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Summary:

So here’s the game-related stock conundrum of the day: last fiscal year, the Sony Corporation had revenue nearly nine times larger than Nintendo ($71 billion to 7.8 billion)– which isn’t surprising, since that includes all Sony’s many divisions (hardware, videogames, movies, etc.), versus Nintendo, which only […]

Nicole for Nintendo DSSo here’s the game-related stock conundrum of the day: last fiscal year, the Sony Corporation had revenue nearly nine times larger than Nintendo ($71 billion to 7.8 billion)– which isn’t surprising, since that includes all Sony’s many divisions (hardware, videogames, movies, etc.), versus Nintendo, which only has their several game platforms and related stuff for its revenues.
Yet somehow, late last week on the Nikkei, Nintendo’s market cap briefly surpassed Sony’s ($52.9 billion to Sony’s $52.3 billion) before falling behind Sony, though not by much. Even if their PS3 was a bomb, and their executive staff is in subsequent disarray, on paper, Sony’s holdings are far more diverse and global. So has the market gone crazy?

Not at all: as James Surowiecki taught us, the stock market can predict which company is responsible for a space shuttle disaster– and which company is about to be left in the dust of history. Sony’s market cap hints at an imminent price cut to the PS3, but it will, if carried out, simply boost sales among the sliver of Lost Boy gamers (18-34 men) who find the system appealing, and do absolutely nothing to expand its potential audience.

Meanwhile, Nintendo just gained Nicole Kidman as a spokeswoman for their DS, citing her “universal appeal to mainstream audiences of all ages and backgrounds, as well as her reputation for being intelligent, entertaining and genuine.” That sounds like a company with its eyes on the real market for games– everyone. Hence its massive valuation.

Update, 6/27: Watch the lovely Ms. Kidman play “Brain Training” on the DS here.

  1. My 8 year old son bought Nintendo’s wii with his savings hence putting an end to my (and my wife’s) attempt to postpone indefinitely the acquisition of gaming consoles…

    So we installed it and started playing it. The result: we have even the 2 year old cheering when we play family tennis and bowling matches!

    Nintendo is doing with the gaming world what Indian Bank ICICI is doing for banking in India: Nintendo is growing the gaming market to include non gamers and ICICI is banking to “unbanked” people in India.

    That is disruptive innovation using technology versus disruptive technology alone (which is what the bulk of companies seem to be doing).

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  2. Can Om not fire up GigaGamez again, so inane ramblings like this can find a safe haven?

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  3. Don’t forget that Sony is swimming in debt, whereas Nintendo has significant cash on it’s books.

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  4. “Sony’s market cap hints at an imminent price cut to the PS3, but it will, if carried out, simply boost sales among the sliver of Lost Boy gamers (18-34 men) who find the system appealing, and do absolutely nothing to expand its potential audience.”

    Perhaps you can explain something. If we remove the price barrier, how does the PS3 differ from the PS2? You can’t seriously claim that the PS2 didn’t reach an audience beyond 18-34 males.

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  5. simply put

    PS2=strong library of games=win

    PS3=weak library games coupled with strong competiton=lose

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  6. Aren’t some divisions of Sony making negative net income? If they solve those problems, the stock will skyrocket. It’s my impression that movie hits have raised th stock over the past six months.

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  7. [...] It’s got a large screen, a wireless Internet connection, and a touch interface a bit like the bestselling Nintendo DS, which you’d think would make it an ideal gaming platform. But for some reason, in all the [...]

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  8. [...] got a large screen, a wireless Internet connection, and a touch interface a bit like the bestselling Nintendo DS, which you’d think would make it an ideal gaming platform. But for some reason, in all the [...]

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  9. [...] Wars for the DS The enormously popular Nintendo DS generally skews to very young gamers or older consumers who enjoy Brain Training and the DS’s many other “eduplay” games. This game, by contrast, aims to expand [...]

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  10. [...] Wars for the DS The enormously popular Nintendo DS generally skews to very young gamers or older consumers who enjoy Brain Training and the DS’s many other “eduplay” games. This game, by contrast, aims to expand these [...]

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