Business Breakdowns
Episode 201 Gaming Consoles Part 1: The Thesis
Business Breakdowns

Episode 201: Gaming Consoles Part 1: The Thesis

Business Breakdowns

Episode 201

Gaming Consoles Part 1: The Thesis

Sia Kamalie is the Founder and Fund Manager at Skycatcher. We cover the scale of the console gaming ecosystem and how it compares to PC and mobile gaming, how the video game industry is increasingly moving towards a subscription-based model, and the major milestones to watch as the console thesis plays out over the next decade.

Show Notes

(00:00:00) Introduction to Business Breakdowns

(00:00:54) Overview of the Video Game Console Market

(00:08:52) The Shift to Software and Digital Purchases

(00:13:02) Nintendo and Sony: Current Trends and Future Prospects

(00:23:23) In-Game Purchases and Subscription Models

(00:27:24) Bold Predictions for Nintendo

(00:27:58) Nintendo's Iterative Console Cycle

(00:28:47) Sony's Lifetime Value and Revenue

(00:29:56) Profit Margins and Software Sales

(00:34:26) Console vs. Mobile and PC Gaming

(00:41:44) The Rise of eSports

(00:44:41) Gen Z and the Future of Gaming

(00:48:28) Emerging Markets and Console Growth

(00:50:37) Valuation and Market Potential

(00:53:08) Conclusion and Future Discussions

Gaming Consoles Part 1: The Thesis

Introduction

Matt
This is Matt Reustle, and today's episode is the first in a multi-part series on the video game market. More specifically, the video game console market. Our guest is Sia Kamalie, the founder and fund manager at Skycatcher. Now, Skycatcher describes themselves as focused on capturing asymmetry at the internet frontier, and Sia has very strong conviction, which you'll hear, that the video game console market is entering a major paradigm shift with an app store model set to hit its inflection point.

For this episode, we start with an overview of the video game console market itself, laying out the size and where it stands today. And admittedly, I did not appreciate it has been a growing market over the past decade. It's just been massively overshadowed by mobile.

We get into why now could represent the shift or the catalyst in terms of both the return profile for the businesses and this specific economic model and the potential inflection in earnings. We get into even more depth in episodes two and three when we cover the names most exposed to this theme with Sony and Nintendo. I think that the shift from hardware to a more software-like revenue stream is obviously a positive for these businesses, but calls out numbers around how big of an impact this could be.

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