Gaming Consoles Part 1: The Thesis - [Business Breakdowns, EP.201]

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Jan 15, 2025

Sia Kamalie, founder and fund manager at Skycatcher, shares his expertise on the evolving video game console market. He discusses a major paradigm shift towards software-driven revenue models. The conversation highlights the booming $50 billion market, contrasting spending habits of gamers, and the dominance of giants like Sony and Nintendo. Kamalie also explores Generation Z's impact on gaming dynamics and the prospects for live service games, shedding light on how these trends could reshape the industry's future.

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INSIGHT

Console Market Overview

The video game console market is a $50 billion market dominated by Nintendo, Sony, and Microsoft.
Sony's PlayStation leads in mature audience spending, while Nintendo's Switch focuses on the family category.

INSIGHT

Console vs. Mobile Gaming

While mobile gaming has grown significantly, console gaming has steadily doubled its market size in the last 10 years.
Console gamers are more engaged, spending hours playing, unlike mobile gamers who play in shorter bursts.

INSIGHT

Consoles as Platforms

Video game consoles are evolving into platforms with digital game purchases, online play, and subscription services.
This creates a lock-in effect, increasing user engagement and potential revenue streams for console makers.

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

We start with an overview of the video game console market, laying out its size and current state. In episodes two and three, we explore this theme in even more depth when we cover the names most exposed to it: Sony and Nintendo.

On these episodes, we always recommend doing your own research. We invited Sia on to lay out his thesis, so this one is particularly geared towards that investment opportunity. Please enjoy this Breakdown of the video console market.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com).

Show Notes

(00:00:00) Welcome to Business Breakdowns

(00:06:54) Overview of the Video Game Console Market

(00:14:52) The Shift to Software and Digital Purchases

(00:19:02) Nintendo and Sony: Current Trends and Future Prospects

(00:29:23) In-Game Purchases and Subscription Models

(00:33:58) Nintendo's Iterative Console Cycle

(00:34:47) Sony's Lifetime Value and Revenue

(00:35:56) Profit Margins and Software Sales

(00:40:26) Console vs. Mobile and PC Gaming

(00:47:44) The Rise of eSports

(00:50:41) Gen Z and the Future of Gaming

(00:54:28) Emerging Markets and Console Growth

(00:56:37) Valuation and Market Potential

(00:59:08) Lessons From The Video Game Console Market