?? Sony and Lego's epic move!

School hols gettin’ Epic! ??

It’s school holidays, and in case you were worried that the kids have swapped Lego bricks for gaming controllers, the stats say no. Privately-owned Lego says their consumer sales were up 22% in 2021, outpacing the rest of the toy industry. But even if video games are beating out brickheadz, there’s a win to be had with improved dexterity and brain connectivity. Science says so.

But combine Lego and video games, and things could be about to get epic! That’s because brick masters Lego are teaming up with Epic Games, which is 40% owned by Tencent (TME), to build a new metaverse for kids and families. ?? The deal includes a US$2 billion investment from Sony and Lego into Epic Games, valuing the company at US$31.5 billion, and sets the scene for Epic to take on players like Roblox (RBLX) and Microsoft’s (MSFT) Minecraft. Unlike the so-called ’creepy’ adult metaverse, the new Epic-Lego-verse will be specifically designed ‘with the wellbeing of kids in mind’.?

Meanwhile Meta’s (FB) wasted no time cashing in on their new digital world. The company is levying a hefty 47.5% fee on all digital NFT items sold, and NFT Twitter (TWTR) is pissed. Meta’s Horizon Worlds metaverse can currently only be accessed through virtual reality (VR). But that could be set to change with a new browser version in the works. ???? It will need to… teens barely use VR.?

Sometimes though we all need to get outside and touch the grass. Science says that too. If you want the kids to unplug and practise their dexterity navigating the real world, awesome adventures await these school holidays. In Auckland, the Museum is playing host to Peter the T Rex. A ride further south, Rotorua’s brand new $40M lakefront volcanic playground is open for business. Or, give the kids a true taste of Wellywood and piratey fun with KidzStuff production of Pirates vs Ninjas. ???? Epic!

A short history of Warner Bros Discovery???

Some things just go together. Like chips and tomato sauce. ???? Salt and pepper. Gin and, well, everything. ?? But it turns out, just because you think something should go together, doesn’t mean it actually should. That was AT&T’s (T) first mistake. Thinking that because they had 100+ million customers and the fibre optics to deliver big content to small screens, that buying Time Warner would be their ‘perfect match’.?

The US$85 billion deal crossed the line in October 2016. Then came AT&T’s second mistake. They set out to ‘disrupt the company’ they bought, muscling AT&T’s management into Time Warner’s boardrooms. ?? Because people who know about cables and stuff know how to create content. Yeah right. Well, that’s the story from former Time Warner chair and CEO, Jeff Bewkes, disputed by AT&T.?

But shareholders may not have been happy with owning shares in what once was a cash flow business that then bought a cash-sucking content entity. They might have been right. Since the ambitious ‘innovation’ merger, AT&T’s share price has dropped 36% from US$27.97 in August 2016 to sit at US$19.46 today, and dividend rates have fallen from above 9% to just under 6%. ?? No surprises AT&T announced in May last year they’d be spinning off of their content arm to focus on what they’re known for, 5G and fibre.?

Now a new pairing hopes to bring the binge watch vibes to screens. And last Friday’s Discovery merger with WarnerMedia, to create Warner Bros Discovery (WBD), doesn’t only combine assets including HGTV, Food Network, Animal Planet with HBO, CNN, Cartoon Network and Harry Potter’s Warner Bros movie studio. According to Bank of America it brings a powerhouse of advertising opportunities too.?

Does this mean popular streaming services like Netflix (NFLX), Apple TV (APPL) and Amazon’s Prime (AMZN) should be worried? Probably not…yet. Competition’s not new for an industry that entered the fray to take down cable and broadcast media since inception. That, and WBD inherited a tonne of AT&T’s debt and will need more than Potter’s wand to make the magic happen. Expecto Patronum! ??

Safe as, erm, houses????

It wasn’t just meme stonks and IPOs exploding last year. ?? Flying below the radar was a scorching performance by Real Estate Investment Trusts, aka REITS. REITs are a vehicle for investing in property without the hassles that come with being a landlord, and they have special rules for how they operate. In the US, REITs must pass on 90% of their profits in the form of dividends, so they suit investors hoping to generate income. But as US real estate prices took off last year, REITs also saw big capital gains with total returns of more than 40%, even outperforming the S&P 500 index. Did inflation help? Historically REITs have been one of the top asset classes in times of inflation. That’s because overtime, rents can usually rise to help offset inflation.

REITs love property probably even more than Kiwi politicians. They range from trusts, like Digital Realty Trust (DLR), which specialises in investing in data centres, to American Tower (AMT), which invests in the land that hosts communications towers, and everything in between. ??The world’s largest REIT is ProLogis (PLD), providers of warehouses for companies that need shedloads of floor space, like Amazon, Walmart and DHL. It has a market capitalisation of US$120 billion, about the same size as PayPal (PYPL).

So are REITs ‘safe as houses’? Not necessarily. Rising interest rates can be a challenge for real estate and shares alike. And recently the US Federal Reserve raised warning flags around residential real estate prices, dropping the words 'US housing’ and ‘bubble' in the same sentence. ???? ?? The last time those words were heard together during 2007 to 2009, the Vanguard's REIT fund (VNQ) plunged almost 65%, from a high of US$65 to a low of US$23, before steadily bouncing back.

We’re not financial advisors and Hatch news is for your information only. However dazzling our writing, none of it is a recommendation to invest in any of the companies or funds mentioned. If you want support before making any investment decisions, consider seeking financial advice from a licensed provider. We’ve done our best to ensure all information is current when we pushed ‘publish’ on this article. And of course, with investing, your money isn’t guaranteed to grow and there’s always a risk you might lose money.