Computer games belong to the future. Games have long ceased to be a privilege of young people, which adults give a wide berth to. Rather, the circle of gamers today extends through all age groups. Even the Prime Minister of Thuringia, Bodo Ramelow (left), passed the time with Candy Crush at a ministerial conference. Gone are the days when gaming was dominated by males. Studies show that today girls and women enjoy playing on the computer just as much as boys and men. Gaming shares are therefore in demand on the stock exchange. fast Growth Rates of the Best Gaming Stocks make the chance of being one of the winners seem realistic.
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Almost half of the world's population loves computer games
There are already around 3 billion gamers in the world, in Germany around 34 million people enjoy playing computer games. The corona pandemic has given the industry another quantum leap. In times of lockdown, curfew and contact restrictions, people have few alternatives. Games give people a break from the boredom of everyday Corona life and offer them the opportunity to set positive goals, which the brain releases dopamine when they are reached. The entire gaming industry has enjoyed a 75% increase in sales since the outbreak of the pandemic. Experts consider the trend to be sustainable and expect annual growth rates of 10 to 20%. So it's worth investing in gaming stocks, and investors should keep an eye on the best gaming stocks even after Corona.
Key technologies as locomotives for the development of the economy
According to the long wave theory developed by Kondratiev and Schumpeter, it is new key technologies that give the world economy an innovative leap under market conditions. It is these key technologies that stimulate demand, keep it alive in the long term and prevent market saturation. The Industry 4.0 concept is based on these key technologies. According to this model, the invention of the mechanical loom and the steam engine were the basis for Industry 1.0. The automobile, oil propulsion, radio, aviation and electricity were the pillars of Industry 2.0. During Industry 3.0, televisions, computers and automated processes in factories were the transmission belts for technological advances. The current Industry 4.0 is characterized by digitization with the triumph of streaming services such as Netflix, Amazon Prime and Twitch as well as mobile internet. The gaming industry is particularly receptive to technological advances. The history of computer games can be divided into several epochs depending on the key technologies, and it shows that new key technologies, some of which are still in their infancy, are likely to continue to ensure rapid sales figures for video games in the next decade. Almost every technological innovation has a direct impact on the gaming market and thus on gaming shares.
The key technologies in the gaming industry
The start in the history of computer games was rather sluggish. After Tic-Tac-Toe (OCO), NIM (a matchstick game) and a chess variant on a board that was reduced to 6 × 6 rows due to a lack of computing capacity, the first computer games on a graphical playing surface can be listed on one hand. The first games that went down in history, namely Tennis for Two (1958), Spacewar! (1962) and Pong (1972) were isolated phenomena that were not yet able to initiate a mass movement.
It wasn't until the late 1970s that computer games were released on a larger scale, so the gaming market gradually began to develop. Similar to the dot-com bubble at the turn of the millennium, the gaming industry experienced a crisis that went down in history as the 1983 video game crash. Here, too, according to the model of the hype cycle, exaggerated expectations at the beginning of a key technology led to the bubble bursting and thus to a serious crisis.
Within a year, the young industry's revenues fell from 3 billion US dollars to 100 million US dollars. Since 1983, however, gaming companies have been on the up again. An important reason for this is that technological advances quickly make themselves felt in the games. Video games gained noticeably in complexity, game depth and new functions over time, so that the attraction for good video games increased and gaming stocks began to flourish on the stock exchange. The developments in video games over the last few decades can be roughly divided into the following key technologies.
- 1980s: Computer games conquer children's rooms
- 1990s: The save function allows for more complex games
- 2000s: Computer games are played online
- 2010s: The rise of mobile games
- 2020s: The decade of virtual gaming
Different increases in the individual segments
This table makes it easier to understand that the segments within computer games are currently growing at different rates. The fastest growth is currently taking place for Smartphone Games accounting for 45% of total gaming company revenue. This is followed by titles for game consoles with a share of 32%, while classic games for landline PCs only account for 23%.
These statistics for gaming stocks may come as a surprise from a European perspective. However, it can be explained with a view to Asia, the world's largest gaming market, which also has the highest growth figures in the sector. Become in Asia Smartphones generally preferred, while stationary computers are unpopular. A possible strategy for investors in gaming stocks opens up here, namely to bet specifically on those securities whose owners are fully committed to mobile gaming. In mobile gaming, these are stocks Zynga (City Ville and Farm Ville) and 11 Bit Studios (The War of Mine). Glu Mobile (Dragon Island), on the other hand, was acquired by game developer Electronic Arts. We'll go into detail about the stocks of EA and other giants of gaming stocks.
When investing in gaming consoles, the consoles are from Microsoft (Xbox) and Sony (Playstation) are of particular interest to investors who are in a never-ending race to win over the public. In 2021, both global players launched a new generation of game consoles, Xbox Series X and Playstation 5, which sold like hot cakes among console fans. Nintendo is also on this terrain. The traditional company from the Far East with the cult figure Super Mario has lost none of its charisma and impresses fans with a broad portfolio of excellent hardware and software.
However, the measure of all things in the interior of computers are NVIDIA and AMD, which currently have the most advanced and powerful chipsets and processors produce, both for stationary and mobile computers. Additionally, NVIDIA has continued to put out feelers, serving the growing self-driving car market with advanced technology. NVIDIA Corporation doubled the value of its stock last year and is planning to acquire chip designer ARM, pending approval.
In-game purchases grant the highest revenue
Another development gives rise to criticism in consumer circles, but it is a guarantee for the sustainable growth that experts are forecasting for the gaming market even after Corona. The net proceeds from the games only make up a fraction of the total sales for companies. The profits from customers' subscriptions to streaming platforms for games such as Twitch and, above all, the income from microtransactions are now much more important for them. Gamers use them to get better gear, better weapons, upgrades to their vehicles, and other perks. If you are well off and completely immersed in your gaming world, you can certainly spend up to around EUR 2.000 more on a game for which you initially paid EUR 50. The high addiction factor makes this possible.
In-game purchases mostly co-exist with the advances that can be made through performance alone in a game world. Shareholders who rely on game forges should therefore pay particular attention to how well the providers are equipped with successful blockbusters, which are characterized by complex game worlds and in which in-game purchases are an integral part of the overall concept.
The role of successful game series
Similar to good films, particularly successful game titles are constantly being reissued. The successor usually offers improvements and mainly attracts the fans of the previous game. The archetypes of those evergreens, Sim City (1989), Civilization (1991), The Settlers (1993) and FIFA (1993), whose successors still attract a mass audience to this day, emerged in the early days of computer games. Later, similarly successful concepts such as Grand Theft Auto (1997), StarCraft (1998), Call of Duty (2003) and World of Warcraft (2004) were added. These, too, have developed into absolute success models right from the start, which are also regularly relaunched. The number and quality of blockbusters is a reliable indicator that says a lot about the perspective of the game company and also guarantees stability. Game developers with successful series bind an audience of millions that they can activate at any time with a sequel title.
E-Sports: competitions on the computer
28% of all 16 to 24 year olds dream of a career as an e-sportsman. Own leagues are now common practice for well-respected titles. The leagues attract audiences in the millions and are increasingly yielding large sums of money for the players. The Dane Johan Sundstein, who lives out his passion in the league of the game Dota 2, has already received prize money of almost 0 million US dollars under the game name N7tail. Respectable game developers are increasingly involved in these leagues and compete with their own teams. The league for the game Overwatch is even organized by the market leader Activision Blizzard on its own. According to experts, e-sports will also continue to increase in importance. An indicator of the continued growth of a gamer company is therefore the degree of participation in this model, which is to become a discipline and competition of the 2022th Asian Games for the first time in a high-level sports competition in 19.
Innovative strength and adaptability
An analysis of the company's ability to change will also be important when assessing gaming stocks. This gives rise to questions of how exactly the company applies modern technological innovations and how advanced the operating system looks. Digital space is playing an increasingly important role in marketing, and progressive companies rely on influencers and customer contact via social media. Stationary retail should hardly play a role in marketing.
Companies that apply a majority of their sales in the gaming market via streaming and clouds massively reduce their operating costs and meet today's customers where they are. According to Spencer Neumann, Activision Blizzard's chief financial officer, the level of cost savings from selling a game via download is $10 compared to traditional over-the-counter purchases. Already in 2018, 91% of all game sales were processed digitally. Modern companies have placed their games prominently and in large numbers on an online gaming platform like Twitch.
In addition, the actors should already be involved in the development of VR games that could shape the third decade of this century. The absolute enthusiasm of the players who have already experienced a VR game indicates that the trend will be sustainable. Since the technology is still very young, in the age of rapid technological progress, extreme improvements in VR games can be expected in the next few years and thus a development that is generally typical for the history of computer games, only accelerated dramatically.
The standard technological equipment for VR games is currently the VR headset Ocolus Rift from Ocolus VR with VR Shine Hair and Beard Oil, which Facebook took over in 2014 for 400 million US dollars. Stormland from Insomniac Games is a successful model for VR games. The VR game lets the player slip into the role of an android who has to fight his way through a partly mythical, partly futuristic cloudscape. Many more titles will be realized over the course of 2021. Popular is a conversion of a popular game into a VR game such as Hitman 3 VR, Jurassic World Aftermath VR and Doom 3 VR. However, there are also completely new concepts specifically for VR glasses, such as After the Fall VR, A Rogue Escape and Zenith: The Last City, which the pioneers among players await with particularly high expectations.
The best game developers in the industry
Anyone who invests in gaming stocks usually shows a certain interest in computer games. Most investors in this games industry came into contact with games as children and have experienced the development of computer games up close. You know a large part of the most popular games and can also assign them to the developer. An investment in the success of game developers is the icing on the cake for the shareholders who feel connected to the games.
Investing in gaming shares is also worthwhile financially, because the market is huge with 3 billion gamers. It is also clear because only large companies with the appropriate capital can develop games suitable for the masses, because only they are able to bear the enormous costs for development and research of the games up to the release. The development phase of a computer game that wins the hearts of the masses and has the potential to become a successful game series can take years. We present the most powerful horses in the gaming industry and offer forecasts on the success of the best gaming companies:
Activision Blizzard: Industry leader and all-rounder
Activision Blizzard is the market leader in developing computer games. The company from Santa Monica (USA) was created in 2008 after a merger of Vivendi Universal Games with publishers Activision. The game developer is an all-rounder who is excellently positioned in all areas and games for everyone platforms, consoles and mobile devices. Some of the most popular titles in the world such as WoW, StarCraft, Call of Duty, Destiny, Skylanders, Overwatch and Diablo can be traced back to the manufacturer. Even the most successful global strategy series Civilization now belongs to the industry leader from overseas. In the mobile games segment, Activision Blizzard is also an outstanding creator. Here it is titles like Candy Crush, Bubble Witch and, since the takeover of King Digital Entertainment in 2016, the mobile game King, which are played on smartphones all over the world.
Activision Blizzard is involved with its own teams in prominent e-sports competitions and is the organizer of the Overwatch League, which is based on the NHL model in terms of process and sponsorship. In addition to Overwatch, the leagues of the EA games CoD, WoW, StarCraft and Hearthstone are very popular with players. Activision Blizzard has a balanced portfolio of series and new developments, so that older generations of players are retained and new ones are attracted. Activision Blizzard's share price is characterized by strong, continuous growth, which was only interrupted by a dent in 2019 in the wake of a smaller global crisis affecting the entire industry. The company's policy is up to date, with more than 80% of all sales taking place digitally, while in-game purchases generate more than half of the profits. Investors can do little wrong with an investment in the course of AB, because AB stands for high market potential on a stable basis.
Electronic Arts: no experiments
In terms of revenue, Electronic Arts is the global number two at around $5,5 billion, behind AB ($6,5 billion). Electronic Arts has grown steadily through numerous acquisitions since its inception in 1982. The game company from California shaped the history of computer games almost from the beginning. Known above all for its sports and military games, Electronic Arts succeeded in creating a world-famous classic with Fifa, whose annual new edition is always eagerly awaited by football fans all over the world. Fifa 21 is the name of the current title of an eternal evergreen that hasn't put on a coat of paint to this day, and the game series is a guarantee for the success of the entire company, including on the stock market. In addition to Fifa, Medal of Honour, Battlefields, Dragon Age, the Sims, Madden NFL and Need4Speed are other driving forces.
The company's strengths are the quality of game distribution and a solid foundation with a long list of successful game series. Critics, on the other hand, accuse the game company of concentrating too much on successful new editions and neglecting the new development of innovative games. The corporate structure is considered to be rather conservative, which also causes deductions for the possible changeability. With a 25% share of sales in mobile games, the industry dino is surprisingly weak. This will be one of the reasons why Electronic Arts is simply non-existent in Asia.
Another risk is the many games with a certain amount of violence, which can put the company in difficult waters if the political wind changes and a campaign against violent games is launched. If there are no negative surprises in this field, then the numerous successful game series should give the company a solid foundation.
2018 was EA's crisis year and the share price plummeted by half, but has been back in consolidation status since then. Nevertheless, experts expect a gradual decline in sales compared to the often more innovative competition. In the best case, the company has enough strength for a courageous reorientation. There would be enough capital available to finance this if the tried and tested were to be retained.
Take Two Interactive: Dynamic player with a harsh image
The military focus on the games is particularly strong at Take Two Interactive. The company has a grim image with games like GTA, Borderlands, Mafia and the Wild West game Red Dead Redemption. With new 2K sports games like NBA 2K20, Take Two Interactive wants to inspire customers for sports games in the future. The release of Grand Theft Car was extremely bold at a time when violent games were constantly being discussed in the media. Nevertheless, or precisely because of this, GTA is considered one of the most successful computer game series of all, and it has cult status among its fans. The company, which is based in New York City, relies on the franchise system and is a loyal supplier of games for the game console. 93 new titles have been announced for the new generations of consoles from the market leaders Microsoft and Sony, about half of which are said to be new releases of which the company is confident of their success.
Take Two Interactive obviously also radiates a high sense of mission internally, which spurs the individual employees on to new top performances. The growth forecasts of the analysts are regularly exceeded. Over the past year, the stock's price has surged 40%, and over the five-year period, it's grown by 350%. Take Two Interactive currently has a 58% revenue share in microtransactions. The developer is considered to be highly innovative and a company with distinctive unique selling points and a high recognition value. Although its $3,1 billion in revenue is far below EA's, the company has already surpassed its peers in terms of stock market value. An investment is ideal for stockbrokers who are convinced of the continued success of the New Yorker and are not impressed by temporary lows. In view of the high affinity for violence in many games, there is an even greater risk than at EA that the tide will turn and politicians will feel compelled to adopt a more restrictive anti-violence policy in video games.
More options for publishers
In addition to these three draft horses, it is also worth taking a closer look for the following game developers:
- Tencent: Technology giant from China with high investments in the gaming industry
- Ubisoft: well-known titles: Far Cry, Cread, Assassin's Cread, great tradition, increasingly active in mobile games, speculation on trend after slump
- CapCom: Japanese game developer since 1979, well-known titles: Ghost'n Goblins, Streetfighter, Resident Evil, Lost Planet, Mega Man, formative in the Survival Horror sector
- Embracer: Spectacular growth over the past 10 years, buys game platforms and licenses at high speed, resulting in a broad base in all genres
- Vaneck Vectors Video Gaming: very involved in e-sports
Conclusion: realm of unlimited possibilities
The gaming industry is a gigantic, rapidly growing global market driven by recent innovations in streaming, Virtual Reality , augmented reality, cloud computing and artificial intelligence should continue into the next decade. An investment in gaming shares remains a successful model on the stock exchange. The market is also so diverse that specialization is possible at any time. Speculating on shares in game developers can become a calling and a matter of the heart for shareholders with a passion for gaming. It's terrain that should make you feel like a fish in water.
When choosing a gaming stock, interest should focus on companies on a solid foundation that are broadly based in terms of gaming. Your ability to innovate should create confidence that the connection to the future will continue to succeed and that a pioneering role may even be achieved. Parameters for the ability to innovate are the integration of modern game elements such as AI, VR and AR into the portfolio as well as a high proportion of revenue gains from mobile games, digital sales, streaming subscriptions and microtransactions.
When it comes to the range of games themselves, successful game series guarantee recurring income, which ideally is linked to the ability to spoil the gamer scene with regular new releases, with which the company can attract attention with a bang, just like the Finnish game developer Colossal Orders did in 2015 with Cities: Skylines succeeded. Anyone who has both, namely successful game series and the talent for coveted new games, has set the right course for growth and serves old and new players alike.
▷ User-friendly trading platform
▷ Buy shares without commission
▷ German service & high security
Etoro is regulated and licensed multiple times. The broker has regulations in Europe (CySEC and FCA), Australia (ASIC) and USA (FinCEN). These regulations radiate a high degree of trustworthiness to me.
