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Biggerboat1 on 02 February 2019
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outlawauron said:
Biggerboat1 said:

Revenue, on it's own doesn't tell us anywhere near enough to draw a meaningful conclusion - within the context of this forum anyway.

I'm sure on the forums of The Economist where people have a deep understanding of particular companies / trends / business models, they could draw meaningful conclusions, though they'd still want to see how that translated to profit - but this forum is not that. I mean it's evident that a lot here don't even understand the distinction between revenue & profit...

You can have companies with large revenues that are healthy & other's that are haemorrhaging money...

Bottom line, I think it's asinine to compare revenue of a digital store front to a hardware/software company - don't you? And if you don't agree, can you explain why?

The point is pretty obvious. It's to show the change in the industry, why companies are acting the way they are (ie. why Nintendo is making you pay for online pay), and how truly massive the digital marketplace has become. All of that information is very important to investors because it shows how well they're doing in one of the very few growing game markets.

If the original poster framed it in a way such as "PSN showed 50% YOY growth" or something like that then yes, it's good info to know. But comparing it to Nintendo's revenue is misleading - it's apples to oranges.

Further more, the growth could have come from heavily discounting lots of games which would have a smaller margin, meaning that the profit could be way less than 50% YOY increase... we simply don't know.

Also Nintendo's profit could be approximately the same as Sony gaming overall - in which case who's to say which model is better? To me, running a business at a higher profit to revenue ratio (profit margin) seems preferable to me, though I'll admit that it's likely more complicated than that.

Anyway, I don't contest PSN is doing awesome - it's the flawed comparison that I have a problem with.