Gaming

person holding tablet displaying Fortnite video game

With the gaming industry set to hit US$218.8 billion in revenues by 2024, investors have plenty of opportunities to jump into the sector.

New gaming devices coupled with the advancement of existing gadgets have paved the way for the gaming industry to reach new heights in terms of market value.

Gamers are spoiled for choice today as game publishers continue to release titles across multiple platforms, including mobile, personal computers (PCs), tablets and consoles.

So how can investors get involved and potentially make a profit in this exciting and quickly developing space? Read on for a look at the digital gaming industry, including what makes it lucrative and what stocks and exchange-traded funds (ETFs) investors may want to consider.


Is gaming a fast growing industry?

In a December 2021 report, Newzoo, a provider of gaming and esports analytics, calls for the global gaming economy to top an impressive US$180.3 billion in 2021.

Looking forward, the firm forecasts that growth in the worldwide gaming market will lead to annual revenues of US$218.8 billion by 2024. The Asia-Pacific region is seeing the most growth, accounting for 55 percent of gamers.

COVID-19 lockdown measures have been a key driver behind an explosive expansion of consumer spending on gaming in recent years, especially in the mobile games sector.

With a year-over-year growth rate of 7.3 percent, mobile represents the largest segment of growth for the market. Mobile gaming also accounted for 52 percent of overall gaming revenues for 2021. Mobile gaming, with the help of consumer spending, is expected to generate revenues of US$116.4 billion in 2024.

Another global gaming market segment seeing unprecedented growth is cloud gaming, a method of playing video games using remote servers in data centers, eliminating the need to download and install games. Newzoo reports that cloud gaming revenues for 2021 more than doubled from the previous year to reach US$1.57 billion. The firm is forecasting cloud gaming revenues of US$6.53 billion in 2024.

Why is esports so popular?

While the digital gaming industry has numerous subdivisions, it’s the popular esports arena that is projected to witness the fastest growth. Esports refers to the competitive video gaming industry.

Research and Markets expects this sector to experience a compound annual growth rate (CAGR) of 14.5 percent beginning in 2020 to reach a total value of more than US$2.1 billion in 2025. The firm attributes this impressive growth to “increased diversity of game genres, increase in viewership, emergence of esports cafes, increase in internet accessible devices, rising sponsorships, increase in mobile gaming, and increasing awareness.”

The market segment with the highest revenue in the esports industry is sponsorship, accounting for 61.2 percent of total global esports market revenues. During the forecast period, Research and Markets expects the advertising segment to experience the fastest growth in the esports market, at a CAGR of 19.7 percent.

North America, the Asia Pacific region and Europe are responsible for the lion’s share of the sector’s revenues due to their residents’ higher disposable income and faster adoption rates for smartphones.

In terms of genres, Research and Markets believes the top opportunities in esports market will arise in the multiplayer online battle arena (MOBA) segment, which is slated to reach US$493.2 million in global annual sales by 2025, and includes popular esports titles such as League of Legends and Dota 2.

What are the gaming stocks to consider?

Stocks are often the popular choice for investors looking to make a gaming investment.

Given that the industry involves multiple sectors, investors have plenty of options. For example, investors could consider the biggest esports stocks; they could also look more broadly at the top mobile gaming companies.

Of course, it’s important to be aware that both esports and gaming involve components apart from software. That means investors can look at related stocks, including NVIDIA (NASDAQ:NVDA), which makes computer chips; there's also Microsoft (NASDAQ:MSFT) and Logitech International (NASDAQ:LOGI), which both make gaming peripherals, such as mice, keyboards and headsets.

Ways to invest in gaming: ETF options

Investors who want to enter the gaming space as a whole rather than focus on specific companies may want to put their money into an ETF. ETFs offer broad industry coverage and are known for being less risky — potentially an ideal option for newer investors who are less experienced.

The following three ETFs are the top gaming options by total assets, according to ETFdb.com:

  • VanEck Vectors Video Gaming and eSports ETF (NASDAQ:ESPO)
  • Global X Video Games & Esports ETF (NASDAQ:HERO)
  • Roundhill Sports Betting & iGaming ETF (ARCA:BETZ)

This is an updated version of an article first published by the Investing News Network in 2019.

Don't forget to follow us @INN_Technology for real-time updates!

Securities Disclosure: I, Melissa Pistilli hold no direct investment interest in any company mentioned in this article.


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