The Investing News Network gives investors some of the biggest takeaways from the business of gaming throughout 2019.
Investor interest in gaming is rising thanks to the high-end revenues the sector generates; in fact, the industry has long surpassed revenues for both the movie and music spaces combined.
Unsurprisingly, a focus on gaming from the business world was one of the leading trends seen in the technology sector as a whole in 2019.
Read below to find out about the critical developments in the gaming market through the year. You can also click here to read about the outlook for gaming in the year to come.
Gaming trends 2019: Upside for the gaming business
Projections for the esports industry are largely attached to growth in the hours consumers are spending watching games via platforms such as Twitch, owned by Amazon (NASDAQ:AMZN); YouTube; and Mixr, Microsoft’s (NASDAQ:MSFT) venture into public streaming.
A June market report from research firm Newzoo projects that in 2019, 2.5 billion people will spend a combined US$152.1 billion on video games.
Other highlights from the report include the continued rise of console gaming and a step back in mobile growth for the second year in a row. The report indicates that this decline in yearly growth was due to a lack of new blockbuster mobile games.
That said, the mobile segment continues to dominate as the biggest money maker for the entire gaming sector, with US$54.9 billion seen coming from smartphone gaming for the year.
In other gaming news, the public esports scene noticed one of its first public company blockbuster tie ups thanks to a transaction between Enthusiast Gaming Holdings (TSXV:EGLX), J55 Capital, Luminosity Gaming and Aquilini GameCo.
The brand-new company represents a mix of an esports and gaming media corporations. In December, it was approved to graduate to the most senior exchange in Canada, the Toronto Stock Exchange (TSX).
“Our vision when we founded Enthusiast was to build the largest vertically integrated esports and gaming company in the world,” said Menashe Kestenbaum, president of Enthusiast Gaming.
The company also holds a management services agreement with the Vancouver Titans, one of the top-ranked teams in the popular Overwatch League, which is managed by Activision Blizzard (NASDAQ:ATVI).
For an idea of what the burgeoning esports space is offering to players and investors, watch this visual tour of the Gaming Stadium, a dedicated esports venue located in Richmond, British Columbia:
Gaming trends 2019: Google challenges console gaming
After a pileup of rumors, Google, an Alphabet (NASDAQ:GOOGL) company, unveiled its official entry into the video game market by way of Stadia, a platform designed to offer gamers the versatility of streaming video games via an internet connection, rather than the established disc- or download-based model.
The proposition of cloud-based streaming platforms for gaming has been tried in the past to little success. Google is attempting to reverse the course this time around with a product promising 4K streaming capabilities and online interaction options for viewers.
However, at launch, the product faced criticism from both from gaming and technology reviewers. Stadia officially launched in November by way of a one time US$130 purchase, alongside a continuing US$10 monthly subscription; it costs a further US$20 to US$60 per premium game.
“If you’re expecting it to look or work as well as a high-end gaming PC or even a high-end game console, or if you’re hoping for a killer app, you may come away disappointed,” a review from The Verge states.
In a conversation about the future of Stadia, Paul Tamayo, video producer with video game website Kotaku, said, “Google obviously has the money to throw at Stadia and work on this moving forward, but I’m curious if they’ve taken stock of things like Xbox Games Pass (the equivalent system from Microsoft for its Xbox line of products), which in my opinion is a much better deal for 10 bucks a month.”
Gaming trends 2019: Exclusive ETFs launch
Interest in esports as a subsection of the gaming space grew enough this year to warrant brand-new exchange-traded funds (ETFs) from Evolve ETFs and Roundhill Investments.
The Canadian fund from Evolve made its official debut in June on the TSX.
The Evolve E-Gaming Index ETF (TSX:HERO) retains 49 holdings as part of an index tracking esports stocks. Its top holdings include some of the biggest names in the video game entertainment world, such as Electronic Arts (NASDAQ:EA), Activision Blizzard and Take-Two Interactive Software (NASDAQ:TTWO).
From its inception until December 20, the fund had seen a value increase of 11.81 percent, representing a C$2.35 gain per share for investors.
“The Roundhill BITKRAFT Esports and Digital Entertainment ETF enables institutional investors as well as individuals to participate in the long-term growth of esports and the underlying entertainment trends,” Jens Hilgers, founding partner at BITKRAFT Esports Ventures, said at the time.
Raj Lala, CEO of Evolve Funds, told the Investing News Network that the rise of esports and gaming in the markets was partly led by the spending versatility attached to modern games.
“In some cases, you could be spending hundreds, if not thousands, of dollars on one specific game to continue to play it,” said Lala. “The revenue model has become more complicated, which obviously works out quite well for the companies.”
Gaming trends 2019: Investor takeaway
As companies continue to share the upside of the attractive esports market, investors are becoming more familiar with the plays available in the sector.
The introduction of dedicated ETFs has also aided in the expansion of these names in the eyes of investors, and looks set to continue doing so.
The numbers attached to the gaming scene offer investors a variety of possibilities, and in the public markets 2019 offered a year of development and key advances for the future of the space.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.