Gaming has been picking up steam in recent years. If we look at its rivals in the entertainment industry, they seem to be hugely outplayed. Revenues of the television sector have fallen down by 8% last year (currently $102 billion), while the gaming sector is up at a current annual rate of 10.7%.
The film industry is experiencing the overwhelming dominance of video games as well. Games used to be based on successful movies, but the situation has changed: movies (and books as well) emerge from popular games, for example Angry Birds and Assassin’s Creed to name a few.
While other entertainment categories are witnessing decline, the increased popularity of video games is creating massive opportunities for stock investors.
According to the Newzoo's 2018 report on global games market, currently there are over 2.3 billion active gamers globally. Approximately half of them – 1.1 billion – spend money on games.
Why are millennials so eager to spend more and more on gaming? Because they cannot resist ever-innovative game producers. In addition to fascinating games, the industry has found new ways to get people engaged, such as eSports, and streaming sites like Twitch, where video game fans can watch others play online.
The researcher at Newzoo predict that in 2018 the gaming industry will reach around $138 billion, which is a 13.3% increase against the previous year. For the first time mobile gaming will be more than half of the total gaming market revenue, about $70.3 billion (+25.5% against 2017).
The biggest contribution to the industry’s revenue will come from China – approximately $37.9 billion in 2018. The second and third places go to the USA ($30.4 billion) and Japan ($19.2 billion) respectively. In terms of regions, Asia-Pacific is the major contributor, with revenues of $71.4 billion in 2018.
Gaming stocks: who are the key industry players?
Check the list of video game stocks that are available in the Capital.com platform and provide massive trading opportunities.
This is the largest game company in Europe and the Americas by revenue and market capitalisation as of September 2017.
Overwatch, its recent multiplayer first-person shooter already boasts around 40 million players globally. Launched in 2016, the video game was among the most anticipated games that year and generated more media buzz than Pokémon GO.
Activision Blizzard’s three game production units (Activision, Blizzard Entertainment and King Digital Entertainment) have sold more than 500 million copies of their titles, including Call of Duty, Destiny, Skylanders, World of Warcraft, Hearthstone, Diablo, Heroes of the Storm, StarCraft, Overwatch, Candy Crush, Farm Heroes, Pet Rescue and Bubble Witch.
Call of Duty was the second ranked eSports game by number of players – over 28 million as of August 2017 (after League of Legends), and World of Warcraft became the fourth best selling PC game of all time globally as of January 2018.
Electronic Arts, another American gaming giant, delivers games under several labels, including FIFA , NHL, Madden NFL, etc., and well-established franchises as Battlefield, The Sims, Medal of Honor, and more, and new labels – Crysis, Mass Effect, Dragon Age, Dead Space, Army of Two, etc.
In 2016, Battlefield 1 was titled the best-selling Xbox One video game of the year with around 4.32 million units sold. Another EA’s product – The Sims 3 – has been recognised the fifth best-selling PC game of all time worldwide with over 11 million units sold.
As of September 2017, Take-Two Interactive is the third largest US publicly traded game producer after Activision Blizzard and Electronic Arts. In the last 12 months, the company’s stock is up more than 60%.
Take-Two is being successful due to its massively popular Grand Theft Auto V, which at the time of writing was the third most sold game of all time. NBA 2K, Civilization and BioShock are among their other remarkable titles. Additionally, the company operates Rockstar Games, Private Division and 2K Gamesvideo game publishers.
This is another global gaming titan, that provides video games, hardware, consumer electronics, wireless services and accessories across 14 countries.
Gamestop also owns and manages a monthly magazine Game Informer (GI), covering news and articles on video games and consoles. The company is also the largest Apple’s partner in the USA, operating 47 Simply Mac stores nationwide. Similarly, Gamestop isthe largest AT&T authorised dealer via the Spring Mobile subsidiary.
A Chinese large provider of e-commerce, advertising and e-mail services, NetEase also develops some of the most popular PC-client and mobile games, including New Westward Journey Online II, Fantasy Westward Journey II, Ghost II, Tianxia III, and Heroes of Tang Dynasty Zero.
In collaboration with Blizzard Entertainment, a Microsoft subsidiary Mojang AB, and other gaming companies, NetEase delivers some of the most popular global online games in China, including Hearthstone: Heroes of Warcraft, World of Warcraft, StarCraft II and Diablo III: Reaper of Souls.
NetEase Games were ranked the second iPhone gaming app publisher with the biggest revenue globally as of January 2018.
Microsoft provides the gaming industry with both games and consoles. The company’s video game production division – Microsoft Studios– develops and publishes games for Xbox, Xbox 360, Xbox One, Steam, Games for Windows, Windows Phone and Windows Store.
At the latest E3 2018 Briefing, which took place on 10 June 2018, Microsoft announced it adds another five creative teams to the Microsoft Studios and showcased 52 games including 18 console launch exclusives and 15 global premieres. The long list includes such exclusives as Gears 5, Forza Horizon 4, Ashen, as well as such anticipated blockbusters as Fallout 76, Battlefield V, Kingdom Hearts 3, Metro Exodus and others. Microsoft also owns publisher Mojang AB who released Minecraft, the second most purchased video game of all time (after Tetris).
At the Japanese company, gaming is the responsibility of the Sony Interactive Entertainment division. They have given global players PlayStation consoles 1-4, as well as classic games such as God of War, and Heavy Rain.
As of 9 August 2018, Sony has sold over 525.3 million PlayStation consoles worldwide. To commemorate this huge milestone, the company has announced the release of the new 500 Million Limited Edition PS4 Pro to be available on 24 August 2018.
Gaming sector performance and benchmarks
Released in 2016, the PureFunds Video Game Tech ETF became the first ETF to focused on the gaming industry stocks. It is based off the EE Fund Video Game Tech Index and includes 36 video game stocks of publicly traded game developers, as well as chip and console producers.
Below you can find the long-term performance chart, reflecting how this ETF (ticker symbol: GAMR) performs against the S&P 500 index:
In the short term, the gaming industry stocks included in GAMR are under a slight pressure:
How will the industry perform? Whether it goes up or down, you can take advantage of any of the scenarios, as CFD trading provides for buy and sell positions. Chose a market from the video game stocks list and go long or short.
However, remember about the risks involved in CFD trading and always consider the possibility of adverse market movements.