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.
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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.