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 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.