A look at the entertainmet sector and it's future

It’s vacation time and to what kind of entertainment are you going for? I keep looking at this whole Netflix price/earnings craziness and get to remember the context from where Netflix emerged as a major player. It wasn’t for turn itself into a major content producer, and yet in those days, the whole Netflix analysis gets somewhat lost when deciding if it is a technology or an entertainment company. As you can get better multiples being the first one, that ends up being the choice.

But the fact that is that Netflix has grown being a better technological option to torrent, most of its competitors besides the content offer, will struggle trying to get at the same level as Netflix when we talk about servers. So NFLX, maybe would have been in a way better position, if it had focused on supply it’s technology and relation with small ISP around the world to the newcomers into the streaming battle. If we think how NFLX can offer huge data package deliveries with low cost and low latency, thanks to its relation with small ISP’s on a global scale that could even be the solution to new services like Google Stadia, even though I’m not sure if the real difficulty in this segment is exactly about having a bunch serves, maybe here the right type of servers is the real problem.

So as I’ve made clear, that I would prefer to buy NFLX more as a tech company, than as a content producer (which apparently has been their focus), guess we can proceed to Disney, and besides DIS being already a consolidated giant, I kinda think in the long run Sony could be a way better option. Disney is too much of an old-style company, with too much tradition to hold. Sony, on the other hand, has tradition (with the whole Japanese thing) and is slowing turning itself into an entertainment company.

Source at page 15 here 

The company is yet carrying some legacy sectors as a hardware maker, but even though this part of the business is not that sexy, the company has been making some money in the semiconductor segment.

But the main point on Sony is that they have been strongly growing in a sector that giants like Disney are stupidly ignoring (even though Warner [under ATT] has been able to produce some hits).

When we talk about the videogame industry, we are usually talking about companies with strong communities around themselves, and some lack of good management. And as one good product, with good sales, can hide all the troubles a company may have, it’s hard to do the usual stock picking at this segment. If we go around, we can find companies with good Intellectual Properties, such as Rockstar, but as it comes with the whole TTWO package It becomes way less interesting. EA has a good management, but lacks on the creation of new IP’s, and even though the old ones are strong enough to support the company, I yet do feel EA somewhat disconnected from it’s community which may justify the low P/E the stock has been trading lately.

Besides, that I haven’t offered much of conclusion until now, my point is that amazing IPs are emerging in the videogame industry, so it’s not out of reality to think on a a theme park based on Uncharted, and under that scenario Sony could be a good bet. I don’t think that the future of the industry is on expensive consoles, but the Playstation brand and it’s IP’s could easily go far Beyond that.