Tech columnist Tim Culpan has argued that the gaming sector is on the down and out due to the easing of COVID-19 restrictions. Is it true?
Gaming experienced a moment in the sun last year as pandemic-related lockdowns sent people around the world indoors. As countries open up, can the industry’s success continue?
Bloomberg’s Tim Culpan recently argued that there’s a less-than-rosy future for gaming and related investments, pointing to a slowdown in the massive results gaming companies achieved due to COVID-19, alongside growing optimism about other markets, including athletic brands.
“If console owners are booting up less often, the risk is they’re far less likely to spend time or money on more games,” the columnist and former tech reporter with Bloomberg wrote.
Culpan said gaming results from powerhouses Sony (NYSE:SONY) and Nintendo (OTC Pink:NTDOF,TSE:7974), two of Japan’s biggest gaming companies, hint at a decline in interest for digital worlds now that the outdoors has become more available to consumers.
For example, Nintendo failed to meet estimates in its most recent quarterly results.
“July market data shows Switch and Switch Lite sales are falling. Nintendo will have another tough time ahead in the July-September quarter, which could be worse than the April-June period,” Hideki Yasuda, an analyst at Ace Research Institute, said of the game company’s console systems. Nintendo reported US$1.1 billion in operating income for the period.
For its part, Sony reported an operating profit of US$2.57 billion for the quarter ended on June 30. But Culpan argued that those strong results do not beat the gains seen in 2020.
“As expected, games revenue from both companies weakened, largely because a year ago we were at the height of lockdowns and consumers were rushing to get their hands on software titles and the hardware to play them on,” he wrote in his opinion piece.
The columnist added, “Fewer couch potatoes isn’t good news for those who sell to them, though,” referring to people who prefer to stay at home in front of the TV.
Culpan did admit that the pandemic is not over by any stretch as the US continues to be affected by the Delta variant of the virus. However, he believes new lockdowns or economic windfalls from a resurgence of pandemic conditions would likely also cause consumers to pull back on gaming expenses.
Gaming experts encouraged by future of mobile
The fate of the gaming industry remains up in the air, but some market watchers have pointed to one aspect that seems poised for success even as the impact of the coronavirus diminishes.
Recently the Investing News Network collected expert opinions on the performance of the gaming space so far in 2021, and the consensus pointed to the strength of mobile gaming.
While traditionally consoles and computers are seen as the cornerstone for gaming, the range of mobile games has increased exponentially and they continue to attract investment.
“Mobile gaming is a very, very powerful growth engine for the video gaming industry as a whole,” said John Patrick Lee, exchange-traded fund product manager at investment firm VanEck. “Mobile is just this bright spot in the video game ecosystem.”
Similarly, Raj Lala, president and CEO of Evolve Funds Group, said being able to play games on a phone is one of the biggest factors boosting gaming right now.
“The amount of time sitting in front of your television or your monitor with a console is going to decrease as the world reopens,” said Lala. “The one thing that we carry with us everywhere is our cellphones.”
As the world adjusts to a new normal, there has been much debate about the potential for the gaming industry to keep up with the extraordinary pace seen in the 2020 period.
While it remains to be seen if the gaming market could benefit from another wave of lockdowns, it’s clear that some believe its growth is set to continue with or without the unprecedented effects of COVID-19.
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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.