Nintendo Stock Analysis – The Impact of Nintendo Directs
Over 300 days have passed since the last official Nintendo Direct presentation, and fans continue to grow restless. While Nintendo has provided sporadic trailers and updates on its official Twitter feed, the company has remained silent concerning the future of its quarterly news publication. In fact, president Furukawa recently stated that Nintendo might change its marketing approach as a result of the pandemic. Considering Nintendo Direct presentations remain the envy of Sony and Microsoft, we began to wonder if financial implications were to blame. Using the Nintendo Stock price change as a benchmark, GamingROI analyzed the impact of the Nintendo Direct presentations on the company’s bottom line. Let’s dive in.
The Underlying Assumptions
|Year||ND ROI||Avg ROI||Diff||ND SD||Avg SD||Diff|
*SD = Standard Deviation
To conduct the analysis, the staff considered a number of approaches. After thorough examination, we concluded that the optimum method of evaluating Nintendo Direct presentations would be to employ the following approach:
- To ensure comparability and consistency of the data, we only considered the financial impact of the full-length Nintendo Direct presentations. We did not consider “Direct Mini” or video-game specific presentations.
- We began by calculating the average monthly Return on Investment (ROI) and Standard Deviation (SD) from 2011 to 2019. These averages served as the benchmark to evaluate the impact of Nintendo Direct presentations on stock prices.
- Finally, the staff calculated the seven-day moving average return on investment for each official Nintendo Direct presentation. We then averaged this data for each calendar year and compared the impact of the Nintendo Direct presentations with the overall annual return on investment.
Managing the Upside
Needless to say, we were shocked. Going into this project, the entire staff adhered to the premise that Nintendo Direct presentations directly correlated to financial gains. Instead, we discovered a revealing truth: while popular among fans and critics, Nintendo Direct presentations do not significantly alter investment activity. Listed below are the two principle discoveries:
- During years of overall stock price growth, Nintendo Direct presentations did not immediately boost the company’s stock appeal.
- However, during years of overall stock price decline, Nintendo Direct presentations help to stabilize price drops.
None of this information is surprising. While the Nintendo Direct presentations provide the community with predictability and hope, the primary driver of financial performance is still sales revenue. So long as fan “hype” translates to units sold, investors are happy.
But skepticism across the industry remains, and companies are beginning to consider alternatives. Will fans still buy games without routine news updates? Do companies need to provide status updates on development cycles to sell units? These are questions that Nintendo and other industry giants are reconsidering in light of the pandemic.
Are fans disappointed with a lack of Nintendo news? Absolutely. Do investors care about marketing strategy? Not really. It all comes down to sales. So long as fans continue to buy Nintendo games and systems, the method of presenting information via the Nintendo Direct outlet is immaterial..
But we want to know what you think. Do you think that Nintendo is better off by changing its marketing approach? What do you think of the analysis of the Nintendo Direct presentations on the stock price? Let us know in the comments below or the social media links on the right. Also, be sure to check out our other news items on Pokemon, Modern Warfare, Capcom, Blizzard and more.
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