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Nintendo, Animal Crossing, ViacomCBS, Streaming and U.S. Jobless Claims

Nintendo rides Animal Crossing to a record quarter, ViacomCBS reports significant streaming subscriber growth and U.S. jobless claims fall.
United Kingdom -- March 2020: Nintendo Switch with Joy Con controllers and Animal Crossing: New Horizons. (By Vantage_DS)
United Kingdom -- March 2020: Nintendo Switch with Joy Con controllers and Animal Crossing: New Horizons. (By Vantage_DS)
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Good morning! Today’s word count is 1,392 words, or a 9-minute read. Let’s get to it:

“U.S. stocks rose Thursday as the number of Americans applying for unemployment benefits came in below expectations, but still held at historically high levels,” The Wall Street Journal writes.

  • S&P 500: $3,323.17
  • Nasdaq: $10,990.00
  • Bitcoin: $11,762.27
  • U.S. 10-Year: .513%

Nintendo’s Pandemic Bonanza: A Billion-Dollar Profit

The pandemic-induced lockdown pushed Nintendo to its best quarter in recent memory. The company sold more than 10 million copies of its “Animal Crossing: New Horizons” video game in the latest quarter, leading to total software sales to more than double year-over-year. Sales of the Nintendo Switch nearly tripled.

Why It Matters

It’s Nintendo’s best performance in over a decade.

  • Profits are usually quiet this time of year, as the video game industry generally relies on holiday season sales.
  • But Nintendo earned around $1 billion in profits, more than six times more than the same period a year earlier.
  • The April-June figure was the company’s best since 2008 when the Nintendo Wii was at the height of its popularity.
  • “People do seem to be looking for some kind of escape from reality. The entire home entertainment business did well this quarter,” a Nintendo spokesperson told The Wall Street Journal.

It could have been even better.

  • Supply glitches in February, coupled with high, pandemic-driven demand, led to shortages of Nintendo’s Switch console.
  • Production got back on track in May and is set to increase going forward.
  • However, Nintendo maintained conservative forecasts for the full fiscal year ending in March with net profit predicted to fall 23 percent.

The video game market is about heat up.

  • Sony plans to roll out its next-generation system, the Playstation 5, later this year. Microsoft plans to do the same with the Xbox Series X.
  • It’s not a one-to-one comparison, but Nintendo’s share price is the lowest compared to Sony and Microsoft.
  • Nintendo has traditionally been a volatile company, basing success off its hit products. But its ability to continue to carve out a niche and post record sales in the highly competitive video market has sustained its ability to do business even when competing against larger foes such as Sony and Microsoft.

Numbers to Consider

  • 40 Percent – Around how much the Americas made up of Nintendo’s sales for the quarter.
  • ÂĄ200 billion – Nintendo’s projected net profit for the fiscal year ending in March (converts to roughly $1.9 billion)
  • 5.7 Million – The number of Nintendo Switch consoles the company sold in the April-June quarter.

Read More: (WALL STREET JOURNAL)

ViacomCBS Records Significant Streaming Subscriber Growth

As the streaming marketplace grows more competitive, ViacomCBS announced impressive growth numbers. The company added 16.2 million paid subscribers to its streaming video service – CBS All Access and Showtime OTT – which accounted for a 74 percent year-over-year increase as more people turned to streaming during the Covid-19 pandemic.

Why It Matters

The public health crisis has decimated previously lucrative revenue streams.

  • Viacom saw overall revenue drop 12 percent to $6.3 billion.
  • The lack of theatrical release due to movie theatres shutdowns played a significant role, as theatrical revenue tanked 149 percent to $3 billion this quarter.
  • While other companies, such as Comcast’s Universal Studious, are biting the bullet and making upcoming releases available at home, Viacom is sticking to keeping new movies in theatres.
  • Advertising revenue also experienced a steep drop, declining 27 percent to $1.9 billion.

Streaming has become a figurative land grab.

  • For companies fighting for subscribers, it’s all about the collective breadth of a service’s library.
  • HBO Max dominated headlines following its launch because of its comprehensive offering.
  • Viacom’s networks include Showtime, Nickelodeon, Comedy Central, CBS and film studio Paramount Pictures.

It’s a precursor to the next step.

  • In a move mimicking all large traditional media companies, Viacom is retooling its several streaming platforms to launch a “Super Streamer” in 2021.
  • “The aim is to achieve significant growth in what is a rapidly expanding sector,” ViacomCBS Networks International President and CEO David Lynn told Deadline. “That twin-track strategy will help differentiate ourselves.”
  • The service will be “competitively priced” and aims to take on Netflix and Amazon by “tapping into Viacom and CBS’s annual content spend of $13BN, as well as their combined archive of 140,000 TV episodes and 40,000 films.”

Numbers to Consider

  • $26.60 – ViacomCBS’s open price Thursday.
  • $27.38 Billion – ViacomCBS’s revenue for the 12 months ending March 31, 2020, according to MacroTrends.

Read More: (THE INFORMATION)

A Quick Look

U.S. Jobless Claims Fell in Aug. 1 Week

  1. Filings for unemployment benefits fell last week to their lowest level since March, indicating layoffs eased somewhat as the labor market tries to recover from the Covid-19 pandemic.
  2. Initial unemployment claims decreased to 1.2 million for the week ending Aug. 1, a seasonally adjusted decrease of 249,000. The decline came as the $600-a-week federal stimulus benefits expired.
  3. Even with the drop, weekly claim figures remain well above the pre-pandemic record of 695,000 in 1982. Applications had plateaued in recent weeks, slowing a steady decline from a peak of 6.9 million in late March when the pandemic shutdown had closed a significant portion of the U.S. economy.
  4. The number of people receiving benefits from regular state programs, which cover most workers, dropped by 844,000 to 16.1 million for the week ending July 25, the lowest level since April.
  5. Although employers shed 21 million jobs earlier this year, hiring surged in May and June, adding 7.5 million jobs, according to the U.S. Department of Labor. Economists surveyed by The Wall Street Journal report 1.4 million jobs were added last month, and the unemployment rate decreased to 10.6 percent from 11.1 percent in June.

Read More: (WALL STREET JOURNAL)

Worth Your Time

Split Into Fractions: “One of the most discussed trends in markets this year has been individual investors’ renewed embrace of stocks, fueled in part by coronavirus-fueled volatility and free trading apps like the one from Robinhood Markets Inc. Proponents say fractional trading has helped democratize access to the stock market. But it may be encouraging risky speculation that some analysts and academics warn will end with many individual investors losing money. The S&P 500 has surged nearly 50% since March, despite a rise in U.S. unemployment and other significant, unresolved economic problems,” The Wall Street Journal writes. (WALL STREET JOURNAL)

New Perspective: ByteDance announced it’s going to invest around $500 million for a data center in Ireland. It would become the company’s first data center in Europe and joins Amazon, Facebook and Google, who already have data operations there. ByteDance says TikTok already stores all user data overseas. However, the data center’s launch in Ireland shows the company is still optimistic about its ability to grow in Europe and other regions. (TECH CRUNCH)

Bring It On: “Just months ago, analysts had expected that 5G would jump start the industry after years of declining shipments. But smartphone manufacturers, already dealing with cooling consumer demand for expensive gadgets, have been walloped by the economic effects of the coronavirus pandemic. Now, Samsung Electronics Co. and others are increasingly using 5G and the prospects for superfast data transmission to sweeten the appeal of cheaper phones and to get reluctant users to buy into a technology that has stirred little enthusiasm beyond early adopters,” The Wall Street Journal writes. (WALL STREET JOURNAL)

Tidbits

Even as White House officials and top Democrats vowed to continue talks, the two sides remain nowhere close on a new pandemic stimulus deal.

With the Covid-19 pandemic sapping demand and lowering production, commodities giant Glencore PLC reported a loss for the first half of 2020 and cut its dividend.

The acceleration of remote work will outlast the pandemic and dramatically change how the workforce looks, where people live and the Electoral College.

Bausch Health is planning to spin off its faster-growing eye care business, Bausch + Lomb, from its core pharmaceutical operations, dismantling a company previous management built through acquisitions.

It took a pandemic shortened season and an in-organization outbreak, but former Olympic Speedskater Eddy Alvarez made his Major League Baseball debut Tuesday with the Miami Marlins.

Capital One received an $80 million fine for a 2019 hack that compromised the personal information of around 106 million card customers and applicants.

A Couple Cents Content

There are plenty of reasons to doubt Chinese growth in the second half of 2020, but here are three reasons not to. (POST)

Justin Oh breaks down Microsoft’s potential acquisition of TikTok and how it could impact share prices. (YOUTUBE)

Catch up last week’s Live Show before tonight’s. (YOUTUBE)

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