AC; I agree with you that the hardware is secondary, but I strongly believe (or I would not own AKLM) that Nintendo's model is underappreciated and overlooked. That is why these stocks are exciting investments, because the conventional wisdom (Sony CD model is better) may be wrong. That is where the upside in the share price comes from, when Wall Street realizes that Nintendo publishers make more $$$.
I am using some TRSTs data for my analysis. This data shows that the average N64 title sells far better than the average PSX title. As you point out, there are less N64 titles, so that is the reason. Why are there less titles, because IMHO the "Nintendo model" was/is not as attractive on paper as the "Sony model" therefore lots of developers started PSX projects, glutting the market.
This means less sales for everyone, even with a larger installed base. Now in the Nintendo camp there are far fewer games and far fewer developers. This means more sales per title. Under the Nintendo model it is true the developers get less gross margin dollars per unit, but they do get more units sold, to more than make up the difference.
Here is just one example from the TRSTS data I have:
For the period Jan 97 to September 97
Top N64 title: Mario Kart 64 Units: 1,083,000
Top PSX title: FF 7 Units: 373,000
Which would you rather be the publisher of? The million plus title or the sub 400k title?
best regards;
Joe |
