Summary

Eric is very positive on the console outlook overall with lots of engagement and conversions during Covid which is set to continue after the summer. Never been stronger for core demographic of 18 to 44 males. We are beginning to see the growth of non-sport games monetisation which is the big bull case. For this holiday season there are not many new games. EA and Activision have all the popular games. Sony and Microsoft are going to have a big shipment of hardware in October to cater for holidays, and Nintendo will continue producing plenty of hardware.

Summary of stocks: 

• EA - Sports and Battlefield very bullish - Favourite stock - POSITIVE
• Activision - King and Call of Duty will carry them through this year, until they figure how to fix Blizzard - Bobby is a genius - POSITIVE
• Nintendo - Should be a record holiday season - POSITIVE
• Ubisoft - Big issues internally; haven’t done enough with their franchises - VERY NEGATIVE
• TakeTwo - Nothing good in the pipeline except GTA - NEGATIVE

Given that the video gaming sector can change dramatically investors find Eric’s hands on approach with on-going discussions particularly valuable. Eric highlighted for example that contrary to his current recommendations: Battlefield could disappoint, the Diablo team could walk out given what is going on at Blizzard, Ubisoft could perform a miracle and have software as a service out for Assassins Creek on time, and TakeTwo could release GTA much earlier than expected.

On Mobile, Apple will be forced to open up the app side which is bullish for the publishers as a whole but will take time. Meanwhile IDFA is still a huge headwind so Zynga, SiPlay, Playtika are going to struggle to scale new and existing games. Roblox bullish short-term but bearish long-term growth.

On the Aggregators, Embracer and Stillfront, Eric does not see much current value in these companies. They don’t have any capability to grow organically as they are focused on only existing games and are still unproven at releasing any new games. There is no interest in many of the titles, lack of centralised management, skew planning, live services and marketing, and few potential acquisition targets.

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