The gaming industry is going through one of its best periods ever, this time on the internet and mobile devices. Investors should keep a close eye on developments in this sector and the quotations of key players. The fact is that a new star of the stock market may well be resurrected here, making many investors even richer and giving those who are only thinking of entering the market a strong boost and further ground for understanding investment.
What is the growth in 2019, 2020
The global audience of gamers across all gaming platforms exceeds 2 billion people: one in four people on the planet plays. And that number is growing, thanks to young people who have been using mobile internet since birth.
Unlike older generations, young people from Generation Z around the world don't just play games: for them, it's a way to communicate with the outside world and their friends, making gaming a potentially attractive marketing channel for global corporations.
The COVID-19 epidemic has also contributed to the popularity of gaming: in the absence of real entertainment, people across generations are playing more virtual games. According to data from Bloomberg as of June, the number of users increased by 35% during the pandemic. Research company NewZoo predicts the growth of sales of the global gaming market by 20% by the end of 2020 - up to $175 billion - and up to $256 billion - by the end of 2025. By comparison, Russia's revenues from oil exports in a successful 2019 were $122 billion.
The capitalisation of key players has soared by dozens of per cent since the beginning of the year: Activision Blizzard by almost 40% (to $64billion), Electronic Arts by 23% (to $38billion).
Consumers' audiences and purchasing power are growing in parallel with the penetration of gaming into real life and easier access to games, the number of ways to monetise games is increasing, and the game economy is evolving. All this entails an increase in revenues for companies, which in turn invest them in producing new content for players and improving technological developments.
The industry's potential
The video game market remains the beneficiary of long-term technology trends, and the spread of the coronavirus pandemic should sustain sales and profit growth for these companies for the rest of this year and probably beyond.
The COVID-19 pandemic has generally benefited the gaming market by attracting new users who were not previously the target audience, but have tried video games in social isolation, remote working and distance learning modes. At the same time, avid players are also staying in the game and spending more and more money on gameplay, thanks to the increasingly new methods of monetisation emerging in the market.
The monetisation of games is improving, with users trading with each other, for example by buying "upgraded" heroes and items so that they do not waste their time themselves. In parallel with the growing popularity of PC and video games, cybersports have developed and the economy within games leads to a real exchange of money among players.
The role of platforms like iOS and Android is increasing. Leading cloud companies are introducing their gaming platforms (game-as-a-service). The role of technology giants like Apple and Alphabet will grow, both in selling new games through their App Store and Android and in in-house development (cloud subscription). These and other factors have made monetisation and the gaming economy more difficult over the last 10 years and will continue to affect the industry.