Yeah, well, it's interesting to see how many levers there are to pull to get that customer value up. If we just go back to that one more time, breaking out the 600 to the 2000, do you have, it doesn't have to be super precise measurement in terms of what drives the majority of that, but any loose math on where you expect that to be just in terms of whether it is the upfront purchases versus the subscriptions versus anything else. So

let's look at Nintendo for a moment. Nintendo is not as far along as PlayStation. Back in 2015, we estimate the lifetime value was $90. 2020, 3X to $260. Now for both Nintendo and Sony, you can see that it is growing. But if you just actually overlay the stock price and said, I bought and hold from 2015 to 2020, both of them, their stock price nearly tripled for both on the back of this becoming a much more stickier, higher quality user. Now let's get to our bold predictions. So we think Nintendo today, the lifetime value is going to go 5X, go from $300 to $1,400. Broad stroke. Let's look at the math of what's driving it. Well, what we're looking at when we say revenue per user, we're not looking at hardware for both sides. We're actually leaving the hardware out of it. We want to keep it apples for apples. We're just looking at the software side of spin for the users. And we know from the math is it's roughly a little under $100 for Nintendo users today. Now, what's interesting is because this is the first time Nintendo will go to an iterative cycle, meaning Switch 1, Switch 2, switch three, we're taking our lifetime value, the churn part, and we're saying instead of users churning every five, six years, the churn is now only 10 years or 11 years. And the further you go out, that means the lifetime value of that user is, of course, worth more and more and more. Now, this is a pretty monumental moment for a company like Nintendo, who has never done an iterative cycle, and every set we set the player base, it was always hard for the market to say, your lifetime value is high, because I don't know if people will continue to the next device you bring out. That risk is off the table. And I think that is what gives us so much excitement around this generational console thesis. Let's now look at Sony for a moment. Sony obviously is further along in this process. We shared that the lifetime value is around $600 today. We think this gets to almost $2,000. But if we look at the spin power, it's around $180 per user today. And we think this is only going to grow to maybe 280, 270. But similarly, the user is instead of being around for seven, eight years, is going to stay around for 11, 12, 13 years. Because one of the things that Sony is working on and we know is that there is less and less gaps between consoles and the titles because of live service games. If you're playing a PS5 today, let's say the next edition of PS6, it's going to continue on. You'll go from Fortnite here to Fortnite there. And you didn't have that in the last cycle. And I think this is that broad stroke of what we're saying is that really the console cycle, this cyclicality that you saw in the past, really it's gone. And in that, the churn rates are going to come down lower on that front. Yeah,

there's a certain stickiness there. And seeing how they evolve that stickiness and what leads to stickiness will be interesting as well. On the point of profitability, so to speak, margin profile of these businesses, just the shift away from hardware makes a material difference. The cost of selling something through a retail location, having to ship all those titles, having to produce all the boxes and whatnot, looks drastically different than just granting through a couple of clicks access to these games. What does that show up in the numbers themselves for these businesses? And you could walk through to the extent that it's available for Nintendo and Sony, but just some snapshot of how much of a difference it makes.

Yeah, no. So if you looked at Nintendo today, it's almost a 50-50 % split between hardware and software. But if you really get down to the bottom line and earnings, it's majority software driven. Now, Nintendo and the Switch, they were never devices that they stole at losses. There was always small margin in it. But obviously, the software margin is where you want to be. For PlayStation, very different. So margins have oscillated quite a bit between, let's say, low single digits to as high as 20%. We're at that point where right now the margins are around 10% and should be much higher. One of the things that we're looking forward to is a margin expansion story at the PlayStation ecosystem level. But with each of these businesses, I think the hardware is part of this. If you take a step back and say, the hardware is part of this vertically integrated mode that I have, and then how these devices evolve and behavior of gamers, it will be interesting because, you know, not to get too out there, but is there a scenario where in next generation of switch, it becomes a phone because it's quite a big phone but these things are all i mean quite feasible to do and cost effectively and then we look at the playstation ecosystem obviously one of the risks to the thesis could be around people streaming games and playing from their tv but then you think about part of this mode of why you play the switch is you want to play the IP. And so Sony's got a treasure trove of IPs and they're acquiring more. There's a lot going on around kind of the makeup of these businesses where hardware isn't necessarily a bad thing. It's part of that moat. And the part that I think people are, when we look at the numbers in the next four or five years is, we think people or markets, when I say people, is sleeping on the fact that the bottom line could accelerate because of third party in software sales. And we think that's going to be showing up in the numbers the next few quarters, but also really a question of like, hey, I have a business that historically, and if I take a step back, what did the PlayStation ecosystem do from a recurring operating profit perspective? So prior to PS4, PlayStation's operating profit was very volatile. It was all over the place. And hence, yeah, this is not a great business because no one likes cyclicalness. But since PS4 to today, you've had a new norm where the PlayStation ecosystem has been churning out a couple billion dollars in profit annually. And we think this is going to accelerate and double from here, basically. When I look at Switch, same concept. So just looking at operating profits. They've always been okay, but they had that one little blip called the Wii, where they, for four or five years, operating profit went negative. And I think markets, they look at that and say, okay, what if this happens again? And our whole argument is that that's not going to happen again, because you're building off the most successful device that Nintendo did in Switch, going to Switch 2. And then with that, you're also saying, look, this is a whole different market where you're making money in live service and software. So yeah, I think that touched on many points there, but I think that's the right way to look at it is this recurring nature of operating profit for both companies is going to be higher and then really less cyclical is the way that I would think about it.

was just an interesting market to think about prior to the shift. You had essentially five-year DCFs for whatever the new console was and all the games associated with it, but you were going to see some cyclicality in there and then from one to the next. So it's interesting to see how it shifted. And I think that just the point on the $2 billion of operating profit from PlayStation and then the change for Nintendo makes a lot of sense. Getting back to the hardware point that you were referencing, when you think about an alternative risk just being mobile, what are the hurdles from a technology perspective for mobile to capture more of this opportunity? And what I'm basically getting at is, are there just graphical constraints that will never be reached? What are the other things that stop an iPhone or an Android from being able to carry these titles? When

you look at some of the best IPs out there, some of them are on mobile, some of them are on console, and it's split between these experiences. But there'll always be titles that you're not going to be able to play on your phone because of just how you would use the controller. And those titles don't make sense to be on a mobile device that's super tiny. I think it's going to come down to really the type of game you want to play and type of session you want to play. So I'm speaking out loud for a moment here, but if I were looking at Fortnite, I'm pretty sure my engagement sessions on console versus mobile are very different. Each IP will do what it makes sense because you'll have some IPs that are crossover and some that won't, but not a big factor in my mind in terms of how the future evolves against mobile versus console. I don't think of them as fighting each other. If you wanted to get into kind of, okay, what are the things that are potentially battling each other? I would say it's console versus PC. Yeah.

I wanted to get into the PC market. It's a very interesting one. And I've probably referenced the making of Prince of Persia book on this podcast several times, but it really is fascinating. It gets you into the earlier days of this market, specifically around PCs, and just how unique it was at that moment in time. But after the days of doom in the late 90s, early 2000s, when my dad brought home a copy, it felt like PC just fell off and to the benefit of the console market where all the games shifted that way. I could be just not the right person, the end of one anecdote. But what happened to the PC market? Where does it stand today? And it sounds like there's a risk of it regaining life or being stiffer competition. So where do we stand there with that market? So

the PC market, call the ballpark, it's around $40 billion. So it's slightly smaller than

console in terms of spend. Still very respectable though, in terms of relative size. But

in terms of reach and user base, so it's hard to come up with monthly active user numbers. But I think if we looked at the top platform for digital spend, it's a platform called Steam. Steam has 130 million monthly active users. So it's bigger than PlayStation, bigger than Switch, bigger than Xbox. And we know probably what's been out there is that it's about 9 billion in sales. Now, what I think is interesting about the PC market is that of that 130 million users, about 50 million of them will get a controller and plug it into their PC to play. Now, let's unpack that a little bit further. One of that behaviors is because if I'm playing an online game on PC, I don't have to pay the subscription. Versus when you look at console, to play online, you need a subscription. You have to pay that additional $5, $10 a month. So if in a scenario where console says, we'll get rid of the subscription online play, then I think PC is going to have a hard time. There's 50 million users who want to come over. Then when you unpack and you go back to the titles part, because the PC market, there's 14,000 games annually that get released on there versus cons, there's Cup 100, 300 games. So you're looking at AAA games versus the single A, double A, indie games, very different markets. In that sense, there's just a lot of IPs that are not on PC that are console exclusives. So myself as a gamer, I have a Switch, I have an Xbox, I have a PlayStation, I have a gaming PC. And if I'm being honest, I play my PlayStation the most and my Switch the second and the gaming PC and Xbox are the number three and four. But it's very much title driven for me.

And does PC have, obviously, just given by the number of titles released each year, there are going to be some that are released only on PC, but does it have major titles, major IP that are only released on PC?

They do. But I think one of the more interesting things about PC is that there's a lot of innovative titles that come out of PC the budgets are a lot less than console. So let me give you an example. One of our most noble investments that we were successful with is a Korean company called Crafton. Crafton created the battle royal genre with a game called Players on Battleground. They were the first to really invent this. And then later on, Fortnite and Free Fire came and mimicked their gameplay. But what's interesting about this game, Players on the Battleground, or PUBG, is that it was built with a budget of less than $10 million and ended up being a massive hit because it expanded the shooter genre in a way that shooter genre hadn't before because it introduced a new win condition. And so when you think about PC IPs, there's a lot of innovative stuff that comes there. And since of PUBG, it came out from PC. But then once successful, they immediately go into mobile. They immediately go into console because they know the bigger markets are there in terms of profit pool on that side.

And when you think about the third-party market, just game developers, new games, where they're coming from, are there any new entrants or interesting catalysts for that market to potentially grow on console?

Absolutely. In fact, I think one of the most interesting things that we've seen since we've been investing in video games going back to 2017 was the flood of venture capital that went into the space on this metaverse thesis and COVID hype. And so on the back of that, you've just seen a bunch of venture funding that before COVID never really happened. And so we think there's already a handful of venture game studios that have looked at console as a way to explore that before would never look at it. Do you remember console, there's only a couple hundred games that launch each year. And then the second piece is, how do we reach this audience to the store in terms of advertising on there? And because we know that the console gamer is a high value customer. That's one that's much more valuable than just the mobile gaming user.