 Hey everyone, welcome back to Nintendo Prime. If this is your first time watching one of our videos, be sure to drop a like and subscribe. We also have a couple of giveaways going on as well. If you wanna know what they are and how to enter and everything, just head down to the pinned comment or the description. All right folks, so something obviously massive happened over the last week, and that is that Microsoft is attempting to purchase Activision Blizzard for nearly $70 billion. I think the official numbers are like $68.7 billion. I don't know, the numbers might get adjusted over time, the sales not supposed to go final until 2023, so it's gonna be a while before we really know what happened here. But as I sat here all week thinking about this, and we had conversations on the podcast and other videos and avenues, it made me think about Nintendo and their place in this industry because that $68.7 billion is higher than Nintendo's $58 billion evaluation. Right now, Nintendo has basically a total value between all their stocks and money in the bank and everything of about $58 billion. And it's like, could Microsoft buy Nintendo? And I think the answer is obviously no because Nintendo's most of stock is held by trust funds and other things out there. So yeah, Nintendo's not gonna be able to be bought out by Microsoft. So that's not really the conversation, but it made me think, why as Nintendo fans as a Nintendo fan am I not really worried about this? In fact, I kind of view this as a positive, but Nintendo did something that they've been doing for quite some time, and it's never been more obvious than right now that they made the right choice. And that is Nintendo betting on themselves. Now look, I'm not gonna sit here and pretend that this is some original idea of mine. Player Essence out there put a video this morning that I maybe watched a minute of. No, sorry, buddy, I love you, OJ, but I just, I ain't got time today. But here's the thing, Nintendo betting on themselves, and they bet on themselves in a way that I don't know that a lot of companies can, because Nintendo has obviously that huge stable of IP. And you by the way, Sony has a bunch of exclusive games that come on their platform. And Microsoft needed to spend, what, by the time it's all said and done, what $77 billion between Zenimax and this acquisition. And by the way, I think Microsoft needed to do that and should have done that. And I'm glad that they did. I think Activision Blizzard was obviously in a very tough spot, and they needed some sort of something like this to shake the whole company up to potentially, I don't know, save the reputation or at least create something nice for the employees. Of course, the employees are obviously worried about what's gonna happen, are there gonna be job cuts? Microsoft's talking about bringing back other IP. They're meeting with Sony because Sony's all worried about losing Call of Duty. That seems to be the only thing they're worried about losing, so I guess if all the other IPs go exclusive and Call of Duty doesn't, I don't know, it's because Sony is just scared and Microsoft doesn't wanna lose the acquisition because they don't have Call of Duty. By the way, I have no idea what's gonna happen. I do think that Call of Duty does, or at least some Call of Duty games anyways, eventually be exclusive to Xbox, but maybe not all of them, so we'll see. But I think Microsoft needed to do this because obviously they've been in last place and they're doing a completely different approach to the industry. They are obviously doing this whole Game Pass thing and doing everything they can to boost Game Pass. They have grown by seven million subscribers in the last year and obviously they hope to continue to increase that. They probably wanna grow by 10, 12, 15, maybe 20 million this year and then who knows after? And then they really want it to become the de facto thing that no matter what platform you own, you also are a Game Pass subscriber. They definitely have me on board, so we'll see what happens in the future. But Microsoft needed to do that because they couldn't bet on themselves. Betting on themselves wasn't really working out for them. They bet on themselves with the original Xbox and you could say that was maybe a success. Microsoft did lose money on that platform, but it was their first foray into the console business and for the most part, hey, they popularized online subscriptions, they popularized online multiplayer with FPSs like Halo, Combat Evolve, Halo 2, et cetera. So you can argue that maybe that was a success for them. The Xbox 360 obviously sold phenomenally well, but again, Microsoft still wasn't making handover fist money in the gaming sphere and they lacked a lot of exclusives. It was a lot of the same IPs, the Gears of Wars, the Halos, Fables, et cetera, repeated over and over again. And obviously they bet on themselves again with the Xbox One, where, hey, look, we're just gonna keep trying to push this out. We bought Retro Studios a while back. We're gonna try to get them to make games. Oh, maybe this thing's a multimedia device. And it was really confusing messaging and honestly, Microsoft betting on themselves didn't work out. Hence why they made these acquisitions. Hence why they did a 100% shift over to a service rather than focusing on the systems. Now, yes, the Xbox Series X and Series S are selling well and are good platforms, but Microsoft needed to do something else. Nintendo though, the interesting thing is that Nintendo wasn't exactly always in a good spot either. After the Wii, Nintendo had the worst generation they've had in the history of the company, at least in the history of the video game portion of the company. The 3DS is the worst selling handheld Nintendo's ever released and the Wii U is the worst selling home console ever released. Now, we could debate about the virtual boy and where that stands. You could argue that's a completely different thing. That's a tabletop system. And now we have Switch, which does tabletop, home and portable. So maybe they've got it all together in one now, but the bottom line is obviously we didn't really know. Nintendo bet on themselves with the Wii U and the 3DS. And for the most part, it didn't look like it was going to work out for them. They actually experienced their first two years of losses ever as a video game company where at the end of the year when all of the margins were checked, when all of the accounting was done, when all the employees were paid and the debts were paid and the investments in the future were done, Nintendo lost money. For the first time ever in 30 plus years as a video game company, they lost revenue. And looked like Nintendo was heading down a dark path, at least for the future of the company. Now they had enough money in the bank to survive these kind of losses for quite some time. So it wasn't as if they were about to go bankrupt, but it wasn't a positive sign. And when you're in that position, it's all what do you do next? Cause even back in the GameCube era, when they made that pivot to the Wii, they weren't in that position. They were still a massively profitable company. But Nintendo doubled down. Nintendo did what other companies have tried to do and not necessarily done so successfully. Nintendo doubled down and said, no, we're not going to go out and make a bunch of acquisitions. We're not going to try to buy platinum games. We're not going to try to buy a tantalists. We're not going to try to buy a panic button or any of these other studios out there. Now they did eventually purchase next level games. And to be clear, Nintendo has made acquisitions, retro studios, monoliths up, and next level games are three studios that Nintendo has wholly purchased over the last 20 years. So yes, to be clear, Nintendo does purchase studios, but they don't like buy anything insane. Anything that's market shifting, right? Nothing like what Microsoft is doing. And arguably Sony has bought the bigger studios and Insomniac and obviously Naughty Dog. Like they arguably are bigger studios, even though next level games has actually had their games sell just as much as say Naughty Dog, but that's neither here nor there. The point is that Nintendo doesn't really acquire studios that much. Instead they doubled down and said, you know what? We know what we're doing. We're not only going to release a new system and not give up on the hardware market, even though this system is in two year old technology, we're not giving up. And we're just going to double down on ourselves. We're going to show you that Splatoon, launched during the very worst era, brand new IP, launched during the very worst era of Nintendo, can be a massive hit. We're going to show you that Zelda, an IP that has had a hard time trying to consistently sell over six million every single release, can be something bigger than what it is. We're going to show you that Metroid, a series that struggles to sell two million, can be more with Metroid Dread. We're going to prove to you that Mario still has the exact same power today as it did during the Wii era. And we're going to prove to you by having Mario Odyssey move over 20 million units. We're going to show you that Pokemon doesn't need to be stagnant and encourage the Pokemon company to let Game Freak do something different with Legends Arceus. And we obviously have yet to see how that's going to turn out. Previews did drop today. Previews seem to be pretty glowing for the most part. So we'll see how it actually turns out when the reviews drop and we get the game in our hands next week. Nintendo doubled down. They created new IP. They're like, we're not done making new IP. Here's ARMS. And ARMS is actually one of the best selling fighting games of 2017. Now, whether we're getting ARMS 2 or not or LEGS or whatever they call it, I don't know. But Nintendo doubled down. And it's paying off. They potentially have the best selling system they've ever released. It's already likely passed Wii, probably gonna pass Game Boy this year. And next on the list is DS for them. And if they could somehow get past DS, it's PlayStation 2 or bus for Nintendo. They might've just released their most popular platform ever and they did it in a very un-Nintendo-like way. See, Nintendo's kept this two-pillar approach to gaming to protect themselves. Handheld's always been massively popular. 80 plus million every generation, no problem. Well, until 3DS, which only had 75. Nintendo's home consoles sold a lot with the NES and then started arcing down and then they got the Wii and then just crashed off a cliff after that. So there's been a lot of inconsistencies. And Nintendo said, you know what? Instead of us keeping this two-pillar approach, which has protected us over the years, we're gonna put all our eggs in one basket. Doubling down on a single platform, putting all their games there. And it's paid off. Nintendo is now posting profit margins that are matching and exceeding the days of Wii and DS. The most profitable time period for Nintendo in the history of the company. Remember, the Wii sold 101 million units, the DS sold 150 million units, and with a single platform, Nintendo is posting profit margins that match or exceed the peak years of Wii and DS. With one product doubling down, putting all the eggs in one basket, saying this is the best we got. And Nintendo did it. Now, whether Nintendo will continue to do it, we'll see. We don't know what the next generation's gonna hold and we don't know where Nintendo's gonna go in the future. But what is clear here is that Microsoft needed to make these acquisitions because they were struggling in the space. And to do something brand new, to try something different, they needed to do something different and make acquisitions. Sony, by the way, has been busy making acquisitions this entire time. They have bought several studios over the last decade. Nintendo's got three because Sony and Microsoft, unlike Nintendo, didn't found themselves in the video game industry by making their own stuff. Now, Microsoft did have some studios back in the day making games on PC, but reality is both of those companies have always been reliant on others. Nintendo self-created their own games. Now, they did have some help along the way. They didn't own how laboratories are first and how laboratories help bring some games out, although Nintendo did save them from bankruptcy. So I guess there was a bit more of a partnership there that meets the eye when you go back and look at the history of Nintendo. But the point is that Nintendo is self-reliant. You see, PlayStation wasn't that big a deal for Sony back in the day. They were a massive electronics manufacturer. TVs, you know, portable DVDs, CD players, Blu-ray players, eventually, and everything in between. And obviously, PlayStation's risen up to be one of the pillars of that company. You know, gaming has always sort of been there at Microsoft, but never been a pillar. At least not a pillar. They're rolling to invest this in until now. And what's interesting here is that Nintendo's the only one of those three that are completely self-made. The only thing Nintendo has to rely upon is themselves. Oh, we might not be getting the next Elder Scrolls game on Switch or Call of Duty, which we haven't gotten this entire generation anyways. Do you see Nintendo panicking, calling Microsoft up, getting them on the phone, being like, hey, we're still gonna get the next Crash game, right? Oh, if you make another Crash Racing, we're in on that. Call of Duty Warzone. Like, you're gonna eventually port that over to our next platform, right? Nintendo isn't panicking because of moves others are making. Sony's busy on the phone talking to Phil Spencer, trying to sort this out and not lose anything, whereas Nintendo is just sitting there. We didn't need them anyways. We didn't need Microsoft giving us Ori or giving us Cuphead. I appreciate that we got them, but the Switch was gonna be successful without it. In fact, Switch has proven that despite some major third parties coming over, Skyrim at launch, the Witcher 3, Diablo. Um, God, we're gonna forget the Doom and everything from Bethesda in software that Nintendo likely isn't going to get anymore. Do you think Nintendo's panicking? No, because Nintendo has proven, as long as they're doing one platform, they can release enough software on their own to get by without anyone's help. Nintendo bet on themselves. It doubled down and maybe even tripled down at this point. The Nintendo Switch is using technology right now that is seven years old. The Tegra X1 chip released seven years ago. The Switch is about to turn five years old and be in its sixth year on the market, and yet it's peaking. In fact, this year might be the peak year of sales for Switch. Nintendo bet on themselves. And they bet on themselves in a way that almost nobody else could. Now, this isn't trying to insult other companies. There's multiple ways to succeed. Sony has consistently sold over 100 million units on every platform they've released besides obviously their handhelds. They have never been able to match Nintendo's success with handhelds, although PSP sold a lot. It didn't sell a lot of games. There's no specific reason. We won't get into why PSP was a big deal. Um, and PS Vita just totally tanked. And then obviously PlayStation 3 didn't sell 100 million, but PlayStation 1, PlayStation 2, and 4 all crossed 100 million units. They obviously have the best selling system of all time right now in PlayStation 2. PlayStation 5 is probably gonna sell 100 million units if I had the guests today. Sony found a different path to success by appealing to all the companies that Nintendo sort of tried to force to do things their way back in the day. You're gonna put your games on cartridges. We don't care that you want more data. We don't care that you want better audio. You're gonna do this. You're gonna need the Nintendo seal of approval to be on our platform. Nintendo might have dropped a lot of those restrictions over the years, but that's what really started these companies wanting an alternative like PlayStation. Obviously we all know about the fumbled PlayStation contract back in the day where PlayStation should have been a Nintendo system in the first place, but Nintendo didn't believe in it. Bottom line is, Nintendo doubled down, tripled down, quadrupled down on themselves this generation and they're reaping all of the benefits. They're using hardware that's seven years old, still have yet to do a single price drop on that hardware, released over a vision with a better OLED screen, a lamp port, and obviously just a better overall design with the kickstand. And they're making handover fist profits on every sale of it. Now the pandemic may be helped, but the switch was massively successful before the pandemic ever arrived. It didn't need the pandemic to move 20 million units a year. It was already doing it. The switch is in a precarious situation. It's in a jovial situation. It has an amazing lineup this year and probably an amazing one in 2023. Nintendo is primed to be as successful as they want to be moving forward by just kind of doing their own thing, but doing it in a way that's smart and intelligent, betting on themselves rather than worrying about what anybody else is doing. Oh, the next switch needs to have 4K, DLSS. It needs to be more powerful than the Steam Deck, does it? Steam Deck's not getting Smash Bros. Steam Deck's not getting Mario Kart and Zelda, at least not natively, obviously we all know about emulation. All they need is a powerful enough system that you can't successfully play their games on systems like that anymore. The whole reason Switch is easy to emulate is because Switch is seven year old technology. Guys, Nintendo bet on themselves. And so far, it's been the best bet in gaming. Microsoft's betting on their deep pockets from their parent company. Xbox is betting on that. Sony's betting on the fact that they found a way to sell 100 million units every time and they're gonna keep doing it, but Sony's still afraid of what Microsoft is doing. Nintendo's the only one not panicking here. Microsoft's worried about getting this sale approved and appeasing everyone they can and not having the government blocking. Sony's worried about losing a stable of IP that have sold very, very well on their platforms that have helped maintain Sony's market lead. And Nintendo's just sitting back letting them duke it out and laughing their ways to the most profitable gaming company in the world. And you know what's even crazier? For as big as Sony is, because they're much bigger than anything to do with gaming. They own the Spider-Man license for crying out loud, for movies. All those Marvel Spider-Man movies, yeah, Sony makes money off that. Guess what? Nintendo's still more profitable than them and the richest company in Japan. Folks, Nintendo made the right choice. It's kind of cool watching Nintendo just do something different than everybody else. Again, except this time, it seems a bit more sustainable than a one-off motion control system in 2006. All right, folks, I'm Nathaniel Ruffeljantz from Nintendo Prime. Thank you so much for tuning in and let me know your thoughts on all this down in the comments below.