Listen up retards. Do you happen to feel regret because you always think “ohhh if I yoloed my savings on TSLA/AMD/NVDA 🚀 leaps years ago I could be rich by now!!!”
Well if you didn't know already, it doesn’t really matter what happened in the past. Hindsight will always be 20/20. You shouldn’t be harsh on yourself on your past self that your past self wasn’t retarded enough to yolo their savings into AMD/TSLA/.... Your past self doesn’t have the same knowledge that your current self has. It’s fine. If you judged those stocks with the best DD you could do at the time and didn’t think they were worth it, then you did a good job.
If you always think about what you could/should have done in the past, then you don't have the right attitude to play the stock market casino imho.
The single most important thing is to be able to look ahead. There are always plenty of opportunities around. There are thousands of rockets that are still on earth right now. Some may depart this year, others will stay a little longer on earth. The true strength lies in being able to identify those rockets with the knowledge you have right now. And if you still miss most rockets that will take-off this year that's fine, maybe you'll learn, get better and you'll do better next year.
Now, what if I told you there’s a big rocket that’s parked right right here on earth and it has decent chance for take-off this year? Maybe it won't quite reach the moon this year yet, but hey leaving the exosphere should already be a cool milestone.
It has rock-solid fundamentals and will see lots of growth in the following years/decade.
It’s a company that has the fundamental technology to power all the computer vision tech, which is bound to boom this decade.
The company we’re talking about is of course Sony, and it is extremely undervalued right now.
Its P/E is only 14. They have a P/S of 1.65, a PEG of 0.92 (< 2 is already somewhat exceptional for a company/conglomerate of Sony’s size, under 1 is a steal)
Much lower than all of its same-sector peers. This indicates significant undervaluation.
Next up Sony has a P/CF 13.2, ROE of 20% (S&P 500 average is 14% which would already be considered pretty good. 20% ROE is excellent), PEGY of 0.89, P/B of 2.65 and finally Sony has $41.6B in cash on hand. This makes Sony one of the cheapest tech/entertainment/EV/semiconductor growth stocks you will find on the market.
(ROE of 20% + PEGY of 0.89 + PEG of 0.92 means this company is a growth stock based on the numbers alone, but we’ll dig into the actual company and overall outlook in a moment)
I challenge all retards to find a company with similar benchmarks in one of the mentioned sectors, seriously.
Quite frankly doing this DD honestly blew my mind. I kept looking everywhere for reasons why the company could be so undervalued and why they may struggle in the future. Very important to look at all the challenges the company faces to make sure I’m not just doing confirmation bias DD. But all I could find was the opposite. After several weeks and months of working on this DD, I can only conclude that it is overall a very solid company for a bargain price. The new CEO is taking the company in a great direction imho and I'm begin to think he could be Sony's Satya Nadella.
So if you want some easy tendies, maybe consider $SNE while it is still cheap, I’d say.
For the autists out there who care about analyst ratings, SONY ($SNE) currently has 18 BUY ratings, 2 OVERWEIGHT, 4 HOLD and 0 SELL. (= analyst consensus is a STRONG BUY). Very little analysts cover this stock compared to other entertainment/tech companies, so this adds to my assertion that the stock is very much under the radar. Which means you have time to get in before it gets noticed by the larger investing world and before it starts to get a more fair valuation (P/E of around 30 would be more fair for this company I think, but still cheaper than many same sector peers). But, anyway the few analysts who do happen to cover this company are basically all saying it’s an instant-buy at its current price.
Most boomer investors still think big Japanese tech companies are dinosaurs that have long been surpassed by China, South Korea and Apple etc ages ago. Young boomers may think Sony = PlayStation and that it's it. But the truth is that PlayStation, while very important (about 24% of Sony's total revenue last year), is a part of a larger story.
Lots of investors in general associate Sony with the passé Japanese electronics companies from the 80’s and the 90’s. Just like a lot people may think BlackBerry is a struggling phone company.
While Sony may not be the powerhouse in consumer electronics it was in the 80’s and the 90’s, in a lot of ways they are more relevant than ever before. Despite being a well-known brand and being known as the company behind PlayStation, for some reason its stock still seems to be under the radar among both retail and institutional investors. And boy, are they mind-blowingly undervalued. Even if a big part of its business would collapse tomorrow, they would still be slightly undervalued. And I am about to tell you why.
(& btw compared to Japanese tech/entertainment stocks $SNE is still super cheap (Canon, Nikon, Toshiba, Sharp, Panasonic, Square Enix, Capcom, Nintendo, Fujitsu all have P/E ratios ranging from 18 to 77 and none of them have the combination of global clout, fundamentals & growth prospects that Sony has))
2021 Sony as a corparation is not the fucking Sony from 2005-2015’s, just like BlackBerry in 2021 is not the fucking Blackberry from 2012. Just like Garmin in 2021 is not Garmin from 2011. Just like AMD in 2021 is not AMD from 2012.
No, in 2021, Sony is the global leader in imaging technology and people do not fucking realize it. Sony has 50% marketshare in the CMOS image sensor market. There’s a very good chance the smartphone in your pocket has Sony image sensors (unless it’s a Samsung phone). Sony image sensors are powering a big part of today's vision/camera technology. And they will power even more of tomorrow's computer vision tech.
In 2021, Sony is a behemoth in video games, music, anime, movies and TV show production. Sony is present in every segment of entertainment. Sony’s entertainment branches have been doing great business over the past 5 years, especially music and PlayStation. Additionally, Sony Pictures has completely turned around.
In 2021, Sony is the world’s biggest music publisher (and second biggest music company overall). Music streaming has been a boon for Sony Music and will continue to be.
In 2021, Sony is among the biggest mobile gaming companies in the world (yes, you read that right). And it’s mainly thanks to one game (Fate/Grand Order) that nets them over $1B revenue each year. One of the biggest mobile gaming companies + arguably biggest gaming brand in the world (PlayStation).
In 2021, Sony is an EV company. They surprised the world when they revealed their “Vision-S” at CES 2020. At the reception was fantastic. It is seriously one of the best looking EV’s. They already sell sensors to Toyota. Sony will most like sell the Vision-S's tech to other car manufacturers (sensors for driving assistence / autonomous driving, LiDAR tech, infotainment system).
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40 sensors in the Sony Vision-S
Considering the overwhelmingly good reception of the Vision-S so far, I suspect the Vision-S could be another catalyst that will put Sony as a company on the radar of investors and consumers.
We've seen insane investment hype for anything even remotely related to EV over the past year. We've seen a company that barely had a few EV design concepts (oh wait, they had a gravity-powered truck though) even get a $30B market cap at some point lmao.
But somehow a profitable company ($SNE) that has an EV that you can actually drive, doesn't even have a fair valuation?
In 2020’s Sony’s brand value is at their highest point since 12 years. In 2021, it is projected to be a its highest point since 2001 assuming same growth as average yearly growth from 2015 to 2020. Keep in mind brand valuation is a bit bullshitty as there’s no standardization to compare brands from different sectors, let alone non-consumer-facing brands with consumer-facing brands. But one thing we can note is that Sony both as B2C brand and as a B2B company is on a big upwards trend.
https://interbrand.com/best-global-brands/sony/
https://careers.uw.edu/blog/2020/03/17/these-are-the-10-biggest-video-game-companies-in-north-america-shared-article-from-zippia/
In 2021, Sony is an entertainment behemoth. They have grown their entertainment branches by a huge amount over the past 5 to 10 years (they made some big acquisitions in the music space especially and they’re now also all-in in anime). I don’t think people realize how big Sony is as an entertainment company. I dug up the numbers and as of Q3 2020, PlayStation is the second biggest video game company in the world (Tencent is #1) in revenue (I suspect Sony might dethrone Tencent after Sony’s FY Q3 2020 is released). But Sony already comes very close to Tencent especially if you add Fate/Grand Order (which is under Sony Music and not under PlayStation) under PlayStation.
There’s no single other company that has this unique combination of a dominant/important position in all entertainment segments. (video games + music + movies + TV series + anime + TV networks). I guess Tencent maybe?
In 2021, Sony has amazing momentum in the camera space. If you’re familiar with the enthusiast photography space, you should know this. Basically, the market is slowly shifting from SLR to mirrorless cameras. This is because mirrorless cameras tend to smallelighter, have faster AF, better low light performance, better battery life and better video performance. Sony is the company that has been specializing in the development for mirrorless cameras for over a decade while Canon’s bread and butter has always been SLR cameras. Sony is in the lead when it comes to mirrorless cameras and that’s where the market is shifting towards. Because the advantages of mirrorless have become more and more apparent and Sony’s cameras have become technically superior, Sony has gained quite a bit of market share over Canon and Nikon in the last few years. In 2019, Sony overtook Nikon as the #2 camera manufacturer. Sony is in an upwards trend here. (they have the ambition to become the world’s #1 camera brand) Sony also has very good marketing for their cameras. (Sony has a lot of YouTubers / influencers / brand ambassadors for their cameras despite being a smaller brand than Canon)
(just search on YouTube and/or Google “switching to Sony from Canon” just to give you an idea that they do have amazing brand momentum in the camera space. You won’t get as many hits for the opposite)
A huge portion of Sony’s profit comes from image sensors in addition to music and video games. This is in addition to their highly profitable financial holdings division & their more moderately profitable electronics division.
Sony’s electronics division, unlike other Japanese brands, has shown great resilience against the very strong competition from China & South Korea. They have been able to maintain their position in the audio space and as of 2020 are still the global market leader in high-end TV’s (a position they have been holding for decades) and it seems they will continue to be able to maintain that.
But seriously this company is dirt-cheap compared to any of its peers in any segment and there’s various huge growth prospects for Sony:

• CMOS image sensors & Sony’s overall imaging prowess will boom due to increased demand from automotive sector, security & surveillance industry, manufacturing industry, medical sector and finally from the aerospace & defence industry. On the longer term, image sensors will continue to boom due to increased demand for computer vision & AI + robotics. And for consumer electronics demand will remain very high obviously.
• Sony is aiming for 60% market share in the CMOS image sensor market by 2026. Biggest threat here is Samsung here who have recently started to aggressively invest in image sensors and are challenging Sony. Sony has technological lead + higher production capacity (and Sony will soon open a new plant in Nagasaki), so Sony should be able to hold off Samsung.
• The iPhone 12 Pro has 3 cameras + a lidar sensor. Apple now buys 3 image sensors (from Sony) + LiDAR sensor (from Sony) per iPhone 12 Pro they manufacture. Remember the iPhone X and iPhone XS? That one had “only” 2 rear cameras (with image sensos from Sony of course). Basically, Sony will be selling exponentially more image sensors as more smartphones get equipped with more and more cameras.
• Now think about how many image sensors Sony can sell to Apple if the iPhone 13 will have 5 cameras + LiDAR sensor (I mean the number of cameras on smartphones certainly won’t decrease)
• Gaming (PS5 hype, PSN game sales are booming, add-on content is booming, PS+ subscribers count is booming and finally PSNow & first-party games sales are trending upwards as well). Very consistent year-on-year profit & revenue growth here. They have a history of beating earnings expectations here. The number of PS+ subscribers went from 4M to 48M in just 6-7 years. Investors love to hype up recurring revenue and subscription services such as Disney+ and Netflix. Let’s apply the same logic to PS+? PS+ already has more subscribers than HBO Max in the USA.
• PlayStation (video games in general) has not even scratched the fucking surface. Most people who play video games now are millennials and kids. Do you think those millennials will stop playing video games when they grow older? No, of course not. Boomers today also still watch movies and TV. Those millennials have kids and those kids are now also playing video games. The kids of those kids will also play video games etc. Basically the total addressable audience for video games will by HUGE by the end of the decade (and the decades after that) because video games will have penetrated all age ranges of the population. Gaming is the fastest growing segment of the whole entertainment business. By a large margin. PlayStation is obviously in a great position here as you can guess from the PS5 hype, but more importantly imho, the growth of PS+ subscribers (currently a bit under 50 million) and PSN users (>100 million MAU) over the past 5 years shows that PlayStation is primed to profit from the audience growth.
• On top of that you have huge video game growth in the China where Sony & PlayStation is already much better established than Xbox (but still super small compared to mobile games and PC gaming in China). Within the console market, Xbox only competes with PlayStation in North America. In the rest of the world, PlayStation has an enormous lead over Xbox. Xbox is simply a lesser known and lesser desirable brand in the rest of the world
• Anime streaming (basically they have a monopoly already + vertical integration, it might still be somewhat niche right now, but it will be big within 5 years. Acquiring Crunchyroll was a very good move)
• Music streaming (no, they don’t have a music streaming service, but as music streaming grows, Sony Music also gets a piece of the growing pie through licensing/royalties, and they also still have a little 2.8% stake in Spotify)
• Apple, Amazon, Netflix, AT&T and Disney are currently battling it out in the streaming wars. When there’s a war you have little chances of winning, you shouldn’t be the one waging the war. You should be the one selling the ammo. Basically Sony Pictures (tv shows + movies) is in that position. Sony Pictures can negotiate good prices for their content because Apple, Amazon, Netflix, AT&T are thirsty for content and they all want their own exclusive content. Sony Pictures does not need to prop up their own streaming service just like Sony Music doesn’t need their own music streaming service when they can just license out their content and turn a profit. There will always be demand for TV & movies content, so Sony Pictures is well positioned is as an independent content provider. And while Apple, Amazon, Netflix, AT&T and Disney are battling it out on the forefront, Sony is quietly building their anime empire in the background. Genius business move from Sony here, seriously. They now have anime production & distribution.
• Netflix has 200M subscribers and they currently have a 250M market cap. Think about what Sony will have in 5 years? >30M Crunchyroll subscribers (assuming all anime will be consolidated into Crunhyroll) & >100M PS+ & PSNow subscribers? Anime and gaming is growing faster than movies and TV shows. (9% CAGR for anime, 12% CAGR for gaming vs. 5% CAGR for the whole movies & TV show entertainment segment which includes PVOD, SVOD, box office, TV etc etc). And gaming as a whole is MUCH bigger than SVOD streaming. Netflix gets 99% of their revenue & profit through subscriptions. For the whole Sony Group Corporation, their subscription services (games + anime) it’s currently only 4.5% of their total revenue. And somehow Sony currently has a meagre $128B market cap?
• PlayStation alone is bigger than Netflix in terms of operating profit. PlayStation has a MUCH higher profit margin than Netflix. For Q3 2020 Netflix posted $790M operating profit and PlayStation posted $988M operating profit. Revenue was was $6.44B for Netflix vs. $4.77B for PlayStation. (and btw Sony’s mobile gaming revenue (~$1B / year) is under Sony Music, it is not even in those PlayStation numbers!!!)
• Think about it. PlayStation alone posts bigger operating profit than Netflix (yes revenue is bit smaller, but it’s the operating profit that matters most). And gaming is growing faster than movies. And PlayStation is about 24% of Sony’s total revenue. And yet Netflix has a market cap that is equal to the double of Sony's market cap? Basically If you apply Netflix’ valuation to PlayStation then PlayStation alone should have a bigger market cap than Netflix' market cap.

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PS+ growth and software digital ratio growth
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• Sony Vision-S & autonomous driving tech (selling sensors + infotainment system to other car manufacturers). Sony surprised everyone when they revealed their Sony Vision-S electric vehicle last year at CES 2020 (in-house design and made in cooperation with Magna Steyr). And it’s currently being tested on public roads. Over the past year we have seen absurdly big investment hype into anything even remotely related to EV’s (including a few questionable companies). We’ve even seen an EV company with a gravity-powered truck get a $30B market cap in June last year. Meanwhile Sony, out of nowhere, revealed what is arguably (subjectively) one of the best looking EV’s. It got very positive reception at CES 2020. An EV that you can actually drive. But somehow their stock is still dirt-cheap based on their current fundamentals alone? Yet some companies that had pretty much nothing but some EV design concepts got insane valuations purely due to hype?
• LTE chips for IoT & Industry 4.0 (Altair Semiconductors)
• Cross-media IP (The Last of Us show on HBO, Uncharted movie etc). Huge unrealized potential synergy here (it’s about to change). We have seen that it can turn out super well when you look at The Witcher, Sonic the Hedgehog and Detective Pikachu. When The Witcher released on Netflix, sales of The Witcher 3 significantly increased again. Imagine the same thing, but with Sony IP’s. Sony Pictures is currently working on 7 video game IP based TV shows and 3 movies. We know The Last of Us tv series is currently in production for HBO. And then the Uncharted is currently in post-production and scheduled to be released in July this year currently. If Uncharted turns out to be successful, it will mark a big, new milestone for Sony as an entertainment company imho.
• Aniplex (Sony Music Entertainment Japan subsidiary for anime production, distribution & mobile games) had a fantastic year in 2020. (more on this later) There is a lot of room for mobile games growth with Aniplex. Thanks to Aniplex, Sony might beat their earnings forecast.
• Drones. DJI just got put on Entity List in USA and Sony started developing drones for prosumer / professional a few years ago. Big opportunity for Sony here to take a bit from DJI’s dominance. It only makes sense for Sony to enter the drone market targeting the professional & prosumer video market, considering Sony’s established position in the professional audio/video/photography space
• Currently Sony also has several ventures & investments in AI & robotics
• Over the past decade, Sony has also carefully expanded into medical equipment tech & biotechnology. Worth noting that Sony also has an important 33% stake in M3 inc (a medical services through-the-internet company with a market cap of $65.5B) (= just their stake in M3 Inc is worth $22B alone, remember Sony, with their large, diversified revenue streams & assets only has a market cap of $128B?)
• Sony Pictures has a great upcoming movie slate (MCU Spider-Man, Uncharted, Ghostbusters: Afterlife, Venom 2, Morbius, Spider-Verse sequel, Hotel Transylvania 4, Peter Rabbit 2, Vivo, The Nightingale). They will profit from the theatre reopening and covid recovery. They may even become more favourable among movie theatre chains because they won’t release their movies on the same day on streaming services like Warner (and yeah movie theatres are here to stay, at least for a while imho)
• All the above comes on top of established, mature markets (Financial Holdings & Electronic Products)
• Oh yeah, btw though TV’s are a cyclical and mature market and are not that important for Sony Group Corporation’s bottomline*, Sony TV’s will continue to do well for the following successive years: o 2020: continued pandemic boost

1. 2020-2021: PS5 / Xbox Series X/S
2. 2021 Summer Olympics (tv sales ALWAYS spike during the olympics) (& the effect is more pronounced for high-end TV’s, = good for Sony because Sony’s market share is concentrated in the high-end range (they are market leader in the high-end range)
3. 2022 FIFA world cup (exact same thing as for the olympics)
4. You could say it’s already priced in, but the stock is already ridiculously undervalued so idk…

You would think this company somehow has a bad outlook, but that could not be further from the true, let me explain and go over some of the different divisions and explain why they will moon:
Sony Entertainment
While Netflix, Disney, AT&T, Amazon, and Apple are waging the great streaming war, Sony has been quietly building its anime streaming empire over the past years.

• Sony recently acquired Crunchyroll for $1.175B (it is a great deal for Sony imho and will immediately be more valuable under Sony. Considering the growing appetite for anime I honestly do not even understand why AT&T sold it, they could have integrated it with their other streaming service (HBO Max) but ok)
• With Crunchyroll Sony now has the following anime empire:
• Aniplex (anime production & distribution, subsidiary of Sony Music Entertainment Japan) F
• Funimation
• Manga Entertainment UK (production, licensing, and distribution, UK)
• Wakanam (licensing and distribution in Europe)
• AnimeLab (licensing and distribution in Australia & New Zealand)
• Crunchyroll (3 million paying subcribers, 90 million registered users and 50 million social media followers)

* Why anime matters:
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Anime growth
“The global size is expected to reach USD 36.26 billion by 2025, registering a CAGR of 8.8% over the forecast period, according to a study conducted by Grand View Research, Inc. Growing popularity and sales of Japanese anime content across the globe apart from Japan is driving the growth”
(tl;dr anime 🚀🚀🚀🚀🚀, Sony is all in on anime and they have pretty much no competition)
Anime is the fastest growing subsegment of movies/video entertainment worldwide.

• Sony also has a partnership with Bilibili for anime distribution in China:

https://www.chinadaily.com.cn/a/201903/26/WS5c990d93a3104842260b2737.html

• Bilibili already partnered with Sony Music Entertainment Japan to bring Aniplex’s hugely successful Aniplex’s Fate/Grand Order mobile game in China.
• Sony acquired a 5% stake in Bilibili for $400M in March 2020 (that 5% stake is now already worth $2.33B at Bilibili’s current share price ($BILI) and imho $BILI still has lots of upside potential considering it is the de facto video creation/sharing/viewing à la YouTube/Twitch for GenZ in China)

https://ir.bilibili.com/news-releases/news-release-details/bilibili-announces-equity-investment-sony
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Sony Music Entertainment Japan
Aniplex

• Sony Music (mobile games) generated $400M revenue from its mobile games in Q2 FY2020, published through Aniplex (Sony Music Entertainment Japan, “SMEJ”) subsidiary
• They are the publisher of Fate/Grand Order, one of the most profitable mobile video games of the past 5 years (has generated $4B in revenue (!!) by the end of 2019 and is still as popular as ever). Fate/Grand order is the 7th most profitable mobile game in revenue worldwide as of 2020 (!)

Fate/Grand Order #9 game by revenue last year as of Q3 2020
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• Aniplex launched Disney: Twisted Wonderland in March this year. In Q3, it was the #10 most downloaded mobile game in Japan. (Aniplex now has two top ten games in Japan)
• Fate/Grand Order was the #2 most tweeted game in 2020 and #3 was Disney: Twisted Wonderland. You can see that Aniplex has two hugely successful mobile games. (we are talking close to $1B of revenue a year here). It is the #2 game in Japan by total revenue from Q1 2016 to Q3 2020 and the #9 game in worldwide revenue from Q1 2020 to Q3 2020.

Aniplex has two very popular mobile games

• SMEJ earns about > $1B from mobile games in revenue from mobile games and there is still a lot of future growth potential here considering Japan’s mobile game market grew a whopping 32% yoy from Q3 2019 to Q3 2020.
• Aniplex recently co-distrubuted the movie Demon Slayer: Mugen Train in Japan in October 2020. It became the highest grossing film of all time in Japan with a total gross box office revenue of $380M. In the middle of a pandemic. It still needs to release in South Korea, China and USA where it will most likely do great as well.

Sony Interactive Entertainment (SIE) (Game & Netwerk Services business unit):
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• We all know 2020 was a huge year for video games with the stay-at-home pandemic boost. The whole video game sector brought in $180B of revenue in 2020, a whopping 20% increase yoy.
• But 2020 will not be just a one-off temporary exceptional year for video games. The video game market has a CAGR of 13% which means it will be worth $291B in 2027. Video games is by far the segment with the highest growth rate in the whole entertainment industry.

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US video game market growth (worldwide growth has a 13% CAGR)
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PlayStation revenue and operating profit growth
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• PlayStation obviously has a huge piece of this pie and over the past years has seen consistent yoy revenue and profit growth. Think about it, for every FIFA/Call of Duty/Assassin’s Creed sold on PS4/PS5, Sony gets a 30% cut. There have been sold a billion PS4 games so far.
• 5 years ago 20 to 30% of PS4 games were purchased digitally. Flashforward to 2020 and it’s 60-75% and the digital ratio looks set to still increase a bit. This means higher profit margin for game publishers and for Sony at the expense of retailers
• SIE has seen huge success in its first-party games over the past 5 years. Spider-Man, God of War, Horizon: Zero Dawn, The Last of Us Part 2, Uncharted 4, Ghost of Tsushima, Days Gone, Ratchet & Clank have all been huge successes. This is really big and represents a big change compared to the previous generations where Sony never really hit it big as a games publisher even though most of their games were considered quality games.
• SIE is now not only a powerful platform holdeprovider, but also a very successful games publisher with popular IP’s (Uncharted, God of War, The Last of Us, Horizon, Ghost of Tsushima, Ratchet & Clank). This is an enormous asset, because firstly it increases the chances of success for cross-media opportunities (Sony Pictures can make TV shows and movies out of it to expand the popularity of those IP’s even more). And secondly, it is an obvious selling point for PS5. The more popular and bigger their exclusive content, the more they can draw people to their platform/service. This should increases PS5 total marketshare over its competitor.
• The hype for God of War: Ragnarok will be absolutely through the roof. Hype for Horizon: Forbidden West is also very good already (10 million yt views, 273K likes which is very good). Gran Turismo 7 and Ratchet & Clank will also do very well in 2021. (I suspect that GoW oand Horizon might be delayed to 2022)
• PS5 reception has been extremely good. Demand is through the roof as well all know. The only problem is that they cannot quite capitalize on the demand due to lack of supply, but overall, it is a very good thing that demand is very high, and that reception has been very positive. The challenge will primarily supply and production-related for the following 6 months and to be able to maintain brand momentum. Hopefully, they won’t push disappointed/inpatient customers to competitors.
• Considering there’s backwards compatibility from PS4 to PS5, users will want all their PSN content to transition with them as well, so I expect them to lose very little marketshare to Xbox. Also, I do not know if Americans realize it, but Xbox is not nearly as big as PlayStation in the rest of the world as it is in the USA. PlayStation just has global brand power that Xbox just doesn’t have, so Xbox isn’t much of threat at all I’d say. Where I live, in Belgium, In Europe everyone is talking about the PS5, nobody really seems to care about Xbox Series S/X that much. Comparing PlayStation to Xbox in terms of mindshare is like comparing Apple to Motorola (not meant to be a diss to Motorola, I have a Motorola phone myself, just saying that Xbox has significantly less mindshare / brand power in Europe).
• SIE is likely working on PSVR 2, this could be big.
• Sony has a small stake in Epic Games (1.4%) and they have a good business relationship with them, so this might also make them open to release first-party games on Epic Games Store after exclusivity period on PS5.
• Remember the Travis Scott concert in Fortnite? I believe that was one of the reasons why Sony invested in Epic Games. It serves as an example how music can sometimes converge with video games, and this can play to Sony’s strengths.
• PlayStation also has way superior presence in Asia compared to Xbox. Have been expanding into China as well. Another great opportunity for revenue growth.
• PS+ subscribers grew from 5.7 million by the end of 2013 to 46 million by October 30th, 2020. This is an average growth rate of 28% over the past 5 years. Considering most of the growth was early on, it will slow down, but I predict that they will have about 70 million PS+ subscribers by the end of 2023. This is huge and represents a stable, recurring source of income. Investors who keep hyping Netflix/Disney+ will love this, but it seems they have yet to discover $SNE.
• There is a reason why Amazon, Google, Nvidia have been aggressively investing in video games & games streaming. They know the business is huge and is about to get even bigger. But considering the established, loyal PlayStation userbase, the established global brand of PlayStation and the exclusive games, PlayStation should be able to easily standoff competition from Amazon, Google and Nvidia (GeForce Now) in the next few years. So far, Amazon’s venture into game development, publishing & streaming has completely failed. Stadia and GeForceNow seem to have a bit more success, but still relatively niche. Therefore, I think PlayStation is well-positioned to remain one of the leaders in the industry for the following decade.

I'll get to the other divisions later, I figured this is a good first step.
But so far the tl;dr
Image sensors: 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀
IoT/Industry 4.0 chipsets: 🚀🚀🚀🚀🚀🚀🚀
PS5/PSN/PS+: 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀
Online medical services (M3 inc.): 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀
Anime: 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀
Fate/Grand Order: 🚀🚀🚀🚀🚀
Demon Slayer: Mugen Train 🚀🚀🚀🚀🚀
Sony Music / music streaming (the performance of Sony Music’s in Sony’s business is seriously understated. The numbers speak for themselves): 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀
Sony Electronics 🚀
Sony Financial Holdings (very stable & profitable business, even managed to grow slightly during pandemic when most insurance companies performed more poorly): 🚀🚀🚀
Still have to cover Sony Pictures, but their upcoming movie slate looks pretty good honestly (Spider-Man sequel, Venom: Let There Be Darkness, Ghostbusters: Afterlife, Uncharted, Morbius, Hotel Transylvania 4 so that's worth one rocket as well imho 🚀
tl;dr of tl;dr:
🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀
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Disclaimer: I am not a financial advisor. I am an idiot that's trying to understand why $SNE stock is so cheap.
Positions: SNE 105C 21st January 22

Hello fellow retards
I know these are difficult times for this sub and it’s almost impossible to post something solid which is not about the current meme stocks.
Instead of jerking to some porn i did some research on PLTR and want to share my DD with you. This might be a longer text for your love dopamine level so maybe you should grab some your Adderall before.
The following text might you give your eyes aids since English isn’t my native language. I will try my best.
Palantir as a Company – the beginnings
PLTR was founded by some people and one of them is Peter Thiel who worked alongside with our holy papa Elon at PayPal. As a payment-service they had concerns about money laundering and founded PLTR to tackle this issue early. The CIA also funded PLTR (they are always funding stuff like this – Siri as example). This actually might be the reason why people think that PLTR is a company which aggregates data and do data analysis for the government….but this is not accurate and not correct at all if you see the big picture. I will explain this point later.
You retard still reading? Nice here some rocket emoji’s to pump your dopamine and keep you happy. 🚀🚀🚀
Let’s start with the DD
First of all my POV is looking for a midterm to long term investment in PLTR. My valuation considers PLTRs current state and predicting from now on for the next few years.
​

• 1. The Management

Before I start with the product I rather start with the management. You can sell the nicest thing in the world. I can guarantee you that the product definitely won’t be considered as the nicest thing after a while if you have a shitty management (Intel). With Peter Thiel on the leaderboard we got a competent asshole and CEO is Alex carp (co-founder) Peter Thiel is well known and Alex Karp is one of us. He yolod his heritage into some business and become a chad. Seriously tho, I trust Peter and if Peter holds on Alex since Decades so do I. Peter proved so many times how cunning he is and showed how to pick adapt problems early and create solutions.
​

• 2. PLTR Business model/ products

Before we understand how important PLTRs products are we have to understand that we are simpeltons who don’t have any business with PLTRs. We create data. We don’t fuck with it. We creating with using our phones or working in the office. Only a few of us may working with accumulated big data. PLTRs customers’ base isn’t neighbor Joe or Aunt Nancy. The products they offer are not even for midcap companies they are more designed for whole industries and governments. That’s the reason why their products aren’t so tangible for many people.
PLTR basically offers systems to big companies/governments which import their data into these systems. PLTR doesn’t sends workers to the client to collect data and analyse it. They sell platforms. They got 2 Products called “Gotham” and “Foundry” You may think wtf is this guy talking about? Let me explain it in 2 examples:
First example is Syria with Gotham. It was impossible in the country to know who the good guys are and who the bad ones are. I know u muricans only know yourself and the rest of the world is the “rest of the world” for you. But this wasn’t so simple in Syria you had many factions with different intentions and some of them were allies and some of them were enemies. The lack of information or the ability of recognizing and sorting these information’s are crucial in a war. PLTR solved the struggle with creating a map which provided resilient information for the marines so they can operate safely. Civil problems over there could also be fixed.
https://www.mercurynews.com/2016/10/04/palantir-using-big-data-to-solve-big-humanitarian-crises/
Actually what the John Hopkins University does with the covid numbers and the map, is some sort of what PLTR offering with their solutions. There are rumors that the tracking of Covid and the vaccination will be done by PLTR.
In their S1 Form PLTR describes it this way
“Gotham, our first software platform, was constructed for analysts at defense and intelligence agencies. They were hunting for needles not in one, but in thousands of haystacks. And they did not have the software they needed to do their jobs. In Afghanistan and Iraq, soldiers were mapping networks of insurgents and makers of roadside bombs by hand. Gotham enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants, and helps U.S. and allied military personnel find what they are looking for.”
https://www.sec.gov/Archives/edgadata/1321655/000119312520230013/d904406ds1.htm#rom904406_11
The second example is about “Foundry” and it’s directly from the S1 File of PLTR (page 121)
“An Airbus A350, for example, has five million parts and is built by hundreds of teams that are spread across four countries and more than eight factories. Companies routinely struggle to manage let alone make sense of the data involved in large projects. Foundry was built for them. The platform transforms the ways in which organizations interact with information by creating a central operating system for their data.”
Both of these systems solving big issues with less effort. The arms industry as example would took billions for drones and stuff in Syria for the same job. The important fact is that PLTR does not spend so much resources for new clients they only have to provide access and support for their services and the client feeding the “machine” with data.
The key point is to understand that PLTR benefits very huge from economy of scales. This is very important since their costs for additional revenue is basically flat while the profits growing exorbitant with new customers. They offer a software and platforms and not kind of services where they need man power. All they do is working on their platforms and improving it.
https://www.reuters.com/article/us-palantir-ipo-breakingviews-idUSKCN26E3I2
​
​

• 3. PLTRs big issue during the last decade

Peter Thiel was a great supporter of Trump and funded his elections campaign. The market thought that when trump wins then PLTR will get all the government (especially military) contracts.
https://www.nytimes.com/2016/11/10/technology/peter-thiel-bet-donald-trump-wins-big.html
But this didn’t happened. Peter got cucked by the huge authority apparatus in pentagon. These dudes loves bureaucracy and they do it for a good reason. If you retire from your job in pentagon you usually get a high paid luxurious position at Lockheed, Raytheon or Bae Systems to make additional free money for your retirement. Many thousand people working in pentagon just to select and buy stuff for the government. They spending billions of dollars for purchases and then PLTR came around and said like „look guys we can do this job for a few millions instead billions“. Of course the arms industry was pissed and the pentagon boomers helped them out. PLTR got constantly scammed from boomers and didn’t get the contracts. This was also the „swamp „trump was talking about.
https://www.bloomberg.com/news/articles/2016-10-28/inside-palantir-s-war-with-the-u-s-army
https://www.bizjournals.com/sanjose/news/2017/03/27/palantir-trump-army-military-procurement.html
A fun fact to this matter: Before James Mattis got summoned as the Defense Secretary of the USA he was a general in Afghanistan. He ordered services from PLTR despite the fact the pentagon was against it. But the marines praised PLTRs software and valued it over the trash they used to know from the defense/arms industry.
Processing img 2os8izwwe4h61...
https://www.military.com/defensetech/2013/07/01/special-forces-marines-embrace-palantir-software
Even with a James Mattis as the defense secretary, trump as president and regardless that PLTR does it better and cheaper than the arms industry, it wasn’t possible for PLTR to get the government contracts.
https://www.politico.com/story/2017/06/11/palantir-defense-jim-mattis-inner-circle-239373
https://fortune.com/longform/palantir-pentagon-trump/
How it’s ended? Well Peter’s wife doesn’t have a boyfriend because Peter is the fucking boyfriend of their wifes. All ended at the court and PLTR won. All this injustice ended at the court. The judgements on these cases are true circuit breakers for PLTR. Not only because PLTR spent shit tons of money for law suits. The lawsuits were perfect uppercut hits on the arms industry and they ended some fraudulent behaviors and „best practices „in the government
https://www.defensenews.com/land/2016/10/31/judge-rules-in-favor-of-palantir-in-lawsuit-against-us-army/
https://www.defensenews.com/land/2019/03/29/palantir-who-successfully-sued-the-army-just-won-a-major-army-contract/
PLTR will profit from a Biden who wants to decrease the military expenditures. They will get the job done and at the same time the costs will go down. With the recent judgements the door looks open.
​

• 4. Valuation problems

I could spam some multiplication on revenue or even a DCF but I think it’s not necessary. Expect the costs of research and development (maybe marketing) the costs of PLTR stood mostly flat in the last quarters. It’s a growth stock and the pricing is mostly in the perspective of PLTR. This is actually all we need to know that the revenue increases while the costs staying mostly flat. Check out the balance sheets at page 12 on the S Form 1.
Let’s talk about the market. The whole market seems overpriced but it isn’t tbh. Due to the low cost of capital there is no alternative than to throwing your money on stocks or on real estate. There is nothing with a solid interest rate around (not even in emerging markets). At the stock exchange like in 70s, the companies had to offer a return, a perspective which should be more attractive as putting your money on a saving account with 8% interests without risks. These times are gone since the 2000s. So before people discuss insane valuation they should check out the fiscal and economical policies.
Now back to PLTR and why the price is difficult to set (cheap imo). First of all PLTR did a direct listing without an investment bank for their share offerings. Its lacking of the valuation which they usually would get through such a process.
PLTR wanted to do IPO with Morgan Stanley but it was mess.
https://www.bloomberg.com/news/articles/2018-09-04/morgan-stanley-s-long-romance-of-palantir-pays-off-as-ipo-nears
Morgan Stanley proved themselves many times as stubborn communists when it comes to valuations. I mean you guys remember their disgusting price targets for tesla like 100$ post split or stuff like that.
These guys are very focused on numbers and I know it’s difficult to price in the potential and perspectives. But you can’t ignore these things for a fundamental valuation. If you want to consider these things in the price you have to understand the business of the company.
This ended that one team at Morgan Stanley valuated PLTR with 5 billion while another team thought they worth 40 billion.
https://www.bizjournals.com/sanjose/news/2018/11/14/palantir-ipo-valuation-morgan-stanley.html
How is this difference possible and why is this happening? Because people don’t understand what they are valuating. This happened a lot in the last decade because the decision makers in these banks and many analyst don’t have any idea which metrics they should use on companies like that. They are using the metrics from classical industries on new business. They freaked out when Facebook was valued with 100 billion as IPO. Same with Twitter and in the last years it was Tesla. They said apple going to tank every damn year in the last decade. I honor Warren Buffet so much since he has the dignity to realize that he don’t understands something but at the same time he sees the potential and the trend. That’s why he hired 2 Chads who bought Snowflake for him. The transformation and the generation change didn’t happened yet. That’s why they try to use the metrics from Caterpillar on Tesla.
Guys the whole market is mooning with the cheap liquidity. Pennystocks and zombie companies transforming into billion dollar market cap companies. Facebook as IPO had a market cap of 104 billion back in 2012. At that time it wasn’t possible for Facebook to monetize their users with selling ads. They just paid 100 billion for the potential in more difficult market conditions.
Look at the IPOs like doordash, Bumble. I’m not going to call this a bubble. Just check out their business cases and use the metrics. Maybe its easier for people to understand Bumble and Doordash…
On page 12 of the S1 (balance sheet) Form you can already see the huge positive trends in PLTRs revenue and their costs. All this without all the positive events and contracts PLTR recently got.
PLTRs valuation is difficult and I think it’s miscalculated by pessimistic communist who don’t understand that their products are game changers for industries, governments and defense forces. Because of these points I think there is huge price potential for PLTR
​

• 5. Risks for PLTR

Despite the general market risks PLTR mentions at page 29 of the S1 Form the competitors as the main risk: “We face intense competition in our markets, and we may lack sufficient financial or other resources to maintain or improve our competitive position.” The S1 Form didn’t aged well. Actually I don’t think that PLTR would have any trouble with offering new shares. Also with Peter Thiel as one of the founders the financial side should be stable.
As PLTR competitor people use to mention IBM. The boomers from IBM already surrendered with their Windows95 computers and decided to cooperate. The biggest threat would be big tech with big money like AMZN or APPL. You all now the stories about APPL and Spotify or AMZN and all the merchants. Even if the big players would step into PLTR markets it would be difficult for them since PLTRs products doesn’t rely on an Amazon store or on apple devices. PLTR is years ahead with their products.
I think the greatest risk (still) are the boomerish arms industry and all the boomers in pentagon and other authorities.
There are very corrupt infrastructures when it comes to decision making and assigning contracts. People fear changes but they can’t avoid the changes. With the recent judgements we can see a turn on the tables but the transformation will still take time. It’s a circuit breaker with an avalanche effect.
The risk factors on page 16 on the S1 form mostly aren’t relevant anymore. People complained that PLTR wasn’t profitable for 18 years. Well PLTR was never designed to be profitable and Alex Karp once said “love us or leave us alone”.
https://www.bizjournals.com/sanjose/news/2020/09/09/palantir-ceo-makes-livestreamed-pitch-to-investors.html
But even this changed recently. PLTR became profitable in 2020 with 130,000,000§. Now the same people complaining about how high the stock price compared to the profits. Well just you wait.
​

• 6. Conclusion and Outlook

If you still reading I have to admit that this was a lot text and i am sorry again about the lingo. Let’s connect the dots and bring this information to a point

1. The boomer coalition in the pentagon and in the arms industry is taken down by PLTR. They will able to get the governments contracts and the classic arms/defense industry is no match for PLTR products. The judgements of lawsuits were catalyst and the effects should be already shown in the next earnings. These were such underrated events but I think there still will be some odds but PLTRs situation is much better as it was a time ago. The chains are off!
2. Military expenditures rising worldwide

​
https://preview.redd.it/qqcv8vzee4h61.jpg?width=744&format=pjpg&auto=webp&s=98d264f091b7ff80926038660f43c57b87fc8ef2
https://www.sipri.org/media/press-release/2020/global-military-expenditure-sees-largest-annual-increase-decade-says-sipri-reaching-1917-billion
With Bidens presidency we will see more disruptive technologies chosen by the government. Biden want to reduce the military expenditures. PLTR is able to provide better service for lower cost. Not only the recent judgements also the political change will help PLTR. Ironic if you remember that Peter supported Trump and getting his tendies from Biden.

1. PLTR superior products profits hugely from economy of scales. They don’t have any significant costs when they acquire new customers. Making the big data usable for decisions making is already very important and step by step people realize that this issue growing fast. We creating everyday more data than we did yesterday and leaving the majority of it as trace and unstructured data. We don’t work with it but big Institutions does.

Here is the passage from the S1 and I fully agree with it:
“The systemic failures of government institutions to provide for the public — fractured healthcare systems, erosions of data privacy, strained criminal justice systems, and outmoded ways of fighting wars — will continue to require both the public and private sectors to transform themselves. We believe that the underperformance and loss of legitimacy of many of these institutions will only increase the speed with which they are required to change.”

1. PLTRs value. The current situation of the market with tons of liquidity seems like a bubble. People don’t know what to do with the cheap capital and people throwing it even on meme pennystocks.

Facebook had his ipo back in 2012 during much harder market conditions as now. The valuation of Facebook was over 100 billion and people called it insanely overvalued. They did it because Facebook didn’t had a way to monetize their users (especially on mobile platforms). Facebook has a market cap of over 750 billion now and nobody calling it over valued.
A remember the recent examples? Bumble?! Bruuuh. Don’t get me wrong if you invested in Bumble but they have nothing special to offer and their business case can easily copied or improved by others. Its shows the current state of our market with the crazy liquidity that even zombie companies got astronomic valuations. Use these metrics on PLTR with great products, great management, low cost base and less odds as ever before….
PLTR price is wrong imo especially in this market and with PLTRs current state and perspective.

1. Do you use PLTR? Me Neither! It’s not designed for us and we have to inform us about the success. PLTRs new contracts and their future are shining bright. With the settled lawsuits the sky is clear for PLTR. But their customer base is not only America. I’m not a murican and 3 weeks before I just find out that the police departments in our state using PLTR products. I don’t need to link endless evidences here since you can google it by yourself and see how many contracts PLTR recently got. Especially after the circuit breakers we talked about.

I have genuinely trust into Peter Thiel and Alex Karp that their will make the best of PLTRs potential. The odds getting removed and the demand for PLTR is increasing.
If all these information would priced in correctly we would have a share price of at least 60-70$. With upcoming and ongoing positive events PLTR share price should soar more..
What’s next?
Now we have earnings ahead and the lock up period ending.
For the earnings I think the number will be fine and keep up the positive trend on revenue with a disproportionately trend of the costs. The most important part will be guidance for 2021. We should listen closely and see if the magic is already happening.
The second event is the ending of the lock up period. You all remember the end of the lock up period of Nikola? Just 1-2 days after they announced they don’t got the GM deal? The stock tanked – for a good reason. You know the guy Trevor Milton.
But in PLTRs case everything is different. Despite the successful deals they got, does a guy who says “love us or leave us alone” sounds like someone who going to drop his shares at the first possibility? I don’t expect such a behavior from Alex Karp and neither from Peter Thiel. If some employees drop their shares it should be fine.
I would appreciate if the stock prices would go below 3ß. It would create a healthy bullish chart pattern and would be actually a nice discount to get in or stock up. I don’t think that the shares going to dump a lot because of this event. The earnings and the guidance are more important and the key events if you want to invest mid – long term.
What does all this means for you? Nothing! Please don’t do any market activity based on my DD. I’m just sharing my knowledge and looking for critics so I can reevaluate my theses. This is not a financial advice.
My hearts bleeding for all the GME holders. My last Reddit account got banned because I criticized “the pumpers”. In one of the comments I called the mods gay and got banned permanently (bye bye 20 k karma). If you are new to this please don’t do any decision based on this so I can sleep gladly.
I’m not well positioned and not trying to pump this stock. I have 70 shares and a CSP. Fair play and fuck all the bots and pump and dumper we recently got in the sub!
Leave an upvote if this post helped you. I need some more karma to be able to shitpost everywhere again!

This article was written with the feedback of ~300 highly engaged players from the different autochess reddit communities (TFT, DOTA Underlords, Chess Rush...), which participated in interviews and on a poll whose results are available here. They’re especially thanked by name at the end of the article.
In January 2019, Drodo Studio’s Dota Auto Chess mod became insanely popular. Many companies (including household names like Valve, Riot, Ubisoft and Blizzard) rushed to release their own versions.
It seemed like the beginning of something big like MOBA or Battle Royale. But it has been more than a year now and the hype seems to have vanished completely. As quickly as it rose, it went away…
This is the first on a series of articles where we will analyze the autochess genre. Here we will be exploring the genre’s history, its current market situation and its audience. And also, what are the core design issues that autochess suffers and that no one has been able to solve yet.
https://preview.redd.it/tc2c19k4ipg61.png?width=1024&format=png&auto=webp&s=487539f51e104ee7d1aae1a6ded7447b1dee11ca
It really helps me if you check this article (or similar content) at my blog https://jb-dev.net/
​

A HISTORICAL PERSPECTIVE

This wasn’t the first time that a mod got the spotlight and ended up becoming the foundation of a genre. It happened in several major, industry-defining cases before (some of which are Team Shooters, MOBAs, Battle Royale…). But on some of these cases events unfolded differently. So we identify 3 distinctive eras related to the evolution of the industry:

1st Era (2000s): Assimilation

The company whose original software had been modded (or had a close enough game, like Valve) moved quickly to absorb the successful mods and turn them into even more successful products.
Since at that point creating a major game release was very complex (required an expensive development, publishing deals and an infrastructure to distribute the product), the deal was profitable for both sides. But it meant the dissolution of the identity of the original creator team, which became embedded in the bigger company culture.
https://preview.redd.it/abyi6d2jipg61.png?width=461&format=png&auto=webp&s=d4171bf9344a162e695a75a91d18eec8206b9123

Team Fortress (1999) was originally a Quake mod. And Counter-Strike (2000) started out as a fan-made mod on the Half Life engine. Both games (and creators) were quickly absorbed by Valve.

2nd Era (2010s): Integration

By this time, the previous era model still was going on… but the gaming industry had significatively grown a lot and it was also possible for smaller or even new companies to lure the original developers, and use the mod as a proof for commercial success in order to secure funding and develop it as a full title.
The main characteristic of this era is that the original developers were able to keep a bigger share of control and relevance, rather than being integrated as just another gear on a bigger machine, because the companies they joined built their own identity around that key product.
This was the case of Riot Games: They were able to raise enough money for the creation of their company through family and angel investors, and then hire some of the original creators of DOTA, and then created League of Legends.
https://preview.redd.it/vl6h2l7lipg61.png?width=763&format=png&auto=webp&s=414abb3da2b169966b7bf757a6116f86ef3748d2

Defense of the Ancients (DotA), the foundational title for the MOBA genre, appeared in 2003 as a fan-made custom scenario of Warcraft 3. Foreseeing commercial potential on a full game based on the concept, Riot games and Valve both battled for the Dota IP and the original developers, eventually releasing rival titles League of Legends and Dota2. Interestingly, Blizzard (owners of Warcraft 3) tried to replicate the success without the mod creators in Heroes of the Storm (2015), which hasn’t been as successful as the other two.

A similar case happened with battle royale, which also started in 2013 as a successful DayZ mod created by the modder nicknamed PlayerUnknown. Later, it was transformed into a full product through the acquisition of the developer by a korean company (which would later be renamed as the PUBG Corporation, again showing how the company grew around the game rather than assimilating it).
This case hints what would later happen with Auto Chess, since Fortnite wasn’t involved in any way with the original creators. They just copied the concept. Fortnite was a product stuck in a kind of development hell (had been 6 years in the works). As the game was getting close to the release, the developers became impressed by PUBG’s success, so they created a quick Battle Royale spin-off which became insanely popular and eventually ate the rest of the game.
https://preview.redd.it/zkdv4jjqipg61.png?width=808&format=png&auto=webp&s=0e7ad39e5db4d83b6b927587b59bf1c81fe0ef85

Player Unknown’s Battlegrounds (2017), foundational title of the modern battle royale genre, is the successor of PlayerUnknown’s DayZ: Battle Royale, a popular mod for DayZ (which on itself is a mod of ArmA3, making it a mod of a mod lol). The success of PUBG inspired Fortnite (a title on the later stages of a troubled development at the time) to spin towards that genre, becoming PUBG‘s main competitor.

3rd Era (2020s): Fragmentation

In all the cases presented previously, the newborn genre ended up in the release of one or two titles which accumulated most of the business. But this hasn’t been the case here.
In Autochess, the newborn genre has been quickly fragmented into a big list of competitors. Some are standalone games (like DOTA Underlords or Autochess: Origins), but there’s also several service-model games which released their autochess mode as well (like Hearthstone’s Battlegrounds or TeamFight Tactics, which at the end of the day is a side-game mode of League of Legends).
This creates an interesting precedent, which I believe will define future cases where an innovative new game concept appears: The hot idea will be cloned very fast because today the main bottleneck in the industry is having an innovative design that generates player interest and engagement.
By 2020, it’s way easier to create and distribute a game, there are way more developers hungry for a hit than ever before, and a lot of service-model games with short development cycles always looking for something juicy for their next update… so new ideas becoming red oceans fast will be the norm.
For sure, this won’t affect the ability of small developers and modders to innovate, but it will affect their ability to leverage that to become successful on an independant level, before they get cloned.
https://preview.redd.it/51jbq4jwipg61.png?width=1024&format=png&auto=webp&s=fdfcfeb82e73b48210c4d93386438268d6dcbe3b

Dota Auto Chess, was a Dota 2 mod which obtained massive popularity. After a failed acquisition from Valve (owners of Dota), the mod developers (Drodo Studios) went to create the mobile standalone Auto Chess: Origins, while still maintaining the PC version linked to Valve.
Meanwhile, Riot, Valve, Ubisoft and many other companies developed and released their own autobattlers at a record time, downgrading the genre creators to just another competitor.

On Autochess, the fragmentation and fast release pace came at the cost of innovation, though. These games feature few unique selling points compared to the original DOTA Autochess experience: TFT’s ‘anti-snowballing’ character selection rounds, Underlord’s bosses and fast-track mode….
And ultimately, they haven’t fixed the core issues of the original game, which separates it from a true hyper-successful product like MOBA.

MARKET STATUS

Because of the rain of clones, it’s hard to map all the autochess games on the market. It doesn’t help that some of them are available in both PC and Mobile (playable in PC, Mac, Android and iOS), and also they’re exclusive to different PC stores (Dota Underlords is only on Steam, TFT is on Riot’s LoL launcher, and Autochess Origins is only at the Epic Store…).
And if that wasn’t enough, the Auto Chess mod in DOTA2 is still very active and has no signs that it’s going to be dying soon. It’s still being regularly updated, and presumably still profitable: Some months ago they added a battle pass system, with its revenue shared between Valve and Drodo.
https://preview.redd.it/8w2lrid0jpg61.png?width=854&format=png&auto=webp&s=3697396edd8af2dff3f8e25cb2dd3829635506d0
What’s interesting is that none of the contenders has been able to become massively successful in terms of monetization, at least not in terms comparable to even a second or third tier MOBA. And while there are definitively different tiers of following among these titles (led by Riot Games’ TeamFight Tactics), it seems that none of them has been able to gather under its banner a significant amount of players, mobile downloads or Twitch Views…
Sources: AppAnnie (mobile metrics), TwitchMetrics (twitch)
So ultimately, we’re dividing the autochess market into 3 categories: Squires, Would-be Kings and Peasants.

• Squires: Rather than standalone games, these are side-modes of already successful products. Under this category we would list the Battlegrounds mode in Hearthstone, or League of Legends’ TFT, and maybe even the original DOTA Autochess mod. While for sure they’ll have their own dedicated audience that only plays those modes, for most players it’s just a nice and fresh activity integrated within a broader game experience. The squires are the ones that have achieved the biggest success among the autochess genre because they don’t suffer as much backlash from the lack of gameplay depth inherent to the genre, which is harmful for the long term retention: Even if the mode eventually becomes a bit shallow, players have many other things to play, and thus are retained. As a consequence, these games can still monetize significatively by selling renewals of their Battle Passes every new season. Not enough to make them successful on the degree that was expected… but at least it’s something. Other than bringing an additional source of revenue, these modes were useful to their core games: They generated player interest by providing innovative gameplay. Hearthstone’s Battlegrounds was an amazing addition to the CCG genre, and made a lot of people come back to the game to discover the new mode and reengage.

https://preview.redd.it/1qhlvvd6jpg61.png?width=1024&format=png&auto=webp&s=c56f59cc22cf8e0d0207abc424dca9e976c5685c

SQUIRE: The gameplay of TeamFight Tactics (slow tempo, no team coordination, decreased attention requirement…) makes it a nice relief mode to play between LOL matches, which is its purpose in the foreseeable future. If there ever was an intention to make it a standalone game, it vanished together with the player interest on autochess…

• Would-be Kings: These are the other two top dogs of the category. They were supposed to rule… but that looking at the numbers they don’t really seem to have ever lifted off. Under this category we would list Auto Chess: Origins and DOTA Underlords. The problem is that their standalone approach means that they suffer the most of the design issues of the genre that we’ve presented in the last section of this article (i.e. flat complexity, lack of mastery depth, lack of progression and rotative meta…). That means that they lost a lot of population over time, and therefore their Battle Pass renewal isn’t as effective at generating revenue : (

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DOTA Underlords is an extremely polished product in terms of graphics, character design and UX, and yet another proof that Valve devs really know how to do great games. Too bad they aren’t as good at releasing third installments.

THE AUDIENCE

We are of the belief that you can’t talk about a game and not talk about who plays it, and that players say more about a game than analyzing all its features and mechanics. So with this in mind we collected answers from ~300 autochess players (check the raw data here). After examining their responses, we’ve identified 3 main player profiles (the comments on each profile are literal):
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• Patricks, gamers looking for a competitive-but-idle experience that doesn’t require full attention and it’s easily reconcilable with their functional adult life.
• Grizzlies, competitive players that struggle with fast paced games that demand a high actions per minute ratio and quick reflexes (like MOBAs or competitive shooters).
• Warmasters, highly competitive players that enjoy more the area of strategy (setting up goals and planning how to achieve them) rather than tactics (skillful execution of actions and micromanagement).

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What these profiles have in common, other than being hardcore gamers and having a big interest in competitive games, is the fact that they enjoy the lack of micromanagement, and the demand of reflexes and dexterity of autochess.
This is quite interesting, considering that the genre foundation is so close to MOBAs, which are extremely demanding on those aspects. Overall it seems that they belong to audiences below the MOBA umbrella which are currently being alienated by the bulk of ‘younger and dexterity focused’ players.
And when it comes to platforms, it seems that even though the barrier between the classic gaming platforms and mobile is progressively disappearing, the genre is still mainly focused on PC: Out of the ~300 players that answered, 50% said that they play exclusively on PC, 25% played primarily on Mobile, and the remaining 25% played in both.
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Players said that they enjoy the focus of the game in planification, as opposed to the focus on execution and performance of MOBAs. And when asked about their main points of frustration, they pointed out 2 main topics: 1.- The strong luck factor that has a strong impact on making you win or lose regardless on how well you played. 2.- The fact that the game eventually becomes shallow and repetitive, fueled by the fact updates were unexciting and not rotating the meta.

Surprised by the fact that players mention randomness as a factor of both enjoyment and frustration? Don’t be! Competitive players tend to have a love-and-hate relationship with luck, because they tend to consider that external factors outside of skills (money spent, better draw…) stole their well deserved victory.
And it’s even more frustrating in autochess, because there’s a strong snowball effect: Players that obtain a big advantage early on in the game become hard to catch later on. Which means that a few bad or good draws early on can decide the rest of the match.
There hasn’t been a single feature more criticised in Magic: The Gathering than the randomness of drawing mana. And yet, luck it’s part of what makes MTG stand out compared to other CCGs: For experienced players, it introduces uncertainty and the need to take risks and gamble, like they’d do in poker. And for rookies, it allows beating someone that has better skills and has a better deck, if Lady Luck is on their side. Won’t happen often, but it will feel awesome when it does. Like a friend likes to say: The best feeling in MTG is to draw a mana when you really need it. And the worst? To draw it when you didn’t.
This goes to say that in autochess, perhaps the power of luck needs to be reviewed, but it would be a bad decision to completely remove luck from the equation.

DESIGN CHALLENGES

In this awesome DoF article, Giovanni Ducati already pointed out the two main problems that the games in this genre need to solve to achieve real success: Bad long term retention and low monetization.
To these issues we would add a third one, which is bad marketability: Contrary to their big brothers League of Legends and DOTA2, these games haven’t been able to achieve high organic downloads (at least not to be able to generate significant revenue through soft monetization mechanics). What’s even worse is that all these games, their themes and target audience are quite close to RPG and Strategy, which are genres with some of the highest CPIs on the market. So they need top-of-the-class retention and monetization to get a high enough LTV to scale up.
But why do these games fail at keeping players entertained for a long time? And why don’t they monetize enough? Here’s what we think:

Flat Complexity & Progression

You have some games out there which have a strong entry barrier due to being quite complicated to grasp. But for those that can deal with the numbers and stats, the depth will keep them entertained for months and years. This is the case in most RPGs and 4X strategy games. And then you have hypercasual games, which are simple and plug and play. So they generate a great early engagement, but are too shallow to keep users hooked for a long time.
As a genre, Autochess games are in the middle ground: they have a high entry barrier, but also lack the complexity to keep players engaged for a long time…
As a general rule, games with long retention tend to follow Bushnell’s Law of being easy to learn and difficult to master. They achieve that by having what we call an unfolding experience: They appear simpler at the beginning (not necessarily easy), but require thousands of hours of practice to master.
An example of this are games that level lock most of the game complexity, so the player understands and masters only a set starter mechanics. And then, progressively unlock new modes and demand more specialized builds and gameplay, repeating the cycle several times to keep the game always interesting while attempting to avoid being overwhelming.
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In World of Warcraft, character depth is huge. But this complexity is unfolded progressively, forcing the player to spend time mastering each skill and activity as they level up, before moving further.

Another approach to the same idea are competitive games focused on mechanical ability, dexterity or micromanagement. Like CS:GO or Rocket League. They may unlock all the mechanics from the beginning, but a newbie player will only be able to focus and manage some of them, and then progressively discover and master the rest in an organic way.
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Rocket League hides its complexity by matchmaking early players with others of a similar skill. This makes beginner players viable even if they grasp only the basic mechanics. But, as they climb further, they’ll face rivals that take those basic skills for granted and the player will need to master more challenging techniques to keep up.

League of Legends and Overwatch are actually a combination of both: The game first introduces the player to a small selection of heroes which progressively gets expanded, while at the same time having an insane mastery depth that requires a high APM and reflexes, team coordination and thousands of hours of practice.
Contrary to any of those examples, Autochess games throw everything at you from the beginning: Character Skills, Synergies, Unit Upgrade, Gold Management, Items… It’s a lot to swallow. And there’s not even enough time to read what each thing does before the timer runs out. This creates a complex, overwhelming first impression that drives many players out.
But that’s quantity, not depth. Once you’ve gone through that traumatic starting phase, you’ve grasped all the mechanics and you know which team builds are dominating on the meta, it’s just a matter of making it happen by taking the right decisions and adapting to a few key draws.
Eventually, unless luck is really against you, your skills won’t be challenged and you won’t have new mechanics to master. At that point, winning will be based more on the knowledge of the content database and luck rather than your planning and strategic ability. And that’s boring.
So ultimately, these games are hard to grasp for a newbie, but also lack the ability to keep players interested for a very long time since they eventually run out of new features and mechanics to discover and master.

Unexciting Updates, Lack of Collection

On top of that, autochess games seem to have a hard time adding content which reawakens player interest and makes churned ones come back.
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The DAU that we would expect on a long term retention game: A decreasing trend of players until reaching a stagnation stage. At that point, a big update (or new season) is required to attract and reengage users back with new content. This is the model we would see on Fortnite or Hearthstone, but it’s not what we see in most autochesses.

On this topic, perhaps the one that has put the most effort is Riot’s TFT. Each season update, the game releases a new series of heroes, synergies, items and rebalances, as well as a big bunch of cosmetics. This generates a short lived boost on revenue (due primarily to players buying the pass) and downloads, but ultimately nothing that really moves the needle in a relevant way.
‘Why seasonal updates don’t work?‘, you may be asking. Part of the reason is that TFT, as well as every major contender do not include elements of content progression or collection. Instead, they all stick to the roguelike approach of the original mod: Players have access to the same set of units, and build their inventory exclusively during the match.
While at first this seems a good idea, since it keeps the game fair in a similar way to MOBAs, it’s oblivious to the fact that new units do not offer the same amount of gameplay depth as in League of Legends. In LoL, a new unit means weeks or even months of practice until mastering timing, range and usage of the skills, how they interact with every other champion, etc… In comparison, in TFT the new content can be fully explored in just a bunch of matches, both because the new content doesn’t offer that much depth to start with and because it’s available from the moment the player gets the update.
By lacking content progression and collection, autochesses miss the opportunity to create long term objectives after an update, more innovative mechanics and less repetitiveness. As a consequence, they have it really hard to hype players on updates.

Big ‘Snowball Effect’

In game design, the snowball effect refers to the situation where obtaining an advantage or dominance generates further conditions that almost invariably means winning the match. As you can guess, on competitive games this effect can generate a bad experience, especially when the divergence starts early on: The player that obtained the early advantage will keep on increasing the advantage and curbstomp the rest.
For example, this can happen on a Civilization game if a player gets ahead of the rest acquiring key resource territories, and uses them to achieve a greater progress in tech and income at a faster pace than the rest. Or in League of Legends if a team scores a bunch of early kills and levels up, becoming more able at scoring even more kills…
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In this match of Age of Empires 2, the red player (Aztecs) managed to decimate the blue player (Turks) military units early on. Since without an army it was impossible for the blue player to secure enough resources to perform a comeback, for the next 2 hours the blue player was in a pointless, hopeless match. Kudos for not abandoning, though!

Autochess games have a huge snowball effect, due to the following reasons:

• Resources lead to victories, victories lead to resources As you know, in autochess each player builds a team based on successive battles. Better battle performance will grant more gold, which is the resource used to buy units, perform shop rolls, etc… Similar to the cases we’ve already explained, this means that players that achieve early dominance will be able to to obtain more gold, use it to get better units and get more victories and gold, therefore increasing their team power faster than the rest. ‘But players can be lucky or unlucky, generating a factor that compensates for the advantage of having more resources early on‘, you may be considering. Unfortunately, this is a flawed logic, because of 2 main reasons: (1) Having more resources means more adaptability: The dominant players will be able to leverage on them to re-adapt their team, therefore outperforming the rest on a randomness-driven scenario. (2) Resources allow to buy more rolls, which diminishes the deviation generated by each individual roll.

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TeamFight Tactics attempts to decrease the snowball effect by introducing Carousels: rounds where all players pick a character from a list, and where the players that are losing (i.e. have less health) get to choose first. While this decreases the issue, it doesn’t really solve it… It just makes that smart players aim to lose on purpose at the beginning so they can get the better pick and generate the snowball slightly later on.

• Luck factor. The previous point goes into maintaining and increasing dominance once it has been achieved early on, but another source of frustration is that luck is a huge factor in achieving early dominance. This means that your strategic skills and smarts can be completely invalidated by a couple of bad rolls at the beginning of the match. And there’s nothing that competitive players hate more than having their match stolen by factors outside the pure clash of abilities.

As an antithesis, Poker also has resource management, and luck factor determines the victory (on a specific round). But unlike Autochess, resources can’t override luck, and early victories don’t affect the later chance of winning.

Excessive Match Length

Compared to PC, on mobile is much harder to keep the player focused for a long period of time on a single session. And having a very long minimum session kind of goes against the premise of being able to play anywhere which is a primary strength of mobile as a gaming platform. This is a problem for autochess games since a single match can last for 30-45 minutes of synchronous, nonstop gameplay.
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The knockout mode in Dota Underlords aims to make the game more accessible by skipping the slow beginning of the match (you start with a pre-setup army), and by simplifying the health and fusion systems. This shortens the matches to ~15 minutes, which is still too long for mobile, but better than 30. The problem is that it also increases the snowball effect, since the match has less turns to allow comebacks, and makes any mistake (or a bad roll) way more punishing.

‘Isn’t the solution just make the match shorter?’, you’re probably wondering. Unfortunately, there are several reasons that make this more challenging to the core design than what it seems:

• Because in autochess the player builds its team from scratch, at the beginning of each match there are several turns to setup team foundations. Removing these early decisions severely decreases the teambuilding possibilities, decreasing overall depth.
  
• Also, each setup phase between clashes requires a minimum time to think and perform the actions. In the last turns of a match, the game can become quite demanding on thinking and input speed.
  
• Matches require a minimum amount of turns to compensate the weight of a single lucky/unlucky roll over the chances to win. Because the possible units for teambuilding appear on random rolls, the less turns there are the more luck factor the game will suffer, and as a consequence the less important the player’s strategic skills will be.
  
• And if there are few turns, there are also less chances for comebacks. Because it means that players will have less setup phases to adapt and catch a player that has obtained an early advantage.
  
• Finally, since the match involves 8 players, it requires a minimum of turns so that they all can fight between each other… Nevertheless, I don’t consider this a critical issue because Dota has been able to change this specific point on the knockout mode without sacrificing too much in terms of depth.
  

FINAL THOUGHTS

The history of the autochess genre serves as an example of the risks of design endogamy: The devsphere rushed to clone Auto Chess, and before a year all the major contenders were in the board. But that speed came at a cost: None of these projects has brought the concept much further than its original conception, and in doing so they haven’t solved any of the core issues.
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The folks at Riot games developed the TeamFight Tactics in less than 5 months. This allowed them to release while the hype was still at its peak… but it also meant it added just a couple of improvements, and it’s otherwise very similar to the original Auto Chess mod.

After seeing all these projects fail to meet the big expectations that were placed on them, the question is if perhaps the best approach was to avoid rushing, and instead tackle the genre with a title that is not a clone, but rather a more groomed, accessible and innovative successor of the original idea.
In our next article on this series will make an attempt to see how such a game could be, rethinking the spirit and fresh design ideas of autochess to solve the issues mentioned above. (May take a while though, I want to focus on smaller articles for a couple of months…)
Meanwhile, if you want to read more about this genre, we suggest you these awesome articles from the folks at DoF: Why Auto-Chess can’t monetize – and how to fix that and How Riot can turn TFT into a billion dollar game

Special Thanks to…

These articles wouldn’t have been possible with the collaboration of ~300 members of the reddit communities of the different auto chess games who provided us with feedback and data. You folks have been incredible solving all our doubts. One thing that this genre has is some of the most awesome players around.
So big kudos for Brxm1, Erfinder Steve, Xinth, Zofia the Fierce, STRK1911, LontongSinga22, bezacho, hete, NeroVingian, marling2305, NOVA9INE , asidcabeJ, Eidallor, Rhai, Lozarian, bwdm, Toxic, Ruala, Papa Shango, MrMkay, Dread0, L7, kilmerluiz, Amikals, Sworith, Tankull, B., hete, Bour, Denzel, DeCeddy, Diaa, hamoudaxp, Benjamin “ManiaK” Depinois, Katunopolis, DanTheMan, MikelKDAplayer, 0nid, Tobocto, Tiny Rick, phuwin, Alcibiades, triceps, d20diceman, shadebedlam, stinky binky, Tutu, Myuura, suds, Kapo, Hearthstoned, Engagex, Pietrovosky, Daydreamer, Doctor Heckle, Ignis, ShawnE, NastierNate, LeCJ, Nene Thomas, Chris, trinitus_minibus, Nah, Kaubenjunge1337, Mudhutter, Asurakap, Nicky V, shinsplintshurts, bobknows27, Willem (Larry David Official on Steam), Jonathan, Dinomit24, Monstertaco, GangGreen69, Veshral Amadeus Salieri (…lol!), Kuscomem, Cmacu, Pioplu, Dilemily, qulhuae, Ilmo, MarvMind, facu1ty, crayzieap, Saint Expedite, Lobbyse, Lukino , tomes, Blitzy24, Mcmooserton, magicmerl, i4got2putsumpantzon, radicalminusone, Pipoxo, Kharambit, Bricklebrah, Rbagderp, Merforga, Superzuhong, Mo2gon, MoS.Tetu, MeBigBwainy, Zokus, CoyoteSandstorm, Stehnis, Noctis, Fkdn, Ray, Fairs1912, Fairs1912, Krakowski, HolyKrapp, Damadud, Pentium, Mach, Mudak, CaptSteffo, jwsw1990, Omaivapanda, Inquisitor Binks, Jack, yggdranix, GoodLuckM8, Centy, Prabuddha (aka Walla), dtan, Philosokitteh, Doms, ZEDD, Calloween, Synsane, Kaluma, GordonTremeshko , Djouni, DOGE, haveitall, ANIM4SSO, Task Manager, Submersed, BAKE, Viniv, La Tortuga Zorroberto, BixLe, Rafabeen, Blzane, bdlck666, FatCockNinja86, R.U.Sty, Yopsif, blesk, Quaest0r, FanOfTaylor, StaunchDruid, Rushkoski and everyone else that took some minutes to help us out on the article.