Emerging Market Equities 2026 Outlook: A once-in-a-Generation Opportunity
Policy clarity, structural strength and under-recognised AI leadership support emerging markets for 2026.
Video games sit at the confluence of technology and storytelling, claiming ever larger mind- and wallet-share within global media. Inside this arena, international players Nintendo and NetEase stand out for the quality of their intellectual property. However, their business models are distinct: Nintendo leans on premium hardware–software bundles and expanding subscriptions, while NetEase extracts value primarily through mobile free-to-play ecosystems and in-game purchases. Elias Erickson, International Franchise Portfolio Manager, shares nuanced perspectives on these gaming giants.
From hand-painted hanafuda cards in 1889 Kyoto to one of the largest installed console bases on the planet, Nintendo has spent over a century perfecting the art of delight. The company’s lodestar—vertical integration—including proprietary hardware designs (e.g. Wii and Switch) allows Nintendo to control the technological canvas of its creative palette, enabling experiences competitors struggle to imitate.
Yet the true moat is narrative. Under the creative direction of Shigeru Miyamoto, Nintendo has cultivated perhaps the world’s best-loved library of video game characters and stories, including 17 of the 20 best-selling console titles in history (by units), with the most well-known bearing the Triforce (Zelda), plumber’s cap (Mario), or a Poké Ball (Pokémon).
Historically, Nintendo’s fortunes oscillated with each hardware cycle; a blockbuster console catalyzed sales, while a misfire invited troughs. However, that cyclicality is abating as the company iterates its hit Switch form factor and reshapes its player relationships. Today more than 70 percent of operating profit emanates from software, downloadable content, and a burgeoning subscription ecosystem boasting over 200 million Nintendo Accounts and 36 million Switch Online members. Backward-compatible architectures (e.g. Switch 2) and expanded third-party development are extending the platform’s gravity: creators gain a loyal audience, users enjoy more titles, and Nintendo earns an expanding royalty stream.
Beyond the screen, the mushrooming monetization of intellectual property, including merchandise, theme-park attractions, and movies (including the recent blockbuster Super Mario Bros. Movie) reinforces brand equity. With early reception suggesting the Switch 2 console could eclipse its predecessor, the runway for attach-rates and third-party monetization appears both long and conspicuously well-paved. Nintendo, long a master of player delight, is increasingly adept at converting joy into returns.
In contrast to Nintendo’s tight vertical control, NetEase exemplifies digital ubiquity. A pioneer in China’s online-gaming arena, the company has ridden two powerful secular tailwinds: rising disposable income and the smartphone’s ascent as the default entertainment device. Its portfolio is primarily free-to-play, with value flowing from micro-transactions and content updates that turn players into long-term tenants rather than one-off customers.
NetEase’s edge also begins with intellectual property. Flagship franchises such as Fantasy Westward Journey and Justice Mobile dominate the Massively Multiplayer Online Role-Playing Game (MMORPG) genre, where immersive social play correlates with higher in-game spend. Years of live-service experience inform the studio’s ability to refresh narrative arcs and revenue hooks to expand and stretch each title’s lifetime value.
Growth vectors multiply from there. NetEase is pushing into first-person shooters and battle royale games, and providing a toll gateway for Western developers, such as Activision Blizzard, to reach China’s 700-million-strong gamer base, exemplified by the return of World of Warcraft. In its own international push, NetEase’s mobile expertise affords it a head-start over many developers.
Following a period of domestic regulatory evolution, NetEase is focused on global share gains, investing heavily in R&D to maintain a robust pipeline of fresh content that meets evolving player tastes. In today’s digital economy, consumer engagement is the ultimate competition. For Nintendo and NetEase, it’s always game on — and, just like the communities they inspire, they’re constantly leveling up.
This is not a buy, sell or hold recommendation for any particular security.