I I I think when you think about gaming in communities and and less about necessarily you know the specific games but you know the life cycle of a gamer yeah I I I don't see people going the older crowd going down.
00:58:01.119 --> 00:58:08.960
It feels like it's it's it's up and out and then when you add trust and safety in there it's it makes it really dicey.
00:58:09.199 --> 00:58:22.639
Yeah and people conflate like Roblox and Minecraft Minecraft is stickier with older audiences and younger audiences because it's a virtual Lego right people like the build and it's creative and it's expression that's that's not what Roblox's experiences are.
00:58:22.719 --> 00:59:22.639
They're not they're not Minecraft right they're not right building a giant super house or a virtual city like they're not doing that in Roblox at least natively you can I'm sure but like if people come at me saying oh we could build those experiences inside Roblox I'm like okay sure but it's not the same thing as Minecraft so it's not scratching an itch um um so and it's also uh a red flag to me that in the modern shifting gaming and the biggest growth market being China that they were in China and then it got and then they got kicked out of China whereas Minecraft is doing phenomenally well in China like if they have Netney's reported 700 million accounts created in China which is tied to people because of the way you have to sit like log on to these things for monitoring by the big government purposes like that's an insane number also Microsoft never talks about Minecraft until uh Asha started but that's a whole other separate conversation um yeah it's uh it's uh it's crazy I know so I again I think Roblox has a larger kid problem and that leaves me kind of a lot more bearish and bullish on them um until they've proven that they can age people into something else.
00:59:22.880 --> 00:59:23.280
Right.
00:59:23.519 --> 00:59:55.920
I'll I'll take the uh the bullish perspective on this because their their monthly unique players has still gone up meaning new players are still finding this game and they're still logging in and they're still playing uh they didn't hit the numbers they wanted to on a on a revenue perspective which makes sense because if you're putting in tooling to to block the bad people you're going to end up losing some people who are potentially coming in spending money but the fact that maybe the money's going down but you're seeing an increase in players I think it's building out the the foundation of what they're doing.
00:59:56.079 --> 01:00:27.119
They still have kids in there the kids are still coming to play in there maybe you're losing some money and they're still profitable uh this quarter right they still made money so I think this is kind of uh the uh the healthy step of becoming a more sustainable a more just not the boom company they were right that they they've matured and now this is maybe what we expect uh over time I I think and they blamed no viral hits which it's stupid but I mean that's basically them admitting that their algorithm for discovery is bad.
01:00:27.280 --> 01:00:39.440
Like that's all right like that that's what we had no viral hits I'm like so your algo sucks that's your job like that's your job they they actually came out earlier this year said they were going to change how discovery works on the platform.
01:00:39.519 --> 01:01:06.480
So so yes Colin to your point that is exactly it they said that but they also said hey we're going to change this so it's not like uh oh my god we didn't see this coming it's like we're going to tweak a and see what happens so so uh I think that's smart and yes we can all look at it and judge it and time will tell but I I think their algo went from like because their their average time spent in experiences was like laugh of like a minute and a half so like they weren't wow like it was like super super low or something like that.
01:01:06.559 --> 01:01:09.840
And then and they were basically like oh we want that to be longer I'm like yeah no shit.
01:01:10.000 --> 01:01:30.159
Um not TikTok right you want people to spend more time in these in these experiences so they're inherently like you know they'll become more valuable yada yada yada but like so they have tweaked their algo to achieve that um if that actually is the right move we'll know in like a year or two to your point Greg like it'll be a long time to get there.
01:01:30.320 --> 01:01:39.440
Um I mean ultimately the floor of Roblox is they get bought by something so like they're not going out of business right their value will go down so low that someone will swoop in and purchase them.
01:01:40.079 --> 01:01:49.280
If meta wasn't inundated in an infinite amount of lawsuits I always thought Roblox and meta made like meta buying a gaming company that has an ad engine behind it makes so much sense.
01:01:50.880 --> 01:02:06.639
Yeah um instead of them trying to build the metaverse or build agentic AI like again Mark Zuckerberg distracted by things that aren't actually according to main business which is ads um not you know getting on the Mount Rush mower of like Steve Jobs and you know Elon Musk and building cool things.
01:02:06.719 --> 01:02:11.679
Yeah I'm sorry you just built an ad engine man which is actually impressive in and of itself you should be proud of it.
01:02:12.000 --> 01:02:25.679
So we are way over time before we wrap say our goodbyes is there anything else anyone wants to talk on any of these topics no no um I you know uh Greg, we did anything you want to talk about um how are things on your end?
01:02:25.840 --> 01:02:28.079
Good uh things are good on my end.
01:02:28.239 --> 01:02:46.239
You know this is my my next two weeks I feel like I'm on vacation so this is like the last push for me for uh for summer but uh we have a lot going on and a lot of stuff going on and this is good and I was excited about this and I think we're gonna have more guests on the show to debate and talk through on things I think this is a good format and makes a very engaging engaging thing.
01:02:46.320 --> 01:02:51.760
So I'm excited to see this go through and lots of Gamescom stuff going on now so just trying to keep on top of that.
01:02:52.559 --> 01:03:46.480
But before we wrap and care too much about me Simeon tell the people where they can find you thank you so much for having me I had a blast uh on the show today hope hopefully love to come back in the future but in the meantime you guys can find me my site is accrued interestaccrudeint.com you can find me on Substack I have a dot com I'm on all the major socials Instagram Twitter Facebook LinkedIn wherever you like to browse um I just want to say I'm a huge fan of the of gaming and the game industry I I'm I'm rooting for all the companies I just want to warn people of the risks that you know stocks go up and down um look stay diversified look closely at your holdings and some stocks are good for a short time and some stocks are good for a long time but we always just have to keep looking at the facts as they develop and just enjoy the ride.
01:03:46.559 --> 01:03:48.800
So thank you for having me and you know good.
01:03:49.199 --> 01:03:56.320
So I mean if you had to gift both of your children a hundred shares to a specific video game company what game company would you choose?
01:03:59.360 --> 01:03:59.920
None.
01:04:00.320 --> 01:04:10.079
Meta I think I I think meta with their ability to to wring the most ad monetization out of whatever they get their hands on.
01:04:10.480 --> 01:04:23.280
I think that I think that games like TV where I came from and music I think games are another form of media and I think games will live on but how we consume that media may change in the future.
01:04:23.440 --> 01:04:30.800
So I'm more a believer in platform so I'd probably say meta or Google over or over a specific game publisher.
01:04:31.119 --> 01:05:05.920
Cop out of an answer but I'll give it to you thank you for joining us i mean this was great colin let us know everything I uh I you find me on LinkedIn Colinese I write patch notes uh subscribe on LinkedIn or Substack if you prefer that format um I am currently writing my piece this week to talk about the Spider-Man movie um and if you want any hot takes on Spidey and his amazing friends I am the place that'll give it to you I have a lot to say about that show and its value to the Spider-Man ecosystem um and why that means uh and what what that means to the uh to the movie itself.
01:05:06.079 --> 01:05:17.760
Um other than that um yeah just gearing up for games coming all that and if I had to pick a gaming stock short term I'd probably take two and hand it to him and say sell in nine months uh that would be fine you'll you'll make easy money there.
01:05:18.000 --> 01:05:22.480
Um long I like the meta thing because I I I've talked to Greg about this a lot.
01:05:22.559 --> 01:05:59.119
I like yeah like it meta's in the in a downturn and it you know it's laughable like where their stock always like it's it's all based on communication with Mark he just sucks at it and he just puts his foot in his mouth whenever he opens it to talk about we're gonna become an enterprise uh business B2B player I'm like Jesus man like why um but they actually got their hands on a real gaming platform oh boy it'd be the next Instagram they just let it rip and then make so much money so I've always said if if Microsoft fires sales and its gaming division then meta should go bang on the door by Xbox as a platform like immediately and then bolt an ad engine on it and let it rip because it would make a lot of money.
01:05:59.360 --> 01:06:12.960
Bring back animal farm I mean that they would be like just just we'll give you everything consumers just watch ads and um and get sent to a bunch of SMB businesses and yeah um one to one ads.
01:06:13.280 --> 01:06:25.039
Colin just wants to watch the world burn everyone who's joining us today Carlo Diana Tim George was at least people that commented thank you for joining in today I appreciate you joining we'll be back next week
00:00:00.320 --> 00:00:05.679
Roblox grew, users, revenue, and payers, and still got punished by the market.
00:00:06.000 --> 00:00:07.360
Nintendo beat expectations.
00:00:07.519 --> 00:00:14.800
Take two offered almost no detail on its unprecedented GTA 6 pre-orders, and EA is officially private.
00:00:15.359 --> 00:00:18.239
So what are the numbers telling us that the headlines aren't?
00:00:18.640 --> 00:00:20.879
Welcome to Player Driven Live, Greg here.
00:00:21.440 --> 00:00:28.000
This week we're running back last week's conversation with Colin and our special guest, Simeon McMillan from Accrued Interest.
00:00:28.480 --> 00:00:34.479
A number of major game companies recently reported earnings, so we brought Simeon in to help break down the results.
00:00:34.719 --> 00:00:40.159
We cover Roblox, Take Two, and Nintendo, and we touch on EA officially becoming a private company.
00:00:40.479 --> 00:00:43.520
What makes this conversation so much fun is a mix of perspectives.
00:00:43.600 --> 00:00:50.079
You get a finance expert talking with someone from the gaming industry, and they look at the same companies and the same results, but they notice different things.
00:00:50.320 --> 00:00:56.880
One person might focus on the financial outlook, while the other sees those numbers can mean for the games, the players, and the people building them.
00:00:56.960 --> 00:01:01.439
And honestly, your read can change depending on where your heart and your fandom lies.
00:01:01.679 --> 00:01:04.159
Before we jump in, a quick player-driven update.
00:01:04.319 --> 00:01:08.959
We're heading into the dog days of summer, and we have some travel coming up over the next few weeks.
00:01:09.120 --> 00:01:11.840
You'll still see the same amount of content coming out from us.
00:01:12.000 --> 00:01:14.400
We already have new podcasts scheduled to release.
00:01:14.480 --> 00:01:19.439
It may be a little slower in responding while we're on the road, but we'll be staying on top of things.
00:01:19.599 --> 00:01:24.640
If you're not already in the player-driven Discord, come join us and be sure to check out the player-driven Academy.
00:01:24.799 --> 00:01:27.680
We've just launched six new Academy lessons.
00:01:27.760 --> 00:01:35.120
They come from Games for Change and two focused on trust and safety, building on top of their Roblox coverage and lessons coming out of it.
00:01:35.359 --> 00:01:41.439
If you're looking to sharpen your skills and level up what you can do in the games industry, visit academy.playerdriven.io.
00:01:42.239 --> 00:01:46.959
Everything is free and every lesson is broken into bite-sized pieces that you can just take on the go.
00:01:47.200 --> 00:01:49.920
Alright, let's jump into the conversation with Colin and Simeon.
00:01:50.079 --> 00:01:53.200
I hope you guys enjoy this episode and I'll catch you next week.
00:01:57.359 --> 00:01:59.359
Welcome to Player Driven Live.
00:01:59.519 --> 00:02:00.480
It is Thursday.
00:02:00.560 --> 00:02:01.120
We are here.
00:02:01.200 --> 00:02:03.359
We have a guest and we'll get into all this.
00:02:03.599 --> 00:02:07.519
Today we are talking about earnings, earnings everywhere.
00:02:07.680 --> 00:02:12.960
Nintendo's numbers hit this morning, their profits nearly doubled as everyone expected.
00:02:13.120 --> 00:02:15.199
We're gonna ask a finance guy what that means.
00:02:15.280 --> 00:02:22.560
We're gonna ask a games guy, Colin, what that means, and get each of their takes because I think it'll be interesting how different each of their takes look.
00:02:22.800 --> 00:02:24.960
We're going to talk about Netflix.
00:02:25.120 --> 00:02:27.599
Netflix did some crazy stuff with Grand Theft Auto.
00:02:27.759 --> 00:02:28.400
They announced today.
00:02:28.479 --> 00:02:30.000
They did some stuff with FIFA.
00:02:30.159 --> 00:02:34.159
Uh, this is a place where Colin and I disagree, and it will be fun to talk about that.
00:02:34.319 --> 00:02:39.840
We're going to talk about Roblox because Roblox reported earnings yesterday and talk about how well those look.
00:02:40.159 --> 00:02:43.199
And of course, as I mentioned, we have uh guests.
00:02:43.280 --> 00:02:44.719
We have Simeon McMillan.
00:02:44.800 --> 00:02:49.360
He is from Accrued Interests, a really great Substack that takes a look at long-term stocks.
00:02:49.599 --> 00:02:50.960
Simeon, say hi.
00:02:51.120 --> 00:02:52.240
Introduce yourself.
00:02:52.639 --> 00:02:53.520
Hello, everyone.
00:02:53.680 --> 00:02:54.879
Thank you for having me.
00:02:55.120 --> 00:02:57.599
Happy to be a guest of the show, friend of the show.
00:02:57.759 --> 00:03:00.639
So um, so per the intro, my name is Simeon McMillan.
00:03:00.719 --> 00:03:07.680
I'm the author, founder of the newsletter, substack website, and sometimes podcast called Accrued Interest.
00:03:07.919 --> 00:03:18.719
Um, I like to tell people I write a newsletter about uh media stocks and tech stocks made for people who um made by so when I worked in television and radio.
00:03:18.879 --> 00:03:20.400
I come more from a corporate background.
00:03:20.479 --> 00:03:24.800
I spent more time in operating roles, doing ad sales.
00:03:24.960 --> 00:03:30.560
So I like to tell people, like to try this to five, stop um, you know, take it from there.
00:03:31.759 --> 00:03:32.240
Cool.
00:03:32.479 --> 00:03:36.080
We are excited to hear your takes on it as long as your internet holds up.
00:03:36.159 --> 00:03:37.680
You have what we call Colin syndrome.
00:03:37.759 --> 00:03:42.159
Colin had this in the first six months of our filming until we realized the VPN broke it.
00:03:42.319 --> 00:03:45.759
But uh, we could hear you loud and clear, and that's I think what's most important right now.
00:03:45.840 --> 00:03:47.199
So, first of all, thank you for joining us.
00:03:47.280 --> 00:03:51.840
I think it's awesome uh to kind of break down stocks as you and I talked about.
00:03:51.919 --> 00:03:54.560
When I started this whole thing years ago, I was a stock person.
00:03:54.719 --> 00:03:55.759
I love breaking down stocks.
00:03:55.840 --> 00:03:57.759
It turns out I'm just not smart enough for it.
00:03:57.840 --> 00:04:02.639
But I'm good at putting my money into stocks, and I think at the end of the day, as long as you pick the right stocks, you're good there.
00:04:02.879 --> 00:04:05.039
Um, Colin, how are you doing, man?
00:04:05.280 --> 00:04:05.759
I'm good.
00:04:05.840 --> 00:04:12.319
Well, first off, I figured out it was a VPN issue, although no we um and uh fixed it.
00:04:12.479 --> 00:04:14.240
But um no, I'm doing great.
00:04:14.319 --> 00:04:15.039
I'm doing great.
00:04:15.120 --> 00:04:17.920
Um, just to background myself because uh we have a guest today.
00:04:18.000 --> 00:04:36.560
Uh I'm Colinese, SVP of gaming at a research agency in LA called Screen Engine ASI, and also the kind of uh lead uh BD person on our behavioral uh attention uh tracker called Mind Game, where we analyze hundreds of thousands of games across the gaming industry and report on their attention share on a weekly basis, um both unreleased and released.
00:04:36.720 --> 00:04:39.600
Um so not and I also write a newsletter mostly on LinkedIn.
00:04:39.680 --> 00:04:42.319
I picked the worst platform to build it on, like honestly.
00:04:42.399 --> 00:04:47.920
Like LinkedIn is punishingly uh hard, but you know, it is where my audience is, I suppose.
00:04:48.079 --> 00:04:51.040
So uh I also write uh a newsletter on a weekly basis.
00:04:51.120 --> 00:04:57.199
And I am writing about Nintendo this week, so excited to have this conversation because it's gonna be a chunk of my newsletter for sure.
00:04:57.519 --> 00:04:58.560
Great, yeah.
00:04:59.360 --> 00:05:02.160
So, Colin, I'm gonna let you decide where do we want to start today?
00:05:02.720 --> 00:05:03.600
Well, let's start with the GTA.
00:05:03.839 --> 00:05:05.360
Everyone was here for the GTA takes, man.
00:05:05.439 --> 00:05:06.959
This is what's broke the internet today.
00:05:07.040 --> 00:05:10.959
So um, why don't you kick off with saying what happened and then we can give our takes on it.
00:05:11.040 --> 00:05:19.519
But I think everyone's let's talk big picture because tomorrow morning, Take Two Interactive, the parent company to Rockstar, is gonna have their earnings call.
00:05:19.839 --> 00:05:22.720
On this earnings call, we've predicted the last few weeks.
00:05:22.800 --> 00:05:28.000
I've been talking about is GTA gonna drop their next trailer because historically it's around their earnings call.
00:05:28.079 --> 00:05:32.480
You're about to tell your entire investment group about how many games you're selling.
00:05:32.560 --> 00:05:40.720
You probably want to drop a trailer, get people excited, and sell that number until this morning when uh Rockstar decided to drop uh what do you call it now?
00:05:40.800 --> 00:05:52.879
A tweet, an X letting us know that they're going to announce uh a new trailer, a background on GTA 6 on August 27th, uh in an exclusive.
00:05:53.120 --> 00:05:54.720
And it seems wild.
00:05:54.800 --> 00:05:57.680
So break this, tell tell a little better than I did there, Colin.
00:05:58.000 --> 00:05:59.759
Um, I mean, you nailed it, right?
00:05:59.920 --> 00:06:10.959
Um, it was a tweet, uh pretty trailer, um, announcing that they're gonna um do a a kind of show of sorts on Netflix exclusive, which I have so many thoughts on that.
00:06:11.040 --> 00:06:15.040
I saw it this morning, I was waking up and I was I always just scroll X and I'm like, what's going on?
00:06:15.279 --> 00:06:17.439
And I spent like drinking my coffee and almost spit it.
00:06:17.519 --> 00:06:18.240
I was like, what?
00:06:18.639 --> 00:06:20.720
Um I found it so fascinating.
00:06:20.800 --> 00:06:23.680
So, Greg, you were right last week you said they were gonna do something before earnings.
00:06:23.759 --> 00:06:24.079
They did.
00:06:24.160 --> 00:06:24.800
So congrats.
00:06:24.879 --> 00:06:36.160
They didn't drop a trailer, they dropped the news about a trailer, which would probably generate as much interest in their game as like like more interest in that than people trying to sell their game right now, which is like in a like a weird thing in of itself.
00:06:36.319 --> 00:06:39.439
Um I took away two things off the news.
00:06:39.600 --> 00:06:44.879
Um, one, this is the the most made sense uh gaming strategy Netflix has ever had.
00:06:44.959 --> 00:06:47.839
I was like, yeah, they should be buying more of these type of events.
00:06:47.920 --> 00:06:49.519
Like, what's what's Keely's number?
00:06:49.600 --> 00:06:51.839
How much would he take for the game awards for the exclusivity?
00:06:52.000 --> 00:06:57.120
I mean, I know he probably wouldn't do it because he likes having a huge number off YouTube, but also everyone has a price.
00:06:57.279 --> 00:07:07.360
So um, if this works out, do they go knock it on Keely's door for Summer Game Fest, the game awards, Gamescom, uh uh night one or whatever opening night is it calls it, like I assume.
00:07:07.519 --> 00:07:09.279
Um, so and that actually makes sense for Netflix.
00:07:09.360 --> 00:07:10.160
That's my point one.
00:07:10.399 --> 00:07:13.199
Point two is how much did Netflix pay Rockstar for this?
00:07:13.279 --> 00:07:17.600
Um, because Rockstar would reach more people on YouTube, was the next question I was like, they paid.
00:07:17.680 --> 00:07:22.319
Um now I don't think cash passed hand.
00:07:22.480 --> 00:07:30.399
Um, you know, I think it's probably more tied to uh uh add added value media uh in the NFL package that Netflix sits on.
00:07:30.639 --> 00:07:41.199
I've told Greg this for months, like expect a media blitz like you've never seen of Grand Theft Auto trailers across every NFL game this fall, um, and any other live sporting event.
00:07:41.360 --> 00:07:46.240
They will reach every normal American they can reach, uh leading up into November.
00:07:46.399 --> 00:07:50.319
So I think this is part of that in terms of we don't want to pay this much money for it.
00:07:50.399 --> 00:07:52.560
And they're like, well, what do we um you know?
00:07:52.720 --> 00:07:59.120
So some sort of value exchange there where the Rockstar is paying less for the media spend on Netflix and in kind they're also getting this promotional thing.
00:07:59.279 --> 00:08:01.279
So I think there's some value exchange there, would be my guess.
00:08:01.360 --> 00:08:03.040
So that's the two things I kind of caught out of it.
00:08:03.279 --> 00:08:04.319
But thoughts.
00:08:04.959 --> 00:08:07.120
Simon, you got a thought before I jump in?
00:08:07.439 --> 00:08:08.000
Sir, yeah.
00:08:08.160 --> 00:08:10.399
So I'm I'm reacting to this live.
00:08:10.560 --> 00:08:13.120
I I literally was Googling the uh the announcement.
00:08:13.199 --> 00:08:15.759
I was reading my notes before I came on here, so I did not see this.
00:08:15.920 --> 00:08:21.360
I agree with everything that um I agree with everything you just said before.
00:08:21.519 --> 00:08:25.120
I would say I would add on on my side, um, accrued interest.
00:08:25.199 --> 00:08:33.519
I've actually been positive on Netflix after a lot of people have been dumping on them, saying that no one watches them and engagements down.
00:08:33.679 --> 00:08:35.759
And I I've been taking a different point of view.
00:08:35.840 --> 00:08:45.600
I think at Netflix, I to give them credit, I think they've been expanding the uh the day parts and the different types of content that that that that they're going after, going after, excuse me.
00:08:45.679 --> 00:08:50.000
We when people talk hits, they're usually talking prime time dramas, which are important.
00:08:50.080 --> 00:08:56.480
But you know, just last year we saw K-pop Demon Hunters, which again was literally less than one year ago, and it took the world by storm.
00:08:56.639 --> 00:09:03.519
And now we've been seeing earlier this year Netflix is adding podcasts, they're adding digital, um, more short form things.
00:09:03.679 --> 00:09:12.639
In many ways, I think Netflix is creating more of an entertainment super app, and they're converging more and more to YouTube, which is I think their only true competitor.
00:09:12.799 --> 00:09:14.080
So I think it's a great idea.
00:09:14.240 --> 00:09:18.320
I I think I I think what you just said is right, it'd be cool if they got the game awards.
00:09:18.559 --> 00:09:23.519
But um, I I think that you know, they're still going to release the trailer and the stuff on YouTube.
00:09:23.600 --> 00:09:27.360
It's not either or, but I I think it's I think it's definitely a signal.
00:09:27.440 --> 00:09:29.120
You you know, you you said what does this mean?
00:09:29.200 --> 00:09:30.960
I think it's a signal to the rest of the industry.
00:09:31.120 --> 00:09:36.159
Hey, we're a place where you could premiere anything, you could debut anything.
00:09:36.320 --> 00:09:44.399
And I think it also adds some prestige, you know, because more and more people are are watching um content on the big screen television.
00:09:44.639 --> 00:09:49.919
And I think that this adds a certain level of prestige to a video game thing.
00:09:50.000 --> 00:10:00.320
And that that's what you want because that they're gonna, you said it best, they're gonna want to hit every person in America, and certainly every male 18 to 49 in America over the next three uh three three three months.
00:10:00.559 --> 00:10:01.200
So let's go.
00:10:01.679 --> 00:10:02.080
Let's go.
00:10:02.320 --> 00:10:04.080
And then just to add to that, I think I totally agree.
00:10:04.159 --> 00:10:07.440
And I think Strauss being a Hollywood guy plays into that.
00:10:07.519 --> 00:10:16.320
Like, how do I make GTA feel more like a entertainment, like premiere, the biggest thing Hollywood's ever seen, and this is a component of that.
00:10:16.399 --> 00:10:23.840
So I definitely think executives like seeing themselves on prestigious platforms, and Netflix has the sheen of a prestigious platform.
00:10:23.919 --> 00:10:25.440
So I actually completely agree with that too.
00:10:25.519 --> 00:10:27.759
There's there's a bit of boardroom politics going on.
00:10:28.080 --> 00:10:51.759
And one thing I would say, um uh I'll I'll give the mic back to you guys is I think for the game companies, I think the game companies, particularly um GTA, I think they want Americans and everyone to see them as an entertainment company because while most of their sales are dry are driven, excuse me, by you know, I was gonna say disc, it's all it's multi-downloads now.
00:10:52.000 --> 00:10:52.399
RIP.
00:10:52.639 --> 00:10:52.879
RIP.
00:10:53.120 --> 00:10:54.080
Yeah, R I P.
00:10:54.240 --> 00:10:58.399
But still, most of the sales are driven by the units.
00:10:58.639 --> 00:11:02.480
And you know, a lot of people are finding consoles are expensive.
00:11:02.639 --> 00:11:05.600
You you got a lot of people who are complaining about game prices.
00:11:05.840 --> 00:11:16.799
So you want to be a platform where you can sell lots of copies, and eventually they're gonna want to get a lot of people on the online, on the online version, and have that be its old community.
00:11:16.960 --> 00:11:18.879
So good idea.
00:11:19.200 --> 00:11:19.679
All right.
00:11:19.919 --> 00:11:22.399
I'll be the I'll be the realistic one here.
00:11:22.639 --> 00:11:24.639
This is so freaking stupid.
00:11:24.879 --> 00:11:28.159
You're paying for a six-hour exclusive on a 3 p.m.
00:11:28.320 --> 00:11:36.799
on like a Thursday to get access to a trailer that's gonna drop on YouTube six hours later, and that's where most people are consuming this content.
00:11:36.960 --> 00:11:40.639
Like, if no money passed hands, that's fine.
00:11:40.799 --> 00:11:48.399
If money passed hands are some sort, like if Rockstar was able to say, Hey, I'll charge you to watch my third trailer, like, hell yeah, good for Rockstar.
00:11:48.559 --> 00:11:52.799
That means they made a game good enough where people want to pay to premiere the trailer.
00:11:52.879 --> 00:11:55.039
Like, this should not be something that's celebrated.
00:11:55.120 --> 00:12:02.080
Man, a game trailer is a marketing thing where we want to watch it, and I get Netflix is the one paying for it, but like that is so stupid in my book.
00:12:02.159 --> 00:12:07.440
It's like it's like the macho man at the gym flexing like his new protein powder or something.
00:12:07.679 --> 00:12:09.360
Like, you don't need to be doing this, man.
00:12:09.440 --> 00:12:10.559
You're just showing off at this point.
00:12:11.919 --> 00:12:19.120
I see, I I gotta push back because like I I the more I think about it, the more I think it's maybe a brilliant lane for Netflix to kind of occupy.
00:12:19.200 --> 00:12:23.600
Because again, if there if like I assume if there was a trade of value, it's gonna be through ad inventory.
00:12:23.840 --> 00:12:26.639
And so it basically it's like monopoly money almost.
00:12:26.720 --> 00:12:30.559
It's like, yeah, this could have value to someone else, but we'll we'll take it and we'll also do this thing.
00:12:30.720 --> 00:12:37.679
But like for Netflix, the ROI of this event would be do people that couldn't jump on Netflix then stay to watch more Netflix afterwards?
00:12:37.759 --> 00:12:38.799
Like, that's the whole point, right?
00:12:38.879 --> 00:12:44.559
So if the event of GTA is over, does 10% of them go watch Arcane afterwards?
00:12:44.720 --> 00:12:46.480
Then if so, then that's the win for them.
00:12:46.559 --> 00:12:47.679
They're driving up engagement.
00:12:47.840 --> 00:12:49.919
These like almost like engagement shots, right?
00:12:50.639 --> 00:13:03.840
Like, you know, they're getting hammered in the market for uh a decline or a flattening of growth and engagement, so they're looking for shots in the arm to boost engagement and eventizing things to get people into the platform to then have your platform algo take over.
00:13:04.080 --> 00:13:04.799
Not a bad idea.
00:13:04.879 --> 00:13:06.879
I mean, like, we'll see how it works, but not a bad idea.
00:13:07.200 --> 00:13:15.600
It's not a bad idea, but uh again, it's a Thursday at noon Pacific, meaning that most of those people at Pacific time are gonna get home from work at 6 p.m.
00:13:15.759 --> 00:13:17.039
and be able to just turn it on a YouTube.
00:13:17.519 --> 00:13:23.360
So Greg, their audience is not people that work in their day-to-day, and those that do will still watch it.
00:13:23.440 --> 00:13:25.279
Their audience is a bunch of kids in college.
00:13:25.440 --> 00:13:29.440
Like, come on, um fine, we'll see.
00:13:29.519 --> 00:13:35.120
I mean, after that same logic, should I like pitchfork in my like in torches of Nintendo?
00:13:35.200 --> 00:13:37.840
They drop their their their Nintendo directs like 5 a.m.
00:13:38.000 --> 00:13:38.559
PTSD.
00:13:38.639 --> 00:13:44.799
They don't care I exist, they're like playing to Japan, like ah Japan, better drop this out there for now.
00:13:44.960 --> 00:13:50.399
Um but I'm let's let's give it extreme, extreme credit to Rockstar.
00:13:50.559 --> 00:13:58.000
Not that anyone needs to give the multi-billion dollar company lots of kudos, but they don't need to spend a cent in marketing this game other than making a couple trailers.
00:13:58.080 --> 00:13:59.679
Even today, they probably charge to IGN.
00:13:59.840 --> 00:14:03.840
You see IGN's like pre-trailer of the pre-thing coming out in August.
00:14:03.919 --> 00:14:06.960
They probably charge them like this is a money-making machine.
00:14:07.039 --> 00:14:11.360
This is gonna be a disgusting game in a good way when it comes out because of what it's doing.
00:14:11.759 --> 00:14:13.440
And it's just fascinating.
00:14:13.519 --> 00:14:17.600
It this is an outlier in every place you look at.
00:14:18.080 --> 00:14:19.600
Yeah, I mean, totally.
00:14:19.759 --> 00:14:23.600
I like I wrote like last week, like the fall is GTA, you're already seeing the impact.
00:14:23.679 --> 00:14:32.879
So um I track attention, and we're pretty good at modeling out like how that it like affects like games that are coming out, and pretty predictive on more games, how they'll fall coming out, right?
00:14:32.960 --> 00:14:43.120
And GTA is creating a black hole, not just on games that'll come after it, which will be pretty bad, but like games coming before it are also seeing a decrease in demand share going down um or being flat.
00:14:43.679 --> 00:14:48.559
Um because yeah, and you think of the logic, people will buy one or two premium games a year.
00:14:48.720 --> 00:14:51.039
Well, one of them is this game, like exactly.
00:14:51.440 --> 00:14:53.440
So, what's everybody else do, right?
00:14:53.600 --> 00:15:00.559
Um, certain people are kind of escaping that lane, um, and I wrote about last week, but others are not, and they're gonna get crushed by the quicksand.
00:15:00.639 --> 00:15:09.600
Like there'll be like five winners on a curve, as it were, this fall, and then GTA will be so far above everything else, and I think everyone else loses.
00:15:09.759 --> 00:15:20.879
And and that's on top of the fall already having a pretty light lineup, like August, September, October, November, November, especially is just like a graveyard of lot less titles coming out this year um relative to years past.
00:15:21.039 --> 00:15:23.279
Never mind, outside of shovel wear on steam, and it'll cut that.
00:15:23.360 --> 00:15:24.000
Like, that doesn't matter.
00:15:24.080 --> 00:15:25.360
That's shovel wear on steam.
00:15:25.519 --> 00:15:40.799
Um I was just thinking an another another thing I think that is important from from um um some of the things important from Russell's point of view is that basically uh everyone knows GTA is really big, but it's really been 13 years since we premiered a new one.
00:15:40.960 --> 00:15:53.279
And so I think that in some ways they probably want to go over the top because for a lot of their audience who either wasn't alive or they were too young, they've never seen a new version come out before.
00:15:53.440 --> 00:15:54.879
So this really is, you know.
00:15:55.039 --> 00:15:59.600
Um I was talking to some friends about the the new Spider-Man movie that we saw.
00:15:59.840 --> 00:16:03.679
And for a lot of people, um, I just turned 40.
00:16:03.840 --> 00:16:10.639
Um, a lot of people only remember Tom Holland, and they never they never were there when we changed when we changed Spider-Man and had a new franchise.
00:16:10.799 --> 00:16:14.240
So I think sometimes when you have a new franchise, you got to go over the top.
00:16:14.399 --> 00:16:31.519
Um, I I think one of you mentioned that you know the end of August, the beginning of the NFL football season, you know, you can have a lot of people who um who are gonna be buying Madden um and you know the the seasonal games, but yeah, but for everyone else, it it's it's pencils down until until they get past the GTA window.
00:16:31.600 --> 00:16:38.799
So they're really gonna own the fall and they're gonna try to push as much engagement as they can until until um Thanksgiving, Black Friday shopping.
00:16:39.039 --> 00:16:40.000
Yeah, all right.
00:16:40.240 --> 00:16:41.440
Let's play a game here.
00:16:41.600 --> 00:16:45.840
I want to introduce a game for this week, and if it works, forever.
00:16:46.080 --> 00:16:49.120
Um the game is called Bull or Bear.
00:16:49.360 --> 00:16:52.960
And if you're not a finance person, can you use a Jim Kramer guy?
00:16:53.039 --> 00:16:58.080
The little like my sound effects forward.
00:16:58.559 --> 00:17:06.079
Um for those that don't know much about finance, bullish means you're excited, you see a lot of positivity in this company, you want to invest because it's gonna go up.
00:17:06.240 --> 00:17:14.240
If you're bearish, you think the exact opposite, you have bad feelings about this company, they're not gonna hit their numbers, and the stock will go down.
00:17:14.400 --> 00:17:21.440
So the idea of this game is that I am going to give you a hypothetical that you have to you have to prove your point.
00:17:21.519 --> 00:17:29.039
You're either going to be the bull for it and say, This is why I'm hyped about it, or you're gonna have to be a bear and say, This is why I'm not so hyped about that.
00:17:29.279 --> 00:17:31.359
Any questions before we begin?
00:17:32.000 --> 00:17:33.359
No, pretty clear.
00:17:34.720 --> 00:17:40.160
I don't know if I should assign you guys the role, but I will this time and then we'll play it over the rest.
00:17:40.400 --> 00:17:41.119
Yeah, it's your show.
00:17:41.200 --> 00:17:41.440
Yeah, yeah.
00:17:41.519 --> 00:17:42.960
I could do college, do what you want.
00:17:43.119 --> 00:17:46.240
Colin with the bull, you're going to be for this.
00:17:46.480 --> 00:17:48.559
Okay, Simeon, you're going to be the bear.
00:17:48.799 --> 00:17:56.319
And the question is going to be is GTA 6 going to live up to this impossible expectation that investors expect.
00:17:57.200 --> 00:17:58.160
I'm the bull.
00:17:58.720 --> 00:17:59.680
You're the bull.
00:17:59.759 --> 00:18:00.400
You're excited.
00:18:00.480 --> 00:18:04.000
Why is GTA 6 gonna hit those numbers and then and then some?
00:18:04.640 --> 00:18:05.839
Well, um, this is a good thing.
00:18:08.559 --> 00:18:09.119
All right, I'll go.
00:18:09.200 --> 00:18:10.240
I'm gonna go.
00:18:10.400 --> 00:18:10.880
I got it.
00:18:11.039 --> 00:18:12.400
I I mean, like I written about it.
00:18:12.559 --> 00:18:14.240
No, no, you can't start your answer yet, Colin.
00:18:14.319 --> 00:18:15.279
It's 60 seconds.
00:18:15.359 --> 00:18:19.200
This isn't one bite, everyone uh one bite pizza, whatever it is.
00:18:19.440 --> 00:18:21.119
Um you ready to go?
00:18:21.200 --> 00:18:22.640
I gotta see if I have a timer on the page.
00:18:22.880 --> 00:18:23.200
Do my best.
00:18:26.400 --> 00:18:27.839
Actually, give me one one second.
00:18:27.920 --> 00:18:32.319
I'll I'll just I'll just pop up something right now, just uh give you context.
00:18:32.720 --> 00:18:35.359
Uh oh wow, we're gonna have visuals.
00:18:36.160 --> 00:18:37.039
Well, I'm not gonna do a visual.
00:18:37.440 --> 00:18:38.640
I'm just gonna create a data point.
00:18:38.799 --> 00:18:39.839
I load up a data point.
00:18:40.240 --> 00:18:44.240
All right, which is gonna sound like gibberish to those who don't know what I do, but that's fine.
00:18:44.640 --> 00:18:47.920
Let's see, there's gotta be a countdown overlay.
00:18:48.000 --> 00:18:48.960
Come on now.
00:18:50.000 --> 00:18:50.559
Logos.
00:18:50.799 --> 00:18:55.519
All right, well, I'll just have to keep my own timer here and put it on afterwards so you can see it.
00:18:55.839 --> 00:18:57.839
Um he's pulling up stuff.
00:18:57.920 --> 00:18:59.039
Simeon, if you I got it.
00:18:59.119 --> 00:18:59.680
I'm ready, I'm ready.
00:18:59.759 --> 00:19:00.319
Go, I'm ready to go.
00:19:00.400 --> 00:19:01.599
Yeah, oh I'm I'm all set.
00:19:01.759 --> 00:19:02.640
I have a little timer right here.
00:19:02.720 --> 00:19:03.200
I'm all set.
00:19:03.359 --> 00:19:03.839
So okay.
00:19:04.000 --> 00:19:05.119
I'm gonna let me be honest.
00:19:05.200 --> 00:19:05.359
I ran.
00:19:05.680 --> 00:19:08.480
I'm gonna let the bear Simeon go first.
00:19:08.640 --> 00:19:09.039
Okay, cool.
00:19:09.200 --> 00:19:14.480
All right, this is why GTA 6 won't hit expectations from investors, and you may start.
00:19:15.759 --> 00:19:16.240
Sure.
00:19:16.400 --> 00:19:32.880
So I think that the expectations are so high, they're probably not gonna hit it just because even though GTA still is one of the biggest franchises out there, there are a lot other gargant franchises out there that they have to compete with that weren't around when they debuted in 2013.
00:19:33.039 --> 00:19:42.000
You know, you have Fortnite, you have a lot of these other um free to free-to-play games uh that that have their own social ecosystems.
00:19:42.160 --> 00:19:49.119
Um, you have the Call of Duty uh ecosystem, you you you have games like Marvel Rivals, you have PC games.
00:19:49.359 --> 00:19:53.680
The GTA 6 is not gonna debut with the PC game, I think, for a while.
00:19:53.759 --> 00:19:56.640
It's gonna be mostly on PlayStation Xbox for the beginning.
00:19:56.799 --> 00:19:59.599
No one's playing on Switch, so it might take a while.
00:19:59.759 --> 00:20:05.920
If you really want the online to go, you want to get that online community going, and they're eventually going to have to get the PC.
00:20:06.160 --> 00:20:09.279
But there's just so much fragmentation of the media ecosystem.
00:20:09.440 --> 00:20:12.559
I don't think you can live up to the hype, but it's definitely going to be a hit.
00:20:12.880 --> 00:20:13.599
And time.
00:20:14.079 --> 00:20:15.119
Beautiful.
00:20:15.599 --> 00:20:20.160
All right, that was the bear case on why GTA 6 will not live up to expectations.
00:20:20.720 --> 00:20:23.839
Let's hear the bold case, Colin, and on whenever you're ready.
00:20:24.079 --> 00:20:24.799
I'm ready.
00:20:25.039 --> 00:20:25.839
Go, go.
00:20:26.079 --> 00:20:30.720
Um, so GTA 6 is a unicorn, a 101, a monocultural event of gaming.
00:20:30.799 --> 00:20:32.480
So, what does this mean right now?
00:20:32.640 --> 00:20:35.519
It's going to be the only game that reaches maybe four generations.
00:20:35.599 --> 00:20:43.599
You're going to have your millennials and obviously your Gen Xers of a certain age that like opine from the classic GTA era, from the PlayStation 2 onwards.
00:20:43.759 --> 00:20:49.039
You have your Gen Z audience, which basically grew up on one GTA, GTA 5, and then GTA Online.
00:20:49.279 --> 00:20:52.079
And this has basically been the backbone of Twitch for the better part of a decade.
00:20:52.160 --> 00:20:53.599
Uh company I came from.
00:20:53.759 --> 00:21:04.799
And then landing on the alphas, the older alphas are gonna like yearn to play the cool game for the older kids, which is like you know, the 10-year-old, 12-year-old, that's like, I really want to play Grand Theft Auto, like my older brother or the cool kids at school, and so they're gonna want to play that.
00:21:04.880 --> 00:21:08.240
So this is literally a one-on-one event, and we'll never see it again.
00:21:08.319 --> 00:21:13.599
Um, it's an attention in our tool and like everybody else that's in the gaming analytics space, it's unmeasurable.
00:21:13.680 --> 00:21:14.400
There's nothing compared.
00:21:14.640 --> 00:21:18.319
Like, I'm looking at the fall lineup, everything has like a two percent attention share.
00:21:18.480 --> 00:21:20.640
GTA sits at 13% in climbing.
00:21:20.720 --> 00:21:22.000
It's just it's unmeasurable.
00:21:22.079 --> 00:21:24.240
It's like, which is why you see silly numbers out there.
00:21:24.319 --> 00:21:26.480
Like, will it make 15 or 5 billion in day?
00:21:27.440 --> 00:21:27.839
Yeah.
00:21:28.079 --> 00:21:30.480
I could go right, but all right.
00:21:30.640 --> 00:21:32.720
So I guess my role is judge, right?
00:21:32.799 --> 00:21:36.640
And I think you constrained me to admit it, it killed me, but that's okay.
00:21:37.599 --> 00:21:39.440
No, it's people attention economy, man.
00:21:39.519 --> 00:21:40.559
You should read about it.
00:21:40.960 --> 00:21:42.160
Short form, short form.
00:21:42.480 --> 00:21:45.119
Uh, you know, I think it's a tough place to say.
00:21:45.200 --> 00:21:59.680
I I think you have impossible boots to fill, and I don't know if any games ever truly lived up to the expation expectations and sales hype that it's planned, but I think GTA 6 has things planned that they haven't that no one even expects when it comes to even GTA 6 online.
00:22:00.240 --> 00:22:01.279
Like you were talking about, Colin.
00:22:01.599 --> 00:22:07.519
I think we'll need some answers about that sooner than later, which maybe the investors call tomorrow will talk about when there's a potential dates.
00:22:07.599 --> 00:22:08.000
Who knows?
00:22:08.079 --> 00:22:08.319
Yeah.
00:22:08.480 --> 00:22:10.960
But I do think bullish is the case to go on this one.
00:22:11.039 --> 00:22:14.079
I think for GTA 6, the sky is the limit.
00:22:14.160 --> 00:22:16.480
And I think they can kind of define where the sky is.
00:22:16.880 --> 00:22:18.000
And I'm on a stock guy.
00:22:18.079 --> 00:22:18.720
I love your take.
00:22:18.799 --> 00:22:26.799
I think well, I I am uh I I think when the GTA when the take two stock dipped, it was definitely a buy time because it made absolutely no sense.
00:22:26.960 --> 00:22:27.519
Um right.
00:22:27.680 --> 00:22:38.480
And I expect whatever press release they put on uh GTA six uh thereafter is gonna be a huge upswing in in in stock price, and that would be kind of the the buy side is like, well, there's gonna be upside.
00:22:38.559 --> 00:22:49.920
They're gonna put out a ridiculous number that most people don't even realize is possible, which will probably make the stock go up substantially in in a run, and then it'll probably peter off after that as they have to release financials about it.
00:22:50.000 --> 00:22:53.839
But I do think there's a there's a bubble there that has not hit its ceiling yet.
00:22:53.920 --> 00:22:56.880
Um, I know certain people have told me, like, oh, the market's already priced at in.
00:22:57.039 --> 00:22:58.960
I'm like, not retail sellers, not retail.
00:22:59.039 --> 00:23:05.039
They'll see the press release in IGN or Wall Street Journal, and they'll be like, and the newscast on every like I like we'll cover this.
00:23:05.119 --> 00:23:06.880
Like, can you believe games are this popular?
00:23:06.960 --> 00:23:08.799
As always happens with these type of events.
00:23:09.039 --> 00:23:13.680
Like it's like, wow, like wow, gaming out outgrow Spider-Man in like a minute.
00:23:13.759 --> 00:23:15.920
And I'm like, Yeah, I know unsurprising.
00:23:16.079 --> 00:23:19.839
But you know, that's just gaming is always the stepchild of media.
00:23:19.920 --> 00:23:23.440
It's like, oh, you're over here, you're for the weird kids in their in their basements.
00:23:24.000 --> 00:23:26.319
Um, so I do think there's yeah.
00:23:26.559 --> 00:23:30.559
Um, but like as I've told Greg, like the numbers are ridiculous that people are putting out there.
00:23:30.640 --> 00:23:32.559
Like the TAM of consoles, it's a tanker.
00:23:32.799 --> 00:23:37.519
It's oh, it's gonna sell you know billions of copy or milli billions of dollars in copies.
00:23:37.680 --> 00:23:55.200
I'm like, well, the console universe is smaller than it was when GTA 5 came out entirely because Xbox lit its business on fire and right and there's no Xboxes, so PlayStation is bigger than it was, but Xbox is substantially smaller than it was, so there's less devices in and out there.
00:23:55.359 --> 00:24:00.880
So it you know, I'm not saying they can't capture that share of voice, but like it's not a done deal.
00:24:00.960 --> 00:24:05.680
It's not like the universe grew until they get it on PC, which is absolutely right.
00:24:06.160 --> 00:24:08.480
So maybe Simeon, you can explain this to me.
00:24:08.559 --> 00:24:09.440
I'm putting you on the spot.
00:24:09.519 --> 00:24:10.960
So if you can't, that's perfectly fine.
00:24:11.039 --> 00:24:13.039
But just a little bit about Take Two.
00:24:13.279 --> 00:24:16.799
Tomorrow morning, Take Two's reporting their earnings at 8 a.m.
00:24:17.039 --> 00:24:17.519
Eastern.
00:24:17.680 --> 00:24:23.359
That's the first time they're ever doing that, that that they're releasing the numbers before the market opens on a Friday.
00:24:23.519 --> 00:24:30.319
So that can go either two ways that they want to hype the price up before the stock starts on a Friday, or they're looking to bury it before the weekend actually begins.
00:24:30.480 --> 00:24:33.279
Say the news, let it happen, let the market open and close.
00:24:33.440 --> 00:24:39.119
And the consensus is that there's gonna be a loss of 21 cents per share on$1.36 billion.
00:24:39.680 --> 00:24:43.599
The quarter ended on June 30th, so it captured the entire pre pre-order window.
00:24:43.759 --> 00:24:54.720
When it says loss of 21 cents per share on$1.36 billion, in layman's term, can you kind of explain to me what that means and if I should should be something that worries me or not?
00:24:55.759 --> 00:24:56.160
Sure.
00:24:56.319 --> 00:24:57.759
So um, excuse me.
00:24:57.920 --> 00:25:00.799
Well, I'll just say off the rip, it shouldn't worry you.
00:25:01.039 --> 00:25:14.160
I think that when they talk about losses on a per share basis, a lot of that is honestly accounting minutiae, that it has lots of puts and takes that don't necessarily tell you much about the quarter.
00:25:14.319 --> 00:25:19.119
What is gonna matter really is how the company performs relative to expectations.
00:25:19.279 --> 00:25:24.079
And the big, the big categories you're gonna be looking for are, you know, obviously revenues.
00:25:24.240 --> 00:25:34.400
Um, instead of looking at EPS per share, because that has lots of, you know, yeah, one-offs for taxes and other little one-time non-occurring items, you're gonna want to know about sales.
00:25:34.480 --> 00:25:39.440
And this is the type of call we listen to a lot of sales and pre-sales.
00:25:39.759 --> 00:25:43.680
Um, they're often known as KPIs, key performance indicators.
00:25:43.839 --> 00:25:47.599
These are metrics that aren't necessarily money, but tell you how things are going.
00:25:47.759 --> 00:25:55.279
And lastly, I would say when it comes to scheduling it on a Friday, scheduling scheduling earnings calls on Fridays are atypical.
00:25:55.680 --> 00:26:06.400
I don't necessarily know if I'd read into it just because right now, this week, today, for example, there are so many companies all announcing earnings at the exact same time.
00:26:06.640 --> 00:26:14.079
So honestly, I could see Take Two wanting to move to Friday just so they could have the news cycle to themselves.
00:26:14.240 --> 00:26:26.559
Because Nintendo went this morning, or I guess if you adjusted for Japanese time, yeah, for last night, you got Meta, Microsoft, a whole bunch of companies are doing earnings.
00:26:26.640 --> 00:26:29.920
I could see them saying, hey, let's just go off to Friday.
00:26:30.079 --> 00:26:32.160
But you know, we'll find out.
00:26:32.319 --> 00:26:33.839
We'll find out soon enough.
00:26:34.160 --> 00:26:35.119
That's interesting.
00:26:35.279 --> 00:26:37.759
I I part, I mean, I don't know nothing.
00:26:38.000 --> 00:26:44.559
I'm like, if they've never done something and they're gonna change behavior before they do it, and they're like, I feel like they're peacocking right now.
00:26:44.640 --> 00:26:46.160
Like, why announce the Netflix thing?
00:26:46.319 --> 00:26:52.480
I just every analyst asking questions is gonna ask, how many pre-sale orders have you had for GTA 6?
00:26:52.559 --> 00:26:53.359
That's number one question.
00:26:53.440 --> 00:26:55.759
And then the number two question is once it's going on PC.
00:26:56.240 --> 00:26:57.680
That's that's one and two.
00:26:57.839 --> 00:27:00.400
Um, and they're like, What about the 2K business?
00:27:00.480 --> 00:27:01.039
Like, I don't care.
00:27:01.440 --> 00:27:03.359
How much money did Zenga make this quarterback?
00:27:03.440 --> 00:27:03.759
Who cares?
00:27:03.839 --> 00:27:05.279
Uh, like none of that matters.
00:27:05.359 --> 00:27:06.880
Um, it's all about GTA.
00:27:07.039 --> 00:27:10.960
Um, so I I imagine they're gonna I will maybe it's wishful thinking.
00:27:11.039 --> 00:27:13.759
I hope they would say an outrageously large number.
00:27:13.920 --> 00:27:18.960
Um, I think they've broken every pre-sale record there's ever been today.
00:27:19.200 --> 00:27:24.559
And so if they know that, they might say something about it to drive up interest in them.
00:27:24.880 --> 00:27:26.000
I could see that.
00:27:26.480 --> 00:27:27.039
All right.
00:27:27.759 --> 00:27:33.119
I think that's gonna wrap everything we talked about when it comes to Rockstar, unless there's anything you guys want to add to talk about with them.
00:27:33.599 --> 00:27:44.079
No, I might if I were a betting man, I would say the PC, if they're if they were really trying to make this this fiscal year for them hit, like I I told Greg this before.
00:27:44.160 --> 00:27:52.480
Uh, if I were a betting person on polymarket, an interesting bet would be does the PC version come out next March before the end of their fiscal year?
00:27:52.559 --> 00:27:56.160
So they could just you know have another victory lap on everything.
00:27:56.319 --> 00:27:58.640
Um, I would not be surprised if that was the case.
00:27:58.720 --> 00:28:03.039
But if it was gonna come out, it'd probably come out in like February, March next year.
00:28:03.279 --> 00:28:12.640
Oh, and after the holiday season, so it doesn't cannibalize the the console sales, which which are are more expensive on PS5.
00:28:12.960 --> 00:28:14.240
Yeah, yeah.
00:28:14.640 --> 00:28:16.720
Why would you not wait until after the physical year?
00:28:16.799 --> 00:28:21.920
Because I mean, GTA six is your bump for the next rock star time.
00:28:22.000 --> 00:28:25.200
I mean, once the next game gonna come out four, five, six, ten years, right?
00:28:25.279 --> 00:28:26.799
So why not set it out to your next year?
00:28:26.880 --> 00:28:31.680
And your next year's the hype for GTA online and then PC and then whatever.
00:28:32.559 --> 00:28:34.559
Yeah, I I mean I could see that too.
00:28:34.720 --> 00:28:37.680
I I mean I mean I'm again, I'm just kind of shooting from the hip here.
00:28:37.759 --> 00:28:57.839
I just think um they had put a pretty large guidance out there like years ago about what they expected to happen, and I guess right in that vein, like there's like billions of dollars of just magical profit, and to hit billions of dollars of profit, I imagine they just have to go guns blazing and they they can't lose steam.
00:28:57.920 --> 00:29:08.880
I mean, the argument would be they can't lose momentum to ensure that they transfer those GTA online people off of five into whatever the six version is gonna be on Steam, right?
00:29:09.039 --> 00:29:12.400
And get their game in China would probably be doing a bit, right?
00:29:12.480 --> 00:29:17.759
Like Steam's weird, true, like you know, PlayStations exist in China, but it's harder.
00:29:17.920 --> 00:29:26.559
Um, for whatever reason, Steam lives in this world of no censorship with the CCP and it's like okay, and you want to get your game in China to goose those numbers too.
00:29:26.720 --> 00:29:27.440
So yeah.
00:29:27.759 --> 00:29:29.599
Makes sense, makes sense to me.
00:29:29.920 --> 00:29:40.480
All right, let's switch gears to the earnings that we just started talking about, but our friend Nintendo, it's interesting earnings that I'd love to hear broken down.
00:29:40.640 --> 00:29:43.119
Profit basically doubled against the expectation.
00:29:43.279 --> 00:29:45.759
They didn't raise the forecast a single unit.
00:29:46.000 --> 00:29:47.519
Simian, why not?
00:29:48.720 --> 00:29:49.039
Sure.
00:29:49.200 --> 00:29:51.680
So I was reviewing Nintendo's numbers too.
00:29:51.920 --> 00:29:56.799
Um, I a big asterisk, and this is not a scandal, this is just reality.
00:29:57.039 --> 00:30:10.000
Nintendo got a huge benefit from getting a lot of, I think effectively all of the tariff charges that the company was was charged by um the US government refunded to them.
00:30:10.160 --> 00:30:15.200
Um I think Nintendo came out and said that they will not be passing that along to the to the customer.
00:30:15.359 --> 00:30:19.519
So I would not get your uh too too much.
00:30:19.680 --> 00:30:25.119
But um, so yeah, so a lot of that gain are you know a one-off in the tariff money that came.
00:30:25.359 --> 00:30:31.680
Um to their credit, they had very strong sales of Switch 1 titles.
00:30:31.839 --> 00:30:39.359
The Switch 1 titles I I was reading, I think were up um, I think over 30% year over year, and were actually selling better in the switch two side titles.
00:30:39.599 --> 00:30:51.119
And secondly, that they have good sales for Switch 2, but some people like myself are a little concerned that it might not be good enough.
00:30:51.359 --> 00:31:06.960
I I will um I want to get your guys' views on this, but something that worries me reading this earnings is I wonder, is Nintendo squeezing more and more money out of a pool of gamers that's not really growing?
00:31:07.119 --> 00:31:16.720
I was looking at their total um um, I think total player relationships, total game relationships, and it's been stuck around 130 million for about three years now.
00:31:17.039 --> 00:31:31.440
And I'm a little bit worried because I saw, look, you just the biggest debut of all time, but you you have 25 units out there, and I I don't even see a 1% spike in in your total game.
00:31:31.519 --> 00:31:39.759
So it feels like they're replacing it feels like they're replacing um current games with you know it's like a restock, a refresh cycle.
00:31:39.839 --> 00:31:45.440
Um, I want to see more evidence they're expanding the um the pie, the pool of players.
00:31:45.599 --> 00:31:47.839
But uh, I'm curious your guys' take.
00:31:48.400 --> 00:31:50.480
Um yeah, that's interesting.
00:31:50.720 --> 00:31:56.640
I'm more bullish, uh, as Greg has heard ad nauseum on me on Nintendo um for a lot of reasons.
00:31:56.799 --> 00:31:59.920
Uh, but like let me go to the device side.
00:32:00.000 --> 00:32:05.920
I I mean with this switch to it, it's like still the fastest selling console ever, so they're they're they're they're growing.
00:32:06.079 --> 00:32:09.599
Um, the kind of replacement thing is an interesting thought exercise.
00:32:09.680 --> 00:32:18.640
Um, which you know, I look at you know, I read your piece, and the way I see Nintendo is like Apple is I think they have a form factor, they're not gonna move off that form factor.
00:32:18.720 --> 00:32:29.039
And why would you um it just increase battery life, improve screen resolution, um, better processor, like that's the iPhone model, which is what the switch is now, and it won't come out annually.
00:32:29.200 --> 00:32:37.519
They'll probably you know it cycle it out every six, seven years, like it'll be like new switch, and then in between that'll be an OLED or a high resolution version with a better battery, right?
00:32:37.599 --> 00:32:49.519
So they'll have the the switch to the switch 2.5 and the switch three, and like they'll probably continue on until there's a massive technology paradigm shift, which I don't see coming um to devices anyway in the near future.
00:32:49.920 --> 00:32:55.519
Um, uh so that that that is that makes me bullish on their model.
00:32:55.759 --> 00:33:03.680
Um, the TAM side, I would want to know what that looks like what's the switch two is inside China because that's not in China yet, right?
00:33:03.759 --> 00:33:08.079
So they have not gotten it through the regulatory, um, and I don't know if they want to.
00:33:08.160 --> 00:33:15.599
The only switch twos in China right now, to my knowledge, are the ones that are they fly over to Japan, they buy everything, and they fly back to China to them and play them, right?
00:33:15.839 --> 00:33:18.079
Which is not having it in China, right?
00:33:18.160 --> 00:33:20.160
It's just like a it's a it's a workaround.
00:33:20.240 --> 00:33:22.400
So um, but the switch one is in China, right?
00:33:22.480 --> 00:33:31.920
So it's a matter of time, I'm assuming that the switch to, and once the switch two is in China, I expect this the that number to grow drastically um on top of itself, right?
00:33:32.079 --> 00:33:33.279
Um, so that'd be my hunch.
00:33:33.519 --> 00:33:38.799
You're right about the switch one titles outpacing the switch two because the TAM is bigger, like there's more devices to sell to, right?
00:33:38.960 --> 00:33:50.799
So Tomogachi Life outsold Pocopia, but Popopia on a percentile uh basis owns more Switch 2 devices own Pocopia now than Tomogachi Life does on the Switch 1, right?
00:33:50.960 --> 00:33:56.319
But because Tomagotchi Life was on the Switch 1 and Switch 2, it sales out past Pocopia, which like well yeah, duh.
00:33:56.400 --> 00:34:02.960
It's selling in a more epicer universe, it's going to outpace Pocopia, which still sold very, very well for what it was.
00:34:03.119 --> 00:34:10.480
Um, and you know, if I would have most people in the gaming industry don't realize that Nintendo um owns most of the sales records every single year.
00:34:10.639 --> 00:34:13.679
Like, oh, isn't it great that this game sold seven million copies?
00:34:13.760 --> 00:34:21.039
It's like, well, yeah, but like Tomogatch Life is like one of the top three selling games of the year so far, and nobody probably knows it exists, right?
00:34:21.119 --> 00:34:22.960
It just breaks everyone's brain when you tell people that.
00:34:23.039 --> 00:34:31.199
Like, um, so that's part of my racket with Nintendo is I think it's undervalued in gaming circles because they belittle it and they spend a lot more air and time thinking about Xbox.
00:34:31.280 --> 00:34:38.320
So, like Xboxes and their own IP outside of Call of Duty and Blizzard titles isn't consequential to what Nintendo does on tier two titles.
00:34:38.480 --> 00:34:44.320
And this is not them putting out a new Smash, it's not them putting out a new Mario, it's not them putting out a new Zelda, it's none of those things.
00:34:44.480 --> 00:34:45.760
Um, so yeah.
00:34:46.000 --> 00:34:56.079
Um, so that's my initial read of their financials as like, oh yeah, they're continuing on the stretch that they continue doing, and then in the gaming journalist space, specifically IGN, shout out to them.
00:34:56.159 --> 00:34:58.079
They never cease to make me irked.
00:34:58.320 --> 00:35:00.559
They go, is Nintendo losing their imagination?
00:35:00.719 --> 00:35:01.840
I'm like, my god.
00:35:01.920 --> 00:35:05.679
Um, never I saw that I saw I I saw people reacting to that.
00:35:05.760 --> 00:35:08.800
I just thought I was gonna ask you as an eye roll.
00:35:09.119 --> 00:35:11.760
Because like they're like, Yeah, Nintendo losing their imagination.
00:35:11.840 --> 00:35:18.159
I'm like, they came out with a Mario Kart game that was open world a year ago, which is the most successful Switch title was Mario Kart.
00:35:18.239 --> 00:35:24.639
Like people like that say things like, Oh, Nintendo doesn't uh doesn't end you know invest in its biggest IP, Mario.
00:35:24.719 --> 00:35:28.960
I'm like Mario units-wise doesn't move what people think it moves, I think.
00:35:29.039 --> 00:35:31.039
There's like a myth of like what Mario does.
00:35:31.199 --> 00:35:33.280
I mean, Mario as a franchise, yes, right.
00:35:34.639 --> 00:35:53.519
But Mario mainline titles, no, they sell like 25 or 30 million copies, which is really, really good, but it's not like Smash, it's not Animal Crossing, it's not Mario Kart like levels of movement, like they do like laps around that game, but I think there's a PR piece of it, right?
00:35:54.159 --> 00:35:56.639
So thank you for for bringing up the IGN piece.
00:35:56.719 --> 00:36:02.239
I I saw I bookmarked and I read last night, and I saw a lot of people were angrily reacting to it.
00:36:02.480 --> 00:36:09.840
And I I understand maybe the title might have come across as a bit harsh, losing your soul is is a little hyperbolic.
00:36:10.000 --> 00:36:23.519
Um, but what I appreciate from the title, at least the question that I had, is that Switch has all these great franchises, and I've just been a little disappointed that more Marquee games weren't ready closer to launch.
00:36:23.679 --> 00:36:27.599
And it feels like the slate is a little it's a little dry in 2026.
00:36:27.760 --> 00:36:30.480
So you you have Mario Kart World, which was big.
00:36:30.639 --> 00:36:36.960
Personally, as a stock guy, I'd ep for them to bundle it or to give so many copies away for free, effectively.
00:36:37.119 --> 00:36:42.159
Um, I I think that I think Mario Kart would have sold really well on on its own.
00:36:42.320 --> 00:36:44.880
Um, but you know, I I understand the strategy.
00:36:44.960 --> 00:36:46.960
It was the first time they ever bundled a free game.
00:36:47.039 --> 00:36:50.239
So I was like, huh, okay, that that's that that that's interesting.
00:36:50.400 --> 00:37:07.280
And then when and then for what they have coming up, you know, you have a um the Legend of Zelda or Karina of Time remake, um which I I remember playing the original, but I you know, the and and and the Star Fox remake or the update.
00:37:07.440 --> 00:37:21.679
I now I know everyone's saying wait until 2027, we got a new Pokemon on the way, you know, we got a new Pokemon on the way, but I I I think I just wish I saw more unique, more of their heavy hitter original titles in the beginning.
00:37:21.840 --> 00:37:28.400
So when you start off with remakes of your old game, you know, it doesn't scream it doesn't scream innovation, if you know what I mean.
00:37:28.880 --> 00:37:32.320
Yeah, uh and I I'll comment back and I'll let Greg jump in.
00:37:32.400 --> 00:37:34.559
But like my read of the Zelda franchise.
00:37:34.639 --> 00:37:49.199
I mean, one, uh, so when I said I I wrote about this last week, but like um the only thing that's zagging against a GTA tornado or black hole is kid games, and Zelda is pacing to be the same size as Tears of the Kingdom, which you like it's a remake.
00:37:49.360 --> 00:37:50.559
Um, and you're like, dang.
00:37:50.719 --> 00:37:58.320
And I'm assuming it's coming out in uh October on my end, because given how they help calendar things out, Pokemon typically comes out with their mainline series in October.
00:37:58.480 --> 00:38:02.800
I assume that this year is just the Zelda, it's gonna come out in October at some point, which makes a lot of sense.
00:38:03.039 --> 00:38:10.480
So, and if it continues its demand share curve, um it'll do Tears of Kingdom members, which is again a 25 million unit mover, so not nothing.
00:38:10.559 --> 00:38:14.079
Um, and I think for most people, they never played Ocarina of Time to your point.
00:38:14.159 --> 00:38:23.519
So it is a remake, but I also think it's a remake of a game that most young people, which is their main target, have never played, only heard about it as a myth.
00:38:23.679 --> 00:38:31.280
And ultimately, I also think it's a movie tie-in, because if I had to bet anything, it's the the plot of the Zelda movie coming out next spring is going to be Ocarina of Time.
00:38:31.360 --> 00:38:32.239
It just makes the most sense.
00:38:32.320 --> 00:38:33.280
It's the beginning of everything.
00:38:33.440 --> 00:38:36.400
So I think it's all just a bunch of synergy there going on with Nintendo.
00:38:36.559 --> 00:38:46.159
Um, in terms of their uniqueness, I you know, I what I will probably say is I I hear that like, why don't we have more exclusives?
00:38:46.239 --> 00:39:00.639
And I wonder, as like a business, like on your end, there's a bit of hedging going on with Nintendo, and I understand the hedge, which is like we have this device that still sells very well, um, faster than Xbox does that has more graphics and everything else.
00:39:00.960 --> 00:39:13.920
And do we want to abandon this like really, really um money printing Tam of our Switch One to force everyone on Switch 2, or are we gonna have both feet and both pawns for some period of time and support both?
00:39:14.079 --> 00:39:19.760
And at some point they're going to have to move people up, but like that's probably what you're seeing is a hesitancy to do that.
00:39:19.840 --> 00:39:36.000
Like, you know, they come out with two um similar games in Pokopia and Tomogachi Life in the same month because they want to give the Switch 1 owner something that's akin to like uh you know Animal Crossing style cozy game and give Switch 2 owners justification that they bought this device with their own version of it.
00:39:36.079 --> 00:39:42.880
So they're again they are having their feet in both ponds at the same time, and that that I think is a bit of a fair criticism, but I also understand the the reason.
00:39:43.280 --> 00:39:44.000
I can understand that too.
00:39:44.239 --> 00:39:51.599
Yeah, I can understand from uh we just can't light this entire thing on fire because uh you know we're we're making a lot of money on it still.
00:39:51.760 --> 00:39:54.559
Oh, totally, totally, which is like iPhone upgrades, right?
00:39:54.639 --> 00:39:56.079
Not everyone upgrades a new iPhone, right?
00:39:56.159 --> 00:39:57.039
So same thing, right?
00:39:57.119 --> 00:39:59.199
People sit on older generations for a long period of time.
00:39:59.360 --> 00:40:08.239
Um absolutely now um, but again, but I go back to like and Metroid Prime 4 was a disaster on their own scale.
00:40:08.320 --> 00:40:12.719
Like it didn't do what it was supposed to do, which is bring more fans than Metroid to the Metroid universe.
00:40:12.800 --> 00:40:23.119
So, like that game was in development hell for as long as it was, came out in December, did meh, reviewed meh, and that was probably the big miss of the Switch 2, in my opinion, is like the Metroid Prime 4.
00:40:23.280 --> 00:40:29.039
It didn't do what it was supposed to do, but um, you know, I think it'll be just fine with Zelda and Pokemon coming out next year.
00:40:29.119 --> 00:40:32.079
Um, and as they go up and to the right.
00:40:32.159 --> 00:40:35.360
Um, I want your thoughts on the other part of the strategy, which is the flywheel.
00:40:35.440 --> 00:40:37.360
I read your piece, and you were not poo-pooing.
00:40:37.440 --> 00:40:44.559
I understand, like, and I agree, like Mario does a billion dollars in box office, doesn't matter to gaming companies, they make more money doing almost anything.
00:40:44.639 --> 00:40:46.320
I always thought it was a marketing expense.
00:40:46.400 --> 00:40:50.079
Evergreen content draws more fans into the universe than ads.
00:40:50.239 --> 00:40:58.960
So if they're gonna spend a lot of money on ads or they can co-produce a movie than have like a grid of control with uh illumination and universal, then do that.
00:40:59.119 --> 00:41:01.360
Like it will get your brand out there more.
00:41:01.519 --> 00:41:05.119
But to me, it's like Nintendo's finally Disney fying their business.
00:41:05.199 --> 00:41:16.719
Well, if their core business is selling games and and devices to support those games, and the flywheel is merchandise outside that obviously theme parks, uh, movies and TV shows.
00:41:16.800 --> 00:41:22.880
Like it feels like they're becoming the Disney, I mean, uh the more like Disney than maybe Apple, like the Disney of gaming.
00:41:22.960 --> 00:41:28.800
Like, yeah, we'll we'll extend ourselves and build multiple uh areas so long as it moves the flywheel in a circle, right?
00:41:28.960 --> 00:41:30.559
Which is the IP flywheel.
00:41:30.960 --> 00:41:36.079
So so where I give where I give Nintendo credit is I think I think the brand is as strong as ever.
00:41:36.239 --> 00:41:47.119
I I think the brand's as strong as ever, and I think that the the name recognition and and it's it's touching people of different generations, and that's undeniably good.
00:41:47.280 --> 00:42:06.000
Um, where where I just become a little more skeptical is that I think I think when we compare Nintendo to Disney, I think it makes me realize maybe we're selling Disney a little short because I I I think in order for for me to really get on board on this flywheel, I'm just gonna need to see a lot more content.
00:42:06.159 --> 00:42:11.519
I'm gonna need to see, you know, a lot more than one movie every every three years.
00:42:11.760 --> 00:42:12.559
You know, that's fair.
00:42:12.719 --> 00:42:23.039
Uh and um I I also think I think the holiday season is um is going to be a big test for the Switch too, because I loved your analogy of them having a foot in two in two ponds at the same time.
00:42:23.119 --> 00:42:25.760
And I understand why they didn't, I think it was the right call.
00:42:26.079 --> 00:42:35.840
But the tricky part is that as you said, eventually, eventually you have to bring the audience over to that second uh that second ecosystem.
00:42:36.079 --> 00:42:40.159
And historically, Nintendo has had a lot of ups and downs.
00:42:40.320 --> 00:42:47.760
They've had some great consoles, but they've also sometimes had some have some misses, you know, the you know, from uh from from the Wii to the Wii U.
00:42:48.159 --> 00:42:58.960
And what I've one thing I've I've noticed is that it can be a problem if in year two your console sales are not still growing.
00:42:59.280 --> 00:43:08.000
And where we are right now, and I know there's timing, okay, maybe maybe if Pokemon didn't come out in 2027, this wouldn't be a big deal.
00:43:08.159 --> 00:43:14.960
But right now, Switch 2 is tracking lower sales in year two than it is in in year one.
00:43:15.119 --> 00:43:33.119
And that and that's and then the other part that gives me a little pause is that when I look at it from a stock analyst, the history of consoles, where you get that extra bit of growth is when you're in year three and year four, and you can sometimes like give a price cut to you know expand the market.
00:43:33.440 --> 00:43:41.599
And for lots of reasons, outside their control, they had to hike prices really early um that they never had before.
00:43:41.920 --> 00:43:45.360
And then so you know, you're trying hard to bring over people.
00:43:45.519 --> 00:43:50.800
And and look, let's not forget, too, that Nintendo, I'll say I think they got a little lucky.
00:43:50.960 --> 00:44:04.000
Um, I never want to say lucky in COVID in the same sentence, but I think that during during the pandemic, you had a lot of people who found the Switch One as an affordable entry in into gaming.
00:44:04.239 --> 00:44:06.320
And it was it was really, really big.
00:44:06.480 --> 00:44:22.239
And I I just I just wonder you know a lot of people who got into it with a$199 console in year three and four if memory prices stay up or get more expensive will they come back for 500 in 2027?
00:44:22.400 --> 00:44:23.360
I I don't know.
00:44:23.679 --> 00:44:44.079
I I want to respond to two points you bring up one of my favorite talking points on Nintendo like which is uh well one two actually one the Scarlet Leather of the Wii U will never leave them man they can never live that down like if we just erased it from history they would have gone from the Wii to the Switch in between that the 3DS and the DS and to now the switch too it's like an incredible run.
00:44:44.480 --> 00:44:48.480
But they did the Wii U and they'll never live it down at least in the gaming industry they'll never live it down.
00:44:48.719 --> 00:44:48.960
Right.
00:44:49.920 --> 00:45:01.039
My second point is like on the on the you're right about the the price increases but if if Valve is going to increase their machine prices by double because they don't have the supply chain to eat it so they're just going to increase their prices by double.
00:45:01.280 --> 00:45:16.719
If PlayStation on a dollar basis is going to increase their prices by two three hundred dollars same for Xbox if the Switch is going to continue to increase its price by 50 it's still the value machine so and you look at their um earnings call in their letter like they're going to have Call of Duty Modern Warfare 4 on there.
00:45:16.800 --> 00:45:33.519
That's really on launch like at some point people are going to look at that as saying I could play most maybe not Grand Theft Auto 6 but I could play most of my premium games on this handheld device that I could put in my backpack and take with me as I go it's going to become the value machine which I think is again you want to say COVID was an accident.
00:45:33.599 --> 00:45:40.800
I think the current era of memory chips is a happy accident for Nintendo because their competitors are raising prices at a higher dollar value than they are.
00:45:40.880 --> 00:47:01.599
They're going to win the value argument very quickly and it's like well if I want to have a console machine I will make good with Nintendo um and play my third party games on here while also getting the benefit of the first party library which they're very known for um and as the gaming industry is trying to figure out how to rein in costs on games right Nintendo has always made games cheap man and they always graphic fidelity is never a big thing for them they always scale down their games so they are easier to make cheaper to make and on devices that are technology behind quote unquote the leading edge of consoles but and PCs but that is sliding back down in their favor too it's like well we we have the infrastructure and the capability making games better than anyone else in the modern era because it's what we always done um and like I and then lastly like I get the well what about PC as someone who's both built a PC and bought a rebuild PC many many times uh I bought one in Q4 I write about this all the time that price of my machine they like Best Buy I bought it on Black Friday if I didn't buy it then they actually if you bought it in December they canceled your order like just straight up cancel everyone's orders for the same machine in in uh in December and the price has gone up double but effectively since then so it's I PCs are also wildly more expensive than they were um and if you have a PC amazing if you don't good luck to you man.
00:47:02.800 --> 00:48:38.719
And that's the unfortunate part like about PC gaming is to play the latest and greatest games like GTA 6 you're gonna have to have a high end gforce graphics card and yada yada yada things that are incredibly expensive now for consumers who afford yeah no the no the the prices are expensive everywhere and I definitely concede that I I I just worry too if if the Switch is the cheapest console like that's good but I I still I still I still wonder are we are we in the twilight era of the console you know holding everything up so we just we said and begin the conversation that that you know Xbox is is is kind of out the the the picture fine um how much how much longer does this yeah you know go ahead sorry I think that's an interesting question because I I would agree and this is another talky hobby horse of mine is like I think the problem is not devices it's the business model of distribution and I think Xbox is incredibly interesting here going toward an ad-supported fast model because I think that's where I think that's where gaming is going to go and I think Xbox is going and I felt this for a very long time now that we're always gonna be the first ones there because they they had no nothing else to try they had to try the free ad supported uh game pass model which is I think where they're gonna end up and I think that's interesting because that it that is it that is a risk to Nintendo long term if if everyone can get a free version of Xbox games via the cloud on their TV set and only have to pay via their time on ads that's a that's a huge seismic shift in Nintendo's business model.
00:48:38.800 --> 00:48:46.000
But if it's continually based on devices and components of those devices and exclusivity then I think Nintendo's in a solid position.
00:48:46.400 --> 00:48:55.360
I'll end on I was a I did a thing yesterday where I was a firm and long on Nintendo like buy and hold or hold and and long but that's based on their price already collapsing.
00:48:55.440 --> 00:49:34.960
So they were they were like what 20 bucks something like a share yeah yeah it went and it collapsed all the way through it collapsed on itself and I was like well this is silly I I'll I I'll buy and hold on this for a while because it'll go back up um so I I'm on the current pricing model of like I think they'll go back up because and they're already on the climb back up because you know nothing fundamentally changed in their business other than people freaking out about the cost of hardware which is the main reason that I in my opinion the stock collapsed on itself but like I ask you a question yeah sure yeah and and I'm not I I'm I'm sincerely asking this do you think that people will will play Call of Duty and and these other third party titles on on switch because that's something that I've I've just a little bit skeptical on.
00:49:35.679 --> 00:49:50.800
Over time I I don't think it'll be media but I do think like again they're not playing it on Xbox because there's not many of them I think the switch to will probably pass the Xbox in units sold in what sometime this year early next year um which is an insane thing to say out loud.
00:49:51.360 --> 00:50:00.159
So over time yeah I I I do think it we'll see how it runs is the other piece like you know we'll see how it runs in the reviews that are coming out of it.
00:50:00.400 --> 00:50:17.840
Everyone says the switch to can run uh you know Resident Evil Requiem just fine and Final Fantasy um seven rebirth okay great um these are current gen games and it can run them just fine let's see if it can run a multiplayer game just fine um and also my big knock on Nintendo is their their online ecosystem is hot garbage.
00:50:17.920 --> 00:50:20.719
I mean like God um I know they don't care that's not good.
00:50:20.800 --> 00:50:29.199
Well that's not I know no 100% which is why they're at risk of anything that's online cloud is a weakness of Nintendo.
00:50:29.280 --> 00:50:31.039
I would for I firmly stand behind that.
00:50:31.119 --> 00:51:45.360
Like they are so bad the e store is bad their online stores like they just it's never been a strength of theirs and that has always been their big weakness is their um lack of adaptability to modern technology via the internet um all right let's jump to round two of our game all right this is bull or bear this time simian you are the bull you are all for this colin you are the bear has the switch two already proven it's a success again Simeon you're gonna be the bull here sure you're gonna be the bear here Colin oh we're flipping rolls okay yeah you're flipping roles so you want you want you're good to go no no I'm I'm good to go so look I I I think the switch two has proven its success in that its its standard of success I think has been to to to ignite um ignite excitement in the current in the current um switch uh gaming base and I think you see that by the fact that you had you know backwards compatibility gave a whole lot of switch one users a good reason to upgrade on day one you know they didn't have to wait for the exclusives so I think that it's been a success because it gets people in the ecosystem without having to have a big hit like a new Mario or a new Pokemon.
00:51:45.519 --> 00:51:47.599
So I think it's good for from that point of view.
00:51:47.760 --> 00:52:07.920
And I think it's I think it's been successful that they are the first next gen console to you know to debut um you know in this higher price memory market that they got out there you know who knows when we're going to get PlayStation 6 and how expensive that's going to be so I think it's success that switch to did what they had to do and they got out there.
00:52:08.239 --> 00:52:11.920
But I don't know if they're going to be spying the pie.
00:52:12.079 --> 00:52:13.440
I I worry I worry.
00:52:13.760 --> 00:53:47.840
All right one minute you went with uh Simeon goes with the uh first movers advantage and then a strong back catalog to make upgrading easy colin why are you bearish on switch to I'm bearish on switch to because I don't think Nintendo realizes uh the business model is not going to be devices it's gonna be cloud um I'm a buyer of the bubble I think the AI bubble is going to pop in the next two years and like what happened with the dot com and the fiber optics being run across the country and world um is going to happen on the cloud and what happens when there's a bunch of XX capacity cloud it's already built out there's gonna be the need to use that cheaply enter cloud gaming and that is an area that Nintendo is not suited to kind of manage and handle right and Xbox and PlayStation are much more equipped to handle what the online cloud based world would look like as opposed to Nintendo and that's that's the risk they don't know they're walking into all right that's well played for this round I am going to give it to Simeon because you got to have faith in Nintendo man Nintendo is like the gamers game company at the end of the day and maybe that's why it's not as exciting as some of the other numbers that you see because they're not running live service games but I think when you look back to the history of gaming Nintendo makes video games for people that want to play video games not for every game and I think that is a strength they'll forever be able to ride that high of and again I think trans media moving to movies is having more of an impact even if they split the cost with Illumination and whoever dreamworks but I think you're you're planting the seeds in the next generation to want those plushies to want to buy that stuff and go crazy like that.
00:53:48.079 --> 00:53:52.880
Mm-hmm all right so last I hate you putting me in that awkward position Greg.
00:53:52.960 --> 00:54:04.239
You know that makes for good we switch it up we switch it up and now I want to talk about Roblox because well actually before we talk about Roblox let's talk about some house notes just about player driven.
00:54:04.400 --> 00:54:11.599
First off thank you for listening if you're still listening we love having you listening uh this week's podcast was with Andre Pimenta of Anybrain.
00:54:11.679 --> 00:54:16.800
I don't know if you know anybrain Colin but they've created an AI cheat anti-cheat platform.
00:54:16.880 --> 00:54:17.679
It's not AI.
00:54:17.840 --> 00:54:21.679
It uses AI to help track people who are using AI to cheat.
00:54:21.840 --> 00:54:27.679
So do you know people are using Claude and Gemini to build cheats that allow you to build wall hacks and being able to see people through there.
00:54:27.920 --> 00:54:37.119
So what Anybrain is actually using is watching mouse movements and keyboard movements to see if they remain human or if they see different kinds of outliers to how people are moving within game.
00:54:37.280 --> 00:54:46.639
And I think it's a fascinating technology when you start taking user input and trying to see is that user input actually human or not and that's cool stuff.
00:54:47.760 --> 00:55:04.880
On Design Desk Lewis's piece which came out yesterday he did part two of his games for change segment uh you can check it out at slash desk I guess player driven IO slash desk and next week we're probably just gonna launch this because this is going to be a good podcast with people loving to do finance.
00:55:05.039 --> 00:55:27.360
So uh we will be putting all of our predictions on Intel.playerdriven.io but this next piece is important to me because it has to do with Roblox and I want to talk about Roblox's earnings but the whole preface I would like to do this because my world is kind of about trust and safety is that Roblox implemented a lot of trust and safety tooling into their platform over the last year.
00:55:27.599 --> 00:55:40.400
This is something everyone's heard people mention the P word with Roblox which might be a pedophile but uh they've been doing a lot of work to make sure that their game is safer despite what the community kind of sentiment is around.
00:55:40.719 --> 00:56:33.039
And I think now you're seeing actual numbers which will show you does implementing safety tooling actually cause bottom line changes and I know Colin you were big into the Roblox numbers maybe you want to give us kind of high level on how how Roblox is did this quarter I mean uh not I mean not great their user uh their user uh pool has plateaued um they've kind of like you know and their their daily they're they're they're kind of daily users are decreasing I believe I I kind of want to get make sure I'm right about this and although they're saying the algorithmic change of the platform is driving people to more meaningful experiences instead of hyper virable viral snackable things um yeah I mean I I'm I'm just sad on that I mean Roblox is just just taking a hammering and a beating um and I've always been a bit more bearish on the platform although it's so big I was like wait to kind of almost too big to kind of completely collapse on itself.
00:56:33.519 --> 00:56:33.679
Right.
00:56:33.840 --> 00:56:35.519
My biggest issue is the kid problem.
00:56:35.679 --> 00:56:38.400
Like they like trying to roll this out as an advertising business.
00:56:38.480 --> 00:56:49.920
I know you know this like advertisers want to reach 18 to 34 year olds that's it and right they don't have a majority 18 to 34 and they never will because I'm not I do not buy that people age into Roblox as they get older.
00:56:50.000 --> 00:56:51.840
I think they age out and go play Grand Theft Auto.
00:56:52.320 --> 00:56:52.800
I agree with that.
00:56:53.199 --> 00:57:01.679
So they're trapped in Kid Land and the advertising pool of Kid Land is pretty limited to Hasbro Funko you know you can name the brands it's so on my two hands.
00:57:01.760 --> 00:57:06.320
So it's not not a huge Tam there and so they're kind of trapped by that.
00:57:06.480 --> 00:57:11.519
Now they're saying they're investing in AI to build more high fidelity experiences.
00:57:11.760 --> 00:57:26.719
Sure I generally buy that UGC is a huge opportunity and we'll eat the world when it kind of scales but I'm just not mentally there yet with Roblox um it's going to be that solution it's current iteration although they their investments in technology could change my opinion on that.
00:57:27.039 --> 00:57:33.199
I think what you said about the audience aging in aging out I agree very much with that.
00:57:35.119 --> 00:57:43.199
I didn't predict this I I I wouldn't have thought if you asked me two or three years ago that Roblox stock would have gone straight down all this time.
00:57:44.079 --> 00:58:00.960
But I I I I think when you think about gaming in communities and and less about necessarily you know the specific games but you know the life cycle of a gamer yeah I I I don't see people going the older crowd going down.
00:58:01.119 --> 00:58:08.960
It feels like it's it's it's up and out and then when you add trust and safety in there it's it makes it really dicey.
00:58:09.199 --> 00:58:22.639
Yeah and people conflate like Roblox and Minecraft Minecraft is stickier with older audiences and younger audiences because it's a virtual Lego right people like the build and it's creative and it's expression that's that's not what Roblox's experiences are.
00:58:22.719 --> 00:59:22.639
They're not they're not Minecraft right they're not right building a giant super house or a virtual city like they're not doing that in Roblox at least natively you can I'm sure but like if people come at me saying oh we could build those experiences inside Roblox I'm like okay sure but it's not the same thing as Minecraft so it's not scratching an itch um um so and it's also uh a red flag to me that in the modern shifting gaming and the biggest growth market being China that they were in China and then it got and then they got kicked out of China whereas Minecraft is doing phenomenally well in China like if they have Netney's reported 700 million accounts created in China which is tied to people because of the way you have to sit like log on to these things for monitoring by the big government purposes like that's an insane number also Microsoft never talks about Minecraft until uh Asha started but that's a whole other separate conversation um yeah it's uh it's uh it's crazy I know so I again I think Roblox has a larger kid problem and that leaves me kind of a lot more bearish and bullish on them um until they've proven that they can age people into something else.
00:59:22.880 --> 00:59:23.280
Right.
00:59:23.519 --> 00:59:55.920
I'll I'll take the uh the bullish perspective on this because their their monthly unique players has still gone up meaning new players are still finding this game and they're still logging in and they're still playing uh they didn't hit the numbers they wanted to on a on a revenue perspective which makes sense because if you're putting in tooling to to block the bad people you're going to end up losing some people who are potentially coming in spending money but the fact that maybe the money's going down but you're seeing an increase in players I think it's building out the the foundation of what they're doing.
00:59:56.079 --> 01:00:27.119
They still have kids in there the kids are still coming to play in there maybe you're losing some money and they're still profitable uh this quarter right they still made money so I think this is kind of uh the uh the healthy step of becoming a more sustainable a more just not the boom company they were right that they they've matured and now this is maybe what we expect uh over time I I think and they blamed no viral hits which it's stupid but I mean that's basically them admitting that their algorithm for discovery is bad.
01:00:27.280 --> 01:00:39.440
Like that's all right like that that's what we had no viral hits I'm like so your algo sucks that's your job like that's your job they they actually came out earlier this year said they were going to change how discovery works on the platform.
01:00:39.519 --> 01:01:06.480
So so yes Colin to your point that is exactly it they said that but they also said hey we're going to change this so it's not like uh oh my god we didn't see this coming it's like we're going to tweak a and see what happens so so uh I think that's smart and yes we can all look at it and judge it and time will tell but I I think their algo went from like because their their average time spent in experiences was like laugh of like a minute and a half so like they weren't wow like it was like super super low or something like that.
01:01:06.559 --> 01:01:09.840
And then and they were basically like oh we want that to be longer I'm like yeah no shit.
01:01:10.000 --> 01:01:30.159
Um not TikTok right you want people to spend more time in these in these experiences so they're inherently like you know they'll become more valuable yada yada yada but like so they have tweaked their algo to achieve that um if that actually is the right move we'll know in like a year or two to your point Greg like it'll be a long time to get there.
01:01:30.320 --> 01:01:39.440
Um I mean ultimately the floor of Roblox is they get bought by something so like they're not going out of business right their value will go down so low that someone will swoop in and purchase them.
01:01:40.079 --> 01:01:49.280
If meta wasn't inundated in an infinite amount of lawsuits I always thought Roblox and meta made like meta buying a gaming company that has an ad engine behind it makes so much sense.
01:01:50.880 --> 01:02:06.639
Yeah um instead of them trying to build the metaverse or build agentic AI like again Mark Zuckerberg distracted by things that aren't actually according to main business which is ads um not you know getting on the Mount Rush mower of like Steve Jobs and you know Elon Musk and building cool things.
01:02:06.719 --> 01:02:11.679
Yeah I'm sorry you just built an ad engine man which is actually impressive in and of itself you should be proud of it.
01:02:12.000 --> 01:02:25.679
So we are way over time before we wrap say our goodbyes is there anything else anyone wants to talk on any of these topics no no um I you know uh Greg, we did anything you want to talk about um how are things on your end?
01:02:25.840 --> 01:02:28.079
Good uh things are good on my end.
01:02:28.239 --> 01:02:46.239
You know this is my my next two weeks I feel like I'm on vacation so this is like the last push for me for uh for summer but uh we have a lot going on and a lot of stuff going on and this is good and I was excited about this and I think we're gonna have more guests on the show to debate and talk through on things I think this is a good format and makes a very engaging engaging thing.
01:02:46.320 --> 01:02:51.760
So I'm excited to see this go through and lots of Gamescom stuff going on now so just trying to keep on top of that.
01:02:52.559 --> 01:03:46.480
But before we wrap and care too much about me Simeon tell the people where they can find you thank you so much for having me I had a blast uh on the show today hope hopefully love to come back in the future but in the meantime you guys can find me my site is accrued interestaccrudeint.com you can find me on Substack I have a dot com I'm on all the major socials Instagram Twitter Facebook LinkedIn wherever you like to browse um I just want to say I'm a huge fan of the of gaming and the game industry I I'm I'm rooting for all the companies I just want to warn people of the risks that you know stocks go up and down um look stay diversified look closely at your holdings and some stocks are good for a short time and some stocks are good for a long time but we always just have to keep looking at the facts as they develop and just enjoy the ride.
01:03:46.559 --> 01:03:48.800
So thank you for having me and you know good.
01:03:49.199 --> 01:03:56.320
So I mean if you had to gift both of your children a hundred shares to a specific video game company what game company would you choose?
01:03:59.360 --> 01:03:59.920
None.
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Meta I think I I think meta with their ability to to wring the most ad monetization out of whatever they get their hands on.
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I think that I think that games like TV where I came from and music I think games are another form of media and I think games will live on but how we consume that media may change in the future.
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So I'm more a believer in platform so I'd probably say meta or Google over or over a specific game publisher.
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Cop out of an answer but I'll give it to you thank you for joining us i mean this was great colin let us know everything I uh I you find me on LinkedIn Colinese I write patch notes uh subscribe on LinkedIn or Substack if you prefer that format um I am currently writing my piece this week to talk about the Spider-Man movie um and if you want any hot takes on Spidey and his amazing friends I am the place that'll give it to you I have a lot to say about that show and its value to the Spider-Man ecosystem um and why that means uh and what what that means to the uh to the movie itself.
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Um other than that um yeah just gearing up for games coming all that and if I had to pick a gaming stock short term I'd probably take two and hand it to him and say sell in nine months uh that would be fine you'll you'll make easy money there.
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Um long I like the meta thing because I I I've talked to Greg about this a lot.
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I like yeah like it meta's in the in a downturn and it you know it's laughable like where their stock always like it's it's all based on communication with Mark he just sucks at it and he just puts his foot in his mouth whenever he opens it to talk about we're gonna become an enterprise uh business B2B player I'm like Jesus man like why um but they actually got their hands on a real gaming platform oh boy it'd be the next Instagram they just let it rip and then make so much money so I've always said if if Microsoft fires sales and its gaming division then meta should go bang on the door by Xbox as a platform like immediately and then bolt an ad engine on it and let it rip because it would make a lot of money.
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Bring back animal farm I mean that they would be like just just we'll give you everything consumers just watch ads and um and get sent to a bunch of SMB businesses and yeah um one to one ads.
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Colin just wants to watch the world burn everyone who's joining us today Carlo Diana Tim George was at least people that commented thank you for joining in today I appreciate you joining we'll be back next week
