Yet Another Value Podcast Sep 18, 2026 1h 7m 45m saved
With Simeon McMillan, who writes the technology and media research service Accrued Interest
Nintendo goes into this holiday season with a remake as its biggest release, and the next flagship title Simeon McMillan can see is a Pokemon game somewhere in 2027 with no announced date.
The bull case has been that the movies, the theme parks and the recurring subscription revenue let Nintendo escape the console cycle. McMillan published two bearish notes saying that escape has not happened.
"The flywheel is not there"
McMillan writes Accrued Interest, spent longer in corporate financial planning than in professional investing, and worked in radio before that. He also says he went six for six on his shorts in the first half of the year, with the average one down more than 30%.
The full episode is covered here so you can skip it. 67 minutes of audio, 22 minutes of reading.
Here are the 15 calls that matter.
Key Takeaways
Nintendo's biggest release into Christmas is a Zelda remake, with the next flagship title out in 2027 and undated
The Switch 2 attach rate came in below the Switch 1's, and McMillan says the bundled Mario Kart makes it look better than it is
Accounts on Nintendo's subscription service are not growing, which he calls the elephant in the room
Nintendo raised console prices earlier in a cycle than ever before, which he reads as a signal on memory costs
Two to three movies a year and a dozen theme parks is what he would need to believe the connected-universe case
Spotify's royalty deals were Spotify winning, not a mutual peace, once he looked at the terms
Spotify's margins have gone from mid-teens toward 20%, turning 10% revenue growth into high-teens earnings growth
Netflix's operating margins are low-to-mid 30s with a path to 40, and he says the multiple re-rates from there
On a 40x Spotify against a 20x Netflix, he still prefers Spotify, because Spotify has fewer serious competitors
His AI worry is YouTube, not fake sitcoms — he wants to see a real AI show work before pricing it in
1. Six for Six on Shorts
McMillan opened by setting out his record before making the bearish case, since he knew it would irritate Nintendo's holders.
Six shorts, six winners in the first half
I went six for six.
Simeon McMillan
He said the average short was down more than 30% on an absolute basis and more than that relative to the market, and that he is not afraid to ruffle feathers. His position on Nintendo is that the stock is a cycle trade rather than a holding.
The problem is the hardware cycle, not the games
I'm bearish on Nintendo or far less bullish than the average bull because I think it's incredibly cyclical stock that has not been able to break out of its dependence on the hardware upgrade cycle.
Simeon McMillan
So it is not a buy-and-forget stock
My main issue with Nintendo was that this is not a stock you can put away and forget about.
Simeon McMillan
There is a way to own it
I think you buy it when it's down. You buy it going into major game releases.
Simeon McMillan
He noted that the stock was down roughly 50% at one point, that holders now describe themselves as having bought the low, and that it remains well below last year's high.
2. The Flywheel Is Not There
McMillan's grouping of Nintendo's top-tier franchises, in no order, was Mario Kart, whichever Mario title belongs to the cycle, Super Smash Bros., The Legend of Zelda and Pokemon. At the Switch 2 launch, Nintendo bundled copies of the new Mario Kart, which he said it had never done before and which he thinks carried the hardware.
What he needs to see is Switch 2 software selling
They need to sell more Switch 2 software because that's how you bring the audience over to the next cycle
Simeon McMillan
Switch 1 software has sold better than expected this deep into its life, which he reads as a problem rather than a strength: it means Nintendo is extending the old cycle rather than starting a new one.
A second Christmas with no flagship title
Now we're going into Nintendo's second Christmas without any more flagship titles.
Simeon McMillan
The biggest game announced for the holidays out of the two-day Nintendo Direct event was a Zelda remake. Bulls told him more flagship titles are coming; his answer is that they are now out into 2027, with Pokemon expected in the first quarter or the spring and no date attached.
He is not willing to wait indefinitely for that
Right now it's too lumpy for me to hold it for two years.
Simeon McMillan
3. Remakes and the Oil Well
The host made the bull case for remakes himself, and made it well. If a studio re-released a superhero film in a better format nobody would care, yet a Zelda remake will plausibly be one of the year's best-selling games, which says something about the brand.
The host's version is Buffett on Disney
The thing that Buffett used to say about Disney in the 60s, they're like an oil well where the oil seeps in, right?
A host
McMillan conceded the point and said it is why the stock has bounced off the lows. His counter was about who the remake is for.
The audience for a remake is 40-year-olds
The people most excited about it are millennials or 40 year old people who played the old game 20 years ago
Simeon McMillan
And a remake only goes so far
Remakes only get but so much juice.
Simeon McMillan
His structural objection to the Disney comparison is that Disney kept buying new intellectual property rather than re-running the same characters, so it could restart the cycle: Star Wars, Marvel, and within Marvel the move from Spider-Man to the X-Men after people had declared the franchise tired.
He also pushed back on the Zelda film specifically, while being careful not to call it a flop.
He is not predicting a box-office failure
I am not calling the box office a bust.
Simeon McMillan
But it is not a Mario-scale film
This is not the same as like a Mario Galaxy movie.
Simeon McMillan
His reason is that Zelda does not carry the same weight with young children that Mario does. The host agreed from the other direction, saying nobody plays Zelda for the story; they play it for the music and the mechanics.
4. Memory Costs Bite
The other thing that separates this cycle from previous ones is component inflation. The host explained the mechanism for listeners: memory is in heavy demand, and Nintendo was absorbing roughly $150 of cost, leaving it a choice between margin and price.
Nintendo raised console prices earlier than it ever has
This is the first time that Nintendo has raised the prices of a new console so early in its life cycle. You're going to lose some demand.
Simeon McMillan
Which runs against how the business normally works
Consoles are supposed to get less expensive over time typically.
Simeon McMillan
In previous cycles prices fell substantially and Nintendo shipped a cheaper Switch Lite. McMillan reads the price rise as management telling the market something.
The price rise is a statement about memory costs
By raising prices so early, Nintendo implicitly told you that they don't see memory costs coming down anytime soon.
Simeon McMillan
He therefore does not expect a cheaper Switch 2 model soon, which removes one of the levers for bridging the gap to the next flagship release. The market reaction, he noted, was visible in real time.
The market voted during the presentation
The stock started tanking during the presentation.
Simeon McMillan
He added that fan reviewers on YouTube, who were not discussing the stock at all, reacted the same way, and that the event leaned on remakes plus third-party games already available elsewhere or years old.
Nobody upgrades for better graphics on an old title
No one's buying a Switch 2 to play Resident Evil because the graphics are better.
Simeon McMillan
5. The Attach Rate
Asked to define the term for listeners who had not read the note, McMillan kept it simple.
What the attach rate measures
It's the number of games that are purchased with a new system and it's a measure of enthusiasm
Simeon McMillan
He said the Switch 2's attach rate came in significantly below the Switch 1's at the equivalent point, without quoting exact figures from memory, and argued it is worse than it looks because the bundled Mario Kart counts as a sale. Bundling what he believes is Nintendo's best-selling franchise of all time, in his phrasing, meant giving away the big one. He conceded the rate should improve as the bundles wash out of the sample.
The sales mix is what worries him
The longer these Switch One games keep dominating the sales, it just makes me worried.
Simeon McMillan
The host laid out the bull rebuttals fairly: Nintendo's games hold their value and keep selling for years, unlike a PlayStation catalog where the newest releases top the charts; upgraders already own a Switch 1 library, so they need fewer new purchases; and the subscription service gives people a back catalog to play instead of buying, which trades attach rate for recurring revenue and stickiness. He also noted that the Switch 1 is the best-selling system of all time and that Nintendo has cut production targets.
6. A Flat Subscriber Base
McMillan's answer to the subscription argument is the one thing he says almost nobody raises. Nintendo discloses the number of accounts on its subscription service, and he said that number is not growing; he checked it several times and described it as roughly flat over the past couple of years. He called it the elephant in the room and said he buried it too low in his own article.
He would change his view on evidence of growth there
They're milking more and more out of a strong fan base.
Simeon McMillan
The host said he had assumed the opposite, that the subscriber base was growing quickly.
7. Margins and Online Play
The host set up the margin question: hardware is lower margin than software, and a console is least profitable at launch, so this year's compression is expected. What he wanted tested was the bull view that Nintendo becomes a subscription business with app-store economics and 40% to 50% operating margins over time.
McMillan agreed margins expand as software mix rises, and did not dispute that.
The best margin outcome would be never shipping hardware again
The best case for margins would probably be if they never release another console.
Simeon McMillan
He treats the margin question as one of timing rather than direction, and said he may be early by a year. His substantive objection is to the online thesis.
Online is a Nintendo weakness, not a strength
Nintendo is not known for strong online play.
Simeon McMillan
He put it plainly
I think that online is actually one of Nintendo's weaknesses.
Simeon McMillan
Nintendo's multiplayer games, he said, are built for people in the same room, unlike the PlayStation, Xbox and PC model, and the online play that exists is mostly back-catalog. He noted that Nintendo's response to tariffs was a back-catalog sale rather than a rebate, which he called what every publisher does.
Without subscriber growth, it is extraction
You're just draining more out the cow until Pokemon comes.
Simeon McMillan
He also tied the margin case back to intellectual property, and set out what scale he would need to believe it.
Two to three films a year, every year
I need to see two to three movies a year.
Simeon McMillan
And a dozen parks, not a handful
I don't need just a handful of theme parks. I need a dozen. I need way more TV shows.
Simeon McMillan
His preferred model for Nintendo is licensing rather than going it alone, citing a deal Netflix announced that week with Sega for new Sonic and Sega shows.
He would rather Nintendo licensed its characters out
In a perfect world, I think that's what Nintendo should do.
Simeon McMillan
The host's version of the same complaint was about the next generation of fans: his own young daughter knows Mickey Mouse and not Mario, because there is nothing for her to watch, and a company that only serves the people who played in the 1990s has a problem in fifteen years. He also said Nintendo's management runs the company for a dream rather than for shareholders.
The host thinks it should have sold years ago
I worry that they're very Japanese and it's kind of the legacy of the Japanese company that gets run for a dream
A host
He said 2020 and 2021 would have commanded a large premium, and that Comcast has made its interest public.
8. The Pokemon Stake
The host raised Pokemon, putting Nintendo's ownership at about 35% with the caveat that the structure is layered. McMillan's answer was that he wishes the stake were larger and that the brand is nevertheless the template.
He wants the whole thing
This is a brand that I wish they own 100% of.
Simeon McMillan
He noted that Pokemon Go was sold to a gaming company he believes is owned by a Saudi conglomerate, and that game sales remain strong, but that the value leaks.
Most Pokemon consumption never touches Nintendo
A lot of Pokemon is consumed outside of the game in ways that Nintendo doesn't capture, like the toys and the cards.
Simeon McMillan
He added that younger audiences are probably more engaged with the collectible cards than the games, which he said he did not see coming. The host took the same facts the other way: the fact that Pokemon thrives outside Nintendo's control is evidence of brand health, and shows what Mario and Zelda should look like if they were monetized beyond games. McMillan agreed it is the ideal and said he hopes to see more of it.
9. Spotify's Label Peace
The host declared his own history on Spotify first: he did the work in 2021 and 2022 with the stock in the $150s, passed because everyone he spoke to on the music labels told him Spotify would be squeezed, and has regretted it since. McMillan's new piece is a similar admission, with the stock around $550.
His own article is titled as a correction
Spotify is a quiet compounder that I will never underestimate again
Simeon McMillan
He listed three things he got wrong. He thought the labels would hold Spotify's margin hostage; he thought the platform fee on mobile subscriptions would be a permanent drag; and he missed the renegotiation.
The deals were reset across all the labels
Spotify made peace with the record labels in a series of deal renegotiations.
Simeon McMillan
And the incentives finally aligned
For the first time, I would argue everyone was incentivized to be on the same side.
Simeon McMillan
His mechanism is that Spotify's royalty rate falls as it grows, against a basket of metrics rather than any single one, so growth helps both sides. The host offered a blunter reading: this was Spotify telling the labels it no longer needs them as much, and the next renegotiation will go further in Spotify's favor. McMillan accepted the substance.
He agreed it was a win, softly phrased
It is Spotify winning because they got better terms than they certainly have before.
Simeon McMillan
He also revised two other views. Advertising has underperformed, and its share of total revenue has been falling rather than rising, which he flags in his own risk section; the reason the mix fell is that premium subscriptions kept growing at a mid-teens rate for far longer than he expected. And the podcast business changed character.
Podcasts stopped being a money pit
Podcasting went from being like a money pit to a positive one.
Simeon McMillan
He credited price discipline for that, after a period of oversized talent deals. On audiobooks, he quoted management and flagged that they do not break the number out.
Audiobook credits are a $100M run rate
They have I think like a hundred million dollar run rate business on just extra audio credits.
Simeon McMillan
The last piece is what the labels get in exchange for a lower rate: marketing and promotion, which in a digital product means placement.
Promotion in digital means playlist placement
We can get you more placement in the playlist and other digital nudges
Simeon McMillan
A listener can skip a placed track, he said, but the boost is large, and it grows as distribution becomes more algorithmic. The host compared it to the most valuable advertising space in music being the Spotify home page, which Spotify controls and Netflix's equivalent is not for sale.
10. Is 40x Too Rich?
The host's pushback was on price: a low-double-digit revenue grower at about 40 times earnings, in a category where Apple, YouTube and Amazon all bundle a competing product, looks priced for perfection.
McMillan's answer is that revenue growth is the wrong line to read.
Margin expansion turns 10% revenue into high-teens earnings
This margin expansion that is well underway is actually leading to earnings growth probably high teens.
Simeon McMillan
He put trailing operating margins in the mid-teens, with visibility to 20% between now and 2030 on the current run rate and a case for 30% beyond that. His valuation argument does not require any further margin expansion: roll the multiple forward a couple of years on the earnings he already expects and he sees 25% to 35% upside.
The earnings line is what to look at
You have to look at the earnings growth and the cash flow growth.
Simeon McMillan
On the competition he thinks Spotify gets too little credit.
It has already survived three large bundles
I think Spotify doesn't get enough credit for fending off Apple, YouTube Music, and Amazon Music.
Simeon McMillan
They will not disappear, but he is clear who leads
But they're the clear number one. I'm most worried about YouTube.
Simeon McMillan
The competitors are permanent
They're never going to slay the beast.
Simeon McMillan
He also noted that the buyback is increasing and that he thinks cash returns are higher than the market credits.
11. Ek Stepping Back
The host's last Spotify objection was governance: Daniel Ek stepped down as chief executive at the end of 2025 and became executive chairman, and the host's reference case is Netflix after Reed Hastings, which he described as a rocky tenure. The implied question is whether a founder steps back because he can see the difficult years coming.
McMillan accepted the adverse-selection point and then disagreed on how much it matters.
His view of chief executives generally
I think CEOs are overrated in general in my personal opinion
Simeon McMillan
He compared them to quarterbacks, getting too much credit and too much blame, and said the current chief executive's engineering background fits a business that is a platform rather than a content creator. He argued the trend driving the margins is bigger than the executive suite.
And the evidence is already in the numbers
The proof has been in the pudding with the margin expansion.
Simeon McMillan
The host disagreed on the quarterback analogy in an interesting way: most are overrated, but the right tail is thick, and the very best are systematically underpaid because of contract structures. He named Patrick Mahomes, Tom Brady and LeBron James, and put Ek, Elon Musk and Mark Zuckerberg in the founder version of that category.
McMillan's closing Spotify point was that the competitive set has thinned out. Several subscription rivals have gone, which makes it hard to judge how Ek would have handled the rights negotiations five years ago, when there were more alternatives.
12. Netflix as a Value Stock
Netflix is down materially on the year and further since the Warner Brothers deal, and the host set out the bull case as he hears it: not the best-case outcome, but a business performing well at the cheapest multiple in a while, with Bill Ackman back in the stock after selling in 2022. McMillan's first comment was about Ackman rather than Netflix.
The host on changing your mind in public
The mental flexibility to be like, oh, I missed something that 3xed in my face, but I think the opportunities there.
A host
On the company, McMillan's framing is unambiguous: this is now a value stock that has to execute. He argued that too many people judge a global service by whether they personally liked the last show, or by awards.
Scale is the thing that is actually unique
I remind people Netflix is the only truly global streaming service other than YouTube.
Simeon McMillan
The complaint, he said, is the one people made about Apple not making anything astonishing any more: Apple changed the metric to profitability, and people were free to be annoyed. He put Netflix's operating margins in the low-to-mid 30s with a path to 40, and low-double-digit revenue growth translating to high-teens or 20% earnings growth.
The library does more work every year
Netflix has gotten incredibly efficient in milking more and more out of the content library that they have.
Simeon McMillan
His conclusion is that the company should stop trying to win the argument about prestige, which he said sends companies out of business, and let the multiple compress until earnings force a re-rating.
He is content to wait
So yeah, let the stock stay low.
Simeon McMillan
He also warned listeners that Netflix will probably make another large acquisition, and said anchoring on a three-year-old statement that it would not is unreasonable given how much of the competition has since failed.
The linear market is still being eaten
They're still not done feasting off the decaying corpse of the linear television market
Simeon McMillan
And YouTube is now a talent pipeline
Netflix, they're picking off some of the best YouTube stars.
Simeon McMillan
Which he describes as scouting
They're using YouTube sort of as like their pilot season.
Simeon McMillan
He was harsher on Paramount than on anyone else in the conversation, saying its deals, the UFC rights among them, do not make economic sense and that it escapes the scrutiny Netflix receives.
13. AI Slop and Netflix
The host put two AI risks to him. One is that short-form generated content competes for the same hours, citing Meta's own commentary that improved algorithms lifted time on Instagram by about 10%. The other is that generated content makes it cheaper for anyone to produce a watchable show.
McMillan said the generated content he actually sees is on YouTube, concentrated in children's verticals, and falls into two kinds: clips of real shows and films used in ways that skirt or break copyright, and wholly invented material such as trailers for films that do not exist, which children cannot distinguish.
He wants to see one work before pricing it
I need to see some use cases or some examples of like actual AI shows that get people going before I care too much about it.
Simeon McMillan
The host pressed on the trajectory rather than the current state, using the two-year-old video of Will Smith eating a cheeseburger as the benchmark for how fast the quality moved, and sketched a scenario of a generated sitcom with lookalike actors and a single human writer supervising, against which suing is hard because no real likeness is used.
McMillan's answers were that performers' unions will intervene to protect likenesses, that this is primarily a YouTube problem and therefore a sub-plot of the Netflix-versus-YouTube contest, and that every era of media has overestimated how formulaic hits are. His example was the wave of imitators that follows each animated success. The host conceded the point using Dick Wolf's procedurals: they look formulaic, and a network still pays him rather than anyone else, because of the last small margin that makes them work.
14. The NFL Ratings Test
The host offered one data point he thought demonstrated Netflix's position. Last year's overseas NFL opener, in Brazil, ran on YouTube and drew about 17 million viewers. This year's, in Australia, ran on Netflix and drew about 19 million. He flagged the qualifications himself: different weekdays, a bigger star in the YouTube game, and YouTube's numbers being questioned. What struck him is that Netflix matched or beat a free service while requiring a log-in.
Sport opens a category Netflix did not have
If they can get more NFL games, watch out.
Simeon McMillan
McMillan's reading is that live sport lets Netflix behave more like television, which opens advertising and sponsorship inventory, and that he is more interested in that than worried about short-form competition.
15. Spotify Over Netflix
The host closed by pressing the comparison. Both grow revenue at low double digits, both have a margin expansion story, and Spotify trades at roughly twice Netflix's earnings multiple, with the qualification that Netflix carries leverage while Spotify holds net cash. So why is Spotify the higher-conviction position?
The multiples the two were compared on
While Spotify trades at about 40 times price earnings, Netflix trades at about 20 times price earnings.
A host
His answer is the competitive set
I have more conviction on Spotify because I think that they have a lot of the same financial metrics, same story with less competition.
Simeon McMillan
Netflix's problem, he said, is that media attracts irrational competitors who stay longer than they should, so more of the return has to come from earnings rather than from the multiple. He put Paramount in that category and said it only survives because of its owner.
Paramount is the example
Paramount should not be in the conversation.
Simeon McMillan
He also expects Netflix's own strategy to shift.
He expects Netflix to resell rival streamers
When Netflix starts bundling other people's services
Simeon McMillan
That, he said, will be read as a change of strategy and criticized, and it is one of several levers Netflix has that will simply take time. On a long enough horizon he allowed the Netflix case is the bigger one.
Ten years out he can see a re-rating
I wouldn't be surprised if 10 years from now Netflix is trading at 30 times because they've become more of entertainment super app.
Simeon McMillan
The instruction he leaves for both
You sort of just have to follow the earnings, not the noise.
Simeon McMillan
Bonus Insights
McMillan said his discussion of the Netflix, Warner Brothers and Paramount contest has been complicated by people using Paramount as a proxy for their politics, and that by every objective measure the market applies to Netflix, Paramount looks worse and gets none of the same scrutiny.
The two also traded observations that were not about any of the three stocks. Sega, not Nintendo, owns Crazy Taxi, which the host had seen was being adapted for film and offered as the extreme case of a game with no story. The host said his own recommendation algorithm serves him clips of old films and television rather than the children's material McMillan described.
McMillan closed by saying he is adding student-focused material to his site on how to pitch a long and a short, with worked examples from his own best pitches, and said the host's own video on the subject is worth watching. He also mentioned that his coverage runs beyond media, naming recent work on insider buying at Uber.
McMillan's bottom line is that Nintendo remains a cyclical stock priced as a compounder, with the evidence for the flywheel absent from the attach rate and the subscription accounts, while the two media businesses he wants to own are Spotify first and Netflix second, both on earnings growth from margin expansion rather than on revenue.
Products, Companies & Tools Mentioned
Nintendo (The bear case: a Zelda remake as the biggest holiday title, a below-trend attach rate, flat subscription accounts and the earliest console price rise in its history)
Spotify (His highest-conviction long; renegotiated label deals, mid-teens margins heading to 20%, and a $100M run rate in audiobook credits)
Netflix (A value stock in his framing, with low-to-mid-30s operating margins and a path to 40, now recruiting from YouTube)
YouTube (The competitor he is most worried about for both Spotify and Netflix, and where he says generated content actually lives)
Pokemon (The brand he wishes Nintendo owned outright; most of the consumption, especially cards and toys, never reaches Nintendo)
Sega (Owns Crazy Taxi and Sonic, and struck a deal with Netflix for new shows — the licensing model he thinks Nintendo should copy)
Paramount (His example of uneconomic deal-making that escapes the scrutiny Netflix receives)
Micron (Named as the reference point for the memory demand that pushed Nintendo's component costs up)
Apple Music and Amazon Music (Two of the three bundled competitors Spotify has already held off)
Universal Music Group (The label whose bull case convinced the host to pass on Spotify years ago)
Uber (Named at the close as other coverage of his, on insider buying)
Books & Resources Mentioned
Accrued Interest (McMillan's research service, and the source of the two bearish Nintendo notes and the Spotify piece this episode is built on)
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