Why and How To Place Investments In The Gaming Industry?
If there’s one industry that’s showcased growth and inspired confidence, it’s the gaming industry. While 2020 proved to be a challenging year for all involved, gaming proved its resilience thanks to its very nature. In fact, some would go as far to say that 2020 provided the perfect storm for the gaming industry as the conditions created a climate geared towards growth. Last year saw a large influx of gamers, a trend analysts believe will continue throughout the course of 2021. If you’re going to be investing in gaming stock, then there are certain market drivers and companies to be aware of.
Key market drivers in the gaming industry
With the majority of people cultivating a work-from-home lifestyle, the gaming industry hasn’t just survived, it’s escalated, so much so, that growth for this year is estimated at 19.6% – or 174.9 billion dollars to be more precise. The only segment of the industry that has taken a knock is E-sports and for obvious reasons – in-person events are all on ice for the foreseeable future and while such events have entered into virtual spaces, sustainability remains to be seen. The gaming industry’s growth is now mainly reliant on an upsurge of users in console, PC and mobile gaming. The under 25 age group accounts for the majority of the target market of most games, thus a large segment of gaming-related investments have honed in on countries like India where there is a sizeable young population. Another major market driver is the affordability and mass spread of smartphones with high calibre graphics. In addition to graphic-rich smartphones that now reach almost all segments of the public, there’s also internet penetration of new geographies, multi-national investments, and the proliferation of of digital payment systems – all of which are contributing factors.
Online gaming & monetization
Online gaming, especially with regards to smartphone and tablet usage, has brought forth various models for the generation of revenue. These models include in-game advertisements, free games with add-ons, play-to-win and play-to-play, demo versions and merchandise. Each of these revenue models have proven their mettle. ‘In-game advertisements’ for instance are usually used in games that sport high quality graphics and offer immersive experiences. Based on the overall high quality of the game, developers know that players won’t mind the occasional ad especially if it’s between rounds or stages. Quite often players are incentivised to watch the entire ad for the promise of extra points. The ‘free game with add-ons’ model offers the player the game at no cost. However, progression in to the game will require additional purchases. ‘Demo games’ provide players with a taste of things to come thus enticing the possible purchase of the full product while ‘merchandising’ amongst other things, lets players itemise their wardrobes.
Top gaming stocks for 2021
Looking at the various gaming stocks to invest in can very much be likened to trading and comparing currency pair USD CAD. Just as these currencies are susceptible to various market activities, so are the stock prices of the various gaming companies out there. However, when it comes to gaming companies, it’s important to be aware of the best ones, the fastest growing ones, and the ones with the most momentum. Your best video game stocks would be characterised by companies like Nintendo, Electronic Arts Inc. and SciPlay Corp. In terms of your fastest growing video game stocks, companies to look into would be Nintendo (once again), Activision Blizzard Inc. and CD Projekt SA. Finally, video game stock with the most momentum are companies like Sea Ltd., Enthusiast Gaming Holdings Inc. and The 9 Ltd. Just a little bit of homework on each of these companies will be enough to convince even the most reluctant investor.