00:00 Speaker A
I want to shift gears to a discussion of hardware versus intellectual property. And just thinking about over the next 12 months, if you had to pick one bucket, and one of those could be chips and hardware with maybe Nvidia, Microsoft, Sony consoles, and then you have content and IP on the other, with Take two and Roblox and we’ll get to the game, we’ll get to, um, Grand Theft in a second. Where do you see that heading over the next year?
00:32 Speaker B
I mean, the hardware side’s hard to play. Um, Nvidia obviously is a phenomenal company, but you know, a very small percentage, I think less than 5% of their revenue comes from gaming. So it might be 10, but it’s really small. I think it’s four or five billion a quarter out of 45 billion. So, you know, they’re they’re great, um, but they’re not going to really grow that very much. They used to be more like 50% gaming for PC graphic processors. Um now it’s all AI. So I love Nvidia, uh, but it’s really not a gaming play. Nintendo is the pure play. Sony is not quite pure play because of studios and other things. But Nintendo is a pure play, uh hardware manufacturer that also happens to have a lot of great software. Um, and and you can participate there. The stock’s at an all-time high. So, you know, it’s fine. I think that there’re probably some upside there. But I much, much prefer to play in the software side. Uh intellectual property is inexpensive to reproduce again and again and again, very high margin. So you want to play the guys that have the content or the guys that have the technology and that would include Unity and AppLovin.
02:08 Speaker A
All right, let’s stick with content and IP, talk about Grand Theft Auto 6. Uh, it’s been a dozen years since five came out and I’m wondering what the expectations are and then the pricing point especially. I believe you’ve said it could reach triple digits.
02:30 Speaker B
Yeah, I’m I’m pretty confident it will be $100. Um and you know, it’s funny because I’m basing my guess on what the CEO Strauss Zelnick has said, which is that they’re going to charge what they believe that the game is worth and consumers will feel that they got a value for what they’re paying. No no no point in making that comment if you’re going to charge 60 or 70 bucks. So just the idea that he’s addressed price tells me it’s going to start at 100, and I don’t think gamers are going to even flinch. Um, this game is going to be probably twice as big as the last one. Uh as you pointed out, 12 years in development, it’ll come out, uh just shy of the 13th anniversary of the last release. They have 1,200 people working on it, which means they’re spending way north of 100 million per year on development cost. So they’ve got a billion, billion five invested in the game. Why not charge 100 bucks? And and the truth is, gamers are an entitled bunch of whiny little babies, but but the truth, you know, they they can wait a year if they don’t want to pay 100 bucks. They can buy it at 70 next year. And I think Take two will charge 100. I think they will sell 30 or 40 or 50 million units at 100 bucks and that incremental $30 is virtually all profit. So if they can make an extra two or three billion dollars, why not?
