Nintendo stock reaches all time high. 95 billion dollar company valuation. 14 billion dollar cash. NO DEBT. Which studio should they buy???

Ironman_Bad said:
When's the last time Nintendo made a heavy story driven adult themed game like The Last of Us, Ghosts, or God of War?
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Clearly you never played Mario Tennis Aces or 1-2-SWITCH!
Aces covers the story of a drug addled tennis has-been on their way back to the top...if they can keep their dark past hidden!
1-2-SWITCH is basically "The Handmaidens Tale" told through group based mini-games.

(play the xenoblade series for some sad shit)
 
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Angry_Megalodon said:
Nintendo's perceived value (which highly differs real value) is only possible due to its exclusivity and price policies. If Nintendo went third party, the brand would collapse in a few years.

They have great competitive advantages in some market segments but in others they can't even compete, no matter how many fantasies are told in this thread.
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True. Exclusives is what makes Nintendo great throughout the years. That's there biggest selling point and high quality of games.
 
Woopah said:
If you are talking about the numbers on a P&L then yes, this is correct

But you were talking about cash going into a bank account. That's not what profit is.
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I didn't say that profit is the money that goes to a bank account.

Profit, is what I mentioned: the difference between what they earned and what they spent in that year/quarter/project/etc.

Let's say that -simplifying it- a year they start with 5B in the bank, an during that year they have 10B in revenue etc. and they spent 9B in development, marketing, R&D etc. So at the end of that year, they'll have a profit of 1B for that year and 6B of cash in the bank.

There's also cash equivalents that aren't directly cash in the bank etc. but to make it simpler, cash is money in the bank, that remained there at the end of that year because they decided to don't spend it somewhere during that year (it's always good to have a good chunk of cash & equivalents to have a healthy company specially if there are macroeconomic uncertainities in the horizon, etc).

Woopah said:
Not if you meant to say "no" here, but we can look at the last few years and see that Sony publishes fewer games than Nintendo does most of the (not including ports/remasters).
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My idea was to reply the 3 blocks in a row, the N wasn't supposed to be there (I just edited it) xDD

I often have the web browser in a screen and I'm coding in the other one, and when compiling there's an emulator window that appears changing the focus automatically, so sometimes happens that there's some accidental, untintended keypress somewhere. xDD

Woopah said:
I agree with most of this (apart from the fact Nintendo doesn't produce less 1st/2nd party games, not sure why you think that).

A couple of points though:

1. Sony traditionally having a different profit margin than Nintendo is due to many factors, most of which aren't related to CapEx. Things like accounting system, digital ratio, price changes, first/third party software ratio etc. are non-investment factors that affect a company's profit margin. Sony doing more acquisitions and having higher operating costs is just part of the puzzle.

2. The issue with the way you framed it is that you made it sound like caring for growth and reinvesting was a Sony-specific thing. Microsoft has invested way way more in gaming than Sony in recent years, but that doesn't mean Microsoft is reinvesting profits while Sony is just putting cash in the bank.

Microsoft, Sony and Nintendo are three different companies with different scales and investment strategies. But they are all reinvesting in their businesses and to claim any are "ok with how they are" simply isn't true.
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Regarding "non-investment factors": when I said that a company like Sony reinvests most of the revenue they generated that same year, I didn't mean investments in the strict meaning (merge & acquisitions stuff where they acquire a part or totality of another company).

I meant that they decide to spend it in game development, marketing, R&D, deals with 3rd party and so on (being M&A just a small part of that). Stuff that are costs today but will mean more direct or indirect revenue and profit somewhere in the future.

And that if Sony makes let's say $25-30B in revenue per year, they have more room to -if/when desired- 'reinvest' less that year to post a larger profit. Meaning, they may decide for that year to greenlight less first party games that year, or cancel some title, or to lower the spent in marketing campaings, sign less deals with 3rd party, delay acquisitions for another year, to grow less their existing teams that year, to make some layoff somewhere, etc.

All these things affect their profitability. The acquisition related costs -even related to acquisitions made years before- also affect their profits, in fact Totoki previously mentioned them as part of the main reasons of why they had less profit in FY22 and FY23 versus previous years, and that they were meant to -I can't remember exactly the periods - to ease out in FY24 and be completed in FY25.

Meaning, maybe part of why they did pause acquisitions was because they wanted to complete the integration and all the related costs from previous ones before moving to new ones (in addition to mentioned reasons like wanting to improve short term profitability, waiting for cash from selling most of their Financial Group, being cautious about macroeconomic uncertainities etc).
 
Honestly? Something small and creative like Hazelight studios would fit best into their portfolio, though I'd hate for Hazelight games to be exclusive.

NIntendo already has more IP than they can reliably service, so I'm not sure they'd even want to lock down someone like Capcom or Sega even considering their retro libraries (and assuming Nintendo could even afford that), though the expanded development capability would be nice.

And, as much as I love internet meltdowns and drama, I DON'T want Nintendo (or anyone for that matter) buying From Software. One of From's greatest strengths has been the creative freedom they've had from jumping between publishers and platforms. With that said, I would love to see what they could do with a one-off Metroid game, in the same way I'd love to see Kojima take on Eternal Darkness.
 
They won't buy anything. Especially with the state of the world.

Now, one could argue. They should expand their current studios.

IMO, monolith should have 3 teams.

Team 1- makes Xeno or other titles.

Team 2- an "assist " team assigned to help Zelda team or other teams as needed.

Team 3- permanently assigned to help the Pokémon team! Pokémon is their most successful IP and Gamefreak and their partners clearly needs the help.

Assuming Metroid Prime 4 and Next levels games are a success. I would want Retro and Next Level to each have two teams.

Retro
Team 1- Metroid or other ip

Team 2- smaller team for hd remasters or ports.

Next level, the exact same as retro!
 
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Why would Nintendo need to acquire any studio? I fail to understand the logic behind this, they are currently the sales leader in the industry, therefore they don't need any other exclusives but theirs.
 
When Nintendo made toys back in the day, before video games, they almost went under because of a lot of debt. Since then, it's company culture to never take on significant debt.
 
daclynk said:
Bait GIF
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Well.....yes.....but he's not wrong
 
Sorry for the very late reply!
yurinka said:
SorrI didn't say that profit is the money that goes to a bank account.

Profit, is what I mentioned: the difference between what they earned and what they spent in that year/quarter/project/etc.
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Correct. I agree with this for the most part, though it's also affected by the accounting system (for example, when Microsoft bought ABK, I don't think their quarterly P&L would have registered it as a $70 billion spend).
yurinka said:
Let's say that -simplifying it- a year they start with 5B in the bank, an during that year they have 10B in revenue etc. and they spent 9B in development, marketing, R&D etc. So at the end of that year, they'll have a profit of 1B for that year and 6B of cash in the bank.
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What you're describing here is cash flow, not profit.
yurinka said:
There's also cash equivalents that aren't directly cash in the bank etc. but to make it simpler, cash is money in the bank, that remained there at the end of that year because they decided to don't spend it somewhere during that year (it's always good to have a good chunk of cash & equivalents to have a healthy company specially if there are macroeconomic uncertainities in the horizon, etc).
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Also agreed!
yurinka said:
My idea was to reply the 3 blocks in a row, the N wasn't supposed to be there (I just edited it) xDD
I often have the web browser in a screen and I'm coding in the other one, and when compiling there's an emulator window that appears changing the focus automatically, so sometimes happens that there's some accidental, untintended keypress somewhere. xDD
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Got it!
yurinka said:
Regarding "non-investment factors": when I said that a company like Sony reinvests most of the revenue they generated that same year, I didn't mean investments in the strict meaning (merge & acquisitions stuff where they acquire a part or totality of another company).

I meant that they decide to spend it in game development, marketing, R&D, deals with 3rd party and so on (being M&A just a small part of that). Stuff that are costs today but will mean more direct or indirect revenue and profit somewhere in the future.
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This is true for Sony, but its also true for Microsoft and Nintendo.

All three of the companies are reinvesting billions of dollars into their gaming businesses. All of them want to improve software output.

Microsoft invests the most and Nintendo invests the least, which makes sense given their respective size.
yurinka said:
And that if Sony makes let's say $25-30B in revenue per year, they have more room to -if/when desired- 'reinvest' less that year to post a larger profit. Meaning, they may decide for that year to greenlight less first party games that year, or cancel some title, or to lower the spent in marketing campaings, sign less deals with 3rd party, delay acquisitions for another year, to grow less their existing teams that year, to make some layoff somewhere, etc.

All these things affect their profitability. The acquisition related costs -even related to acquisitions made years before- also affect their profits, in fact Totoki previously mentioned them as part of the main reasons of why they had less profit in FY22 and FY23 versus previous years, and that they were meant to -I can't remember exactly the periods - to ease out in FY24 and be completed in FY25.

Meaning, maybe part of why they did pause acquisitions was because they wanted to complete the integration and all the related costs from previous ones before moving to new ones (in addition to mentioned reasons like wanting to improve short term profitability, waiting for cash from selling most of their Financial Group, being cautious about macroeconomic uncertainities etc).
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There are definitely some factors they can affect to improve profitability. Like you say they can cut back on marketing, sign less deals, cancel games and have layoffs / studio closures (which we've seen many publishers do).

Other areas however aren't so easy. For example, in the accounting system used by Microsoft and Sony, a huge chunk of their generated revenue ends up in the hands of third parties. This isn't a reinvestment, nor is it a cost they can reduce (not without increasing their royalty rate.)

But overall, yes I would say Playstation is in a very good place financially. Especially after Totoki's profitability measures.
 
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Woopah said:
What you're describing here is cash flow, not profit.
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In the example I mentioned, the $1B would be the profit for that year. The cash flow would be the $5B they had before the year and $6B after it.

Woopah said:
This is true for Sony, but its also true for Microsoft and Nintendo.

All three of the companies are reinvesting billions of dollars into their gaming businesses. All of them want to improve software output.

Microsoft invests the most and Nintendo invests the least, which makes sense given their respective size.

There are definitely some factors they can affect to improve profitability. Like you say they can cut back on marketing, sign less deals, cancel games and have layoffs / studio closures (which we've seen many publishers do).

Other areas however aren't so easy. For example, in the accounting system used by Microsoft and Sony, a huge chunk of their generated revenue ends up in the hands of third parties. This isn't a reinvestment, nor is it a cost they can reduce (not without increasing their royalty rate.)

But overall, yes I would say Playstation is in a very good place financially. Especially after Totoki's profitability measures.
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Yes, they all three reinvest billions of dollars but in a different scale due to their different context, strategy and needs:
  • MS's gaming division didn't give a fuck about profitability for years because their corporation gets insane profits thanks to partly military / intelligence agencies / governments / etc money plus Windows and data centers. In gaming acquisitions alone, MS spent like almost $100B and gave away their games day one on their gamesub trying to outspend Sony out of the consoles and gamesubs business. Failed hard. At the same time, they transitioned to kill their own console (more loses) to become the biggest 3rd party multiplatform publisher getting their money mostly from mobile, PC and PS instead and keeping Windows as their home platform instead (in the long term will be profitable if they stop including their games day one in base GP).
  • Out of the 3, Sony is the one that makes more revenue and reinvests way more organically, but tries to keep a minimum healthy profit because within the Sony Group SIE is the top grossing one and the biggest profit maker closely followed in terms of operative income by Music and the Imaging & Sensor division. Sony's strategy is to keep each division profitable and selffunding itself, to grow mostly organically, or via acquisitions mostly paid with that profit when possible.
  • In Nintendo's side, most of their revenue and profit comes from gaming. Unlike the others, they focus on posting as much profit as possible: choose to make cheaper hardware and games and to sell them more overpriced. They don't even discount or price cut their games. For their game sub they mostly only sign games from many generations ago, way cheaper what Sony and MS do. And for the console 3rd party deals most of what they sign are timed console exclusives from indies or ports of old games. They also spend almost nothing compared to the other ones in acquisitions.
Basically:
  • MS is the one who invested more money in total, but that mostly comes from other divisions and doesn't care about short term profits
  • Sony is the one that reinvest more money of the 3 when only looking at the money generated by their gaming business. Tries to keep a minimum percentage of their revenue as profit, but healthy one for the whole group.
  • Nintendo is the one who invests/reinvests less out of the three, normally keeping the biggest amount both in total and as percent of their revenue as profit/cash.
Regarding financials, even if it's years away from ending, this generation is the top grossing one ever for Sony (which also means for any console maker in gaming history), and also more profitable than all the previous Sony generations combined.

They have most of their metrics in all time high records numbers and in a multi year growth pattern growing in all areas, which leads to think they'll continue growing until minimum beyond the start of the next generation (which pretty likely would be late 2027 or early 2028).

And on top of this, pretty likely they'll grow even more because their direct competitor -the Xbox console- is dying, they still have a ton of PS4 active players who would migrate later to PS5/PS6 (pretty likely most of them once IPs like GTA, CoD, EA FC start being current gen only) and because they are growing in Asia thanks to movies and PC. And are also working on their PC store/launcher and mobile games, which would help them to grow even more, specially in Asia.
 
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Kotaro said:
Nintendo is swimming in cash. Which studio should they buy??
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CDPR, because
Animated GIF

Bonus points if they make them exclusively Zelda developers after so we get that gritty Zelda they announced in y2k, and a cyberpunk sequel we all want.

Alternatively R*, its about time someone fixes their practices.
 
yurinka said:
In the example I mentioned, the $1B would be the profit for that year. The cash flow would be the $5B they had before the year and $6B after it.
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$1 billion would be the net cash flow, not the profit. We can't calculate profit from the numbers you gave.

That's what I've been trying to explain.

I can give an example from where I work in case that helps.

In the latest financial period, our Operating Profit was over $650 million. But our Cash Flow from Operations was around $500 million. So quite different as we can see. The profit numbers

yurinka said:
Yes, they all three reinvest billions of dollars but in a different scale due to their different context, strategy and needs:
  • MS's gaming division didn't give a fuck about profitability for years because their corporation gets insane profits thanks to partly military / intelligence agencies / governments / etc money plus Windows and data centers. In gaming acquisitions alone, MS spent like almost $100B and gave away their games day one on their gamesub trying to outspend Sony out of the consoles and gamesubs business. Failed hard. At the same time, they transitioned to kill their own console (more loses) to become the biggest 3rd party multiplatform publisher getting their money mostly from mobile, PC and PS instead and keeping Windows as their home platform instead (in the long term will be profitable if they stop including their games day one in base GP).
  • Out of the 3, Sony is the one that makes more revenue and reinvests way more organically, but tries to keep a minimum healthy profit because within the Sony Group SIE is the top grossing one and the biggest profit maker closely followed in terms of operative income by Music and the Imaging & Sensor division. Sony's strategy is to keep each division profitable and selffunding itself, to grow mostly organically, or via acquisitions mostly paid with that profit when possible.
  • In Nintendo's side, most of their revenue and profit comes from gaming. Unlike the others, they focus on posting as much profit as possible: choose to make cheaper hardware and games and to sell them more overpriced. They don't even discount or price cut their games. For their game sub they mostly only sign games from many generations ago, way cheaper what Sony and MS do. And for the console 3rd party deals most of what they sign are timed console exclusives from indies or ports of old games. They also spend almost nothing compared to the other ones in acquisitions.
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Sony cares about profit just as much as Nintendo does. They want to achieve strong profits today, while still investing for even stronger profits tomorrow. That is what Nintendo does.

Likewise MS would love it if Xbox was making Sony/Nintendo level profits right now. They are spending a lot of money just to get to a level that Sony and Nintendo are already at.

On pricing, the 3DS was definitely overpriced at launch. But we can see from the performance of Switch hardware and software that they aren't overpriced. There's largely no benefit to Nintendo from cutting prices and hurting their revenue growth.

yurinka said:
Basically:
  • MS is the one who invested more money in total, but that mostly comes from other divisions and doesn't care about short term profits
  • Sony is the one that reinvest more money of the 3 when only looking at the money generated by their gaming business. Tries to keep a minimum percentage of their revenue as profit, but healthy one for the whole group.
  • Nintendo is the one who invests/reinvests less out of the three, normally keeping the biggest amount both in total and as percent of their revenue as profit/cash.
Regarding financials, even if it's years away from ending, this generation is the top grossing one ever for Sony (which also means for any console maker in gaming history), and also more profitable than all the previous Sony generations combined.

They have most of their metrics in all time high records numbers and in a multi year growth pattern growing in all areas, which leads to think they'll continue growing until minimum beyond the start of the next generation (which pretty likely would be late 2027 or early 2028).

And on top of this, pretty likely they'll grow even more because their direct competitor -the Xbox console- is dying, they still have a ton of PS4 active players who would migrate later to PS5/PS6 (pretty likely most of them once IPs like GTA, CoD, EA FC start being current gen only) and because they are growing in Asia thanks to movies and PC. And are also working on their PC store/launcher and mobile games, which would help them to grow even more, specially in Asia.
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I agtee with a lot of this but It's not an accurate representation to say Sony is aiming for a minimum % of profit while Nintendo aims to keep a biggest % as revenue. Both Nintendo and Sony want to maximise profit while still investing for the future.

If Somy and Nintendo could achieve the same level of growth for half the level of investment, they'd both jump at that chance. To quote Totoki "I would like to go aggressive in improving our margin performance."

The profit margins difference that has traditionally existed between Nintendo and Sony is due various factors like their accounting systems and their first vs. third party focus. But Sony wants to close that gap and Totoki is doing a great job. I think he has a real shot at leading Sony to make a Nintendo-level of profit.
 
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