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Director’s Cut
Consumer drive to digital
Back in the 1990s, futurists talked about the disruptive impact of the internet on
old business models and the profit opportunities it would create in new sectors.
Now investors did get carried away with the idea, leading to the tech bubble and
its collapse, but the trend towards digital and online has continued.
You can see that trend play out in David Gibson’s latest report on the Japanese
gaming sector. Since 2004, he says the amount spent on digital games has risen
from US$3 to US$20 billion, which is greater than the GDP of Afghanistan. He
expects the growth of digital to continue as consumers increasingly play mobile,
social and downloadable games. It’s also interesting to note that games are the
most popular mobile app category, so the increased use of iPhones and tablet
PCs supports this trend. David says the trend benefits game makers, such as
Capcom (9697 JP). In contrast, game hardware makers such as Nintendo
(7974 JP) and Sony (6758 JP) face increasing pricing pressure in the packaged
goods markets, which is expected to decline. >> Read Report
Retail is another sector feeling the disruptive influence of the internet. This is
particularly true in Australia, as their high currency makes it even more attractive
to spend money on overseas websites like Amazon and ASOS. Rob Blythe’s
research shows online is 7.2% of Australia’s retail spend, compared to 5.3% in
the US and 8.5% in the UK. Also, Paul Checchin’s survey of 3,000 Australian
consumers shows 90% of people who shop online do so to get cheaper prices.
In all likelihood, retailers around the world will continue to feel pricing pressures
while this arbitrage between online and offline is so strong. >> Read Report
Long term, it’s our view the growth in online and digital will likely outpace their
physical competitors, whether this is in gaming, retail or other sectors. For stocks
that benefit from the shift, this trend will support earnings certainty and also
higher PER multiples. That said, the older economy side of this divide is also
likely to face increasing earnings risk and lower PER multiples.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Director’s Cut
Consumer drive to digital
Back in the 1990s, futurists talked about the disruptive impact of the internet on
old business models and the profit opportunities it would create in new sectors.
Now investors did get carried away with the idea, leading to the tech bubble and
its collapse, but the trend towards digital and online has continued.
You can see that trend play out in David Gibson’s latest report on the Japanese
gaming sector. Since 2004, he says the amount spent on digital games has risen
from US$3 to US$20 billion, which is greater than the GDP of Afghanistan. He
expects the growth of digital to continue as consumers increasingly play mobile,
social and downloadable games. It’s also interesting to note that games are the
most popular mobile app category, so the increased use of iPhones and tablet
PCs supports this trend. David says the trend benefits game makers, such as
Capcom (9697 JP). In contrast, game hardware makers such as Nintendo
(7974 JP) and Sony (6758 JP) face increasing pricing pressure in the packaged
goods markets, which is expected to decline. >> Read Report
Retail is another sector feeling the disruptive influence of the internet. This is
particularly true in Australia, as their high currency makes it even more attractive
to spend money on overseas websites like Amazon and ASOS. Rob Blythe’s
research shows online is 7.2% of Australia’s retail spend, compared to 5.3% in
the US and 8.5% in the UK. Also, Paul Checchin’s survey of 3,000 Australian
consumers shows 90% of people who shop online do so to get cheaper prices.
In all likelihood, retailers around the world will continue to feel pricing pressures
while this arbitrage between online and offline is so strong. >> Read Report
Long term, it’s our view the growth in online and digital will likely outpace their
physical competitors, whether this is in gaming, retail or other sectors. For stocks
that benefit from the shift, this trend will support earnings certainty and also
higher PER multiples. That said, the older economy side of this divide is also
likely to face increasing earnings risk and lower PER multiples.
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