During the period of quarantine for pandemic coronavirus for the gaming industry has come a Golden age. High-speed Internet, innovative technologies and the development of world e-sports became a good reason to choose computer games and brighten up the home.
Despite the fact that the industry of eSports is now at its peak, more on this make it companies that develop computer games and, of course, the competitive players. Stepan juice, an investment analyst of the company “freedom Finance Ukraine”, prepared for Инвестиций24 review of these firms to convince you that eSports not only brings excitement and satisfaction, but also allows to increase the own capital.
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ESports vs COVID-19: the gaming industry has struck pandemic
Due to quarantine in the world the number of large-scale sports events require the presence of the athletes and spectators, had to be cancelled.
- Football championship Euro 2020 was moved to the summer of 2021.
- The Olympic games, which this year was held in Tokyo slipped for the year ahead.
- And on Thursday, may 28, it became known that the eminent Boston marathon for the first time in 124 years was canceled and scheduled a new date for these competitions in the fall.
When the real sport entered a period of stagnation, interest in the gaming industry increases. In particular, as soon as the quarantine platform Steam broke the record for the number of users: 2 million people from around the world were present at one site, 6 million of them simultaneously played. Players prefer the classics: CS, Dota 2, Rainbow Six Siege, GTA 5 etc.
The gaming industry in numbers In 2019, the revenue from sales of video games worldwide to 148.8 billion dollars, which is 7.2% more than in the previous year, according to research firm Newzoo. 26% (38.4 billion USD) of this amount falls on North America. In this region, sales of video games increased by 8.3% per year, according to Newzoo. For according to research the video game industry is experiencing profound changes, in terms of technologies and business models.
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E-sports and the stock market: shares of companies-developers of video games soared
Some of the most popular companies in the field of gaming today demonstrate the growth of prices for their shares. Among them:
- Electronic Arts (symbol: EA) – + 35,24%;
- Nintendo Co. LTD (NTDOY) – + OF 19.85%;
- The shares represented ETF VanEck Vectors Video Gaming & eSports (ESPO) (+ 34,92%), generally exceeded the broader market, providing investors the average yield from 23 March 2020 30% shared 90% more (2 months) in comparison with the growth of the S&P 500 during this period 35.41%.
Investing in these companies even in the beginning of the crisis, after February 21, when the fall in stock market indices, income investors has increased by 38.48%.
Performance indicators for the market and statistical data of the three best stock companies video game developers with the best ratio, rapid growth of earnings and the maximum speed shown in the table. Data is presented as at may 29, 2020.
It supplies companies with a low ratio of price-to-earnings (P/E, EPS) for 12 months. Since profits can be returned to shareholders in the form of dividends and buybacks, the low P/E ratio shows that you pay less for each dollar of profits.
Shares of gaming companies / Graph “freedom Finance Ukraine” according TradingView
Survey companies: development and revenues
Together with its subsidiaries develops and distributes the game in Japan, USA, Europe, Australia, Asia. Previously, the company was known as Nintendo Playing Card Co., Ltd. and changed its name to Nintendo Co., Ltd in 1963. It was founded in 1889, the headquarters is located in Kyoto, Japan.
Nintendo / Flickr Photos
Develops video games for mobile and web platforms. The company announced in February that its total revenue in 2019 increased by 11.9% compared to the 2018 financial year, while net income rose of 139.7%.
Another well-known company in the industry of e-sports, which develops, publishes and markets software for video game consoles, personal computers, mobile phones and tablets. Electronic Arts announced in December that has partnered with Respawn Entertainment to launch the global Legends series Apex Global, international program of multilateral e-sports.
Need for Speed from Electronic Arts / Photo Flickr
Develops and distributes video games and related products. Among its most popular franchises – Call of Duty, Guitar Hero and World of Warcraft. The company announced earlier this month that it has appointed Daniel Alegre new President and chief operating officer. Earlier, Alegre served as Executive Director of Google.
World of Warcraft from Blizzard / Flickr Photos
Focuses on mobile and web games. The most famous among them – FarmVille, Words with Friends and Zynga Poker.
- VanEck Vectors Video Gaming and eSports ETF (ESPO)
ETF Fund, which is targeted as closely as possible, before payment of commissions and expenses, to replicate the price and yield index MVIS® Global Video Gaming & eSports (the “index”). The Fund generally invests at least 80% of its total assets in securities that comprise the underlying index of the Fund. This is a global index, which tracks the effectiveness of the segment of the global gaming and eSports. The Fund may invest in Depositary receipts and securities in foreign currency. He is non-diversified.
- Take-Two Interactive Software (TTWO)
Developer of interactive software, publishes, and sells entertainment solutions for consumers around the world. The company offers its products under the labels Rockstar Games and 2K, the Division of Private and Social Point. Develops and publishes action/adventure products under the Grand Theft Auto titles, Max Payne, Midnight Club and Red Dead Redemption.
One of the developments of Rockstar Games / Flickr Photos
The features of investment in eSports
For investors, the video game market is divided into shares of game developers, “pure play” (described above) and the securities of technology firms, which have different impact on the industry. The latter group are tekhgigant Apple, Microsoft and Alphabet holding company, with Google.
The share capital of companies operating on the model of pure-play account of Allied Entertainment Esports, Esports Entertainment Group and Super League Gaming. However, these three companies are loss-making.
Some stock funds invest in stocks of game developers:
- ETFMG Video Game Tech ETF (GAMR) was the first ETF, which is targeting the video game industry. The Fund was created in March 2016. He holds securities Glu Mobile, Chinese Bilibili, Swedish Embracer Group and the Polish CD Projekt.
- VanEck Vectors & eSports ETF (ESPO) was created in October 2018. Its main shares are securities of Chinese Internet giant Tencent, the manufacturer of graphics chips, Nvidia and Advanced Micro Devices.
- The Roundhill BITKRAFT Esports & Digital Entertainment ETF was launched only in June 2019. His top stock are: manufacturers of gaming headsets, Turtle Beach, Singapore’s Sea, South Korea’s Nexon and Activision.
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The gaming industry is always in trend
A number of companies that we have listed above, not only are the leading video game developers, but the organizers of the least-known events dedicated to eSports. For example, Tencent holds competitions for League of Legends. Activision Blizzard has a competitive League for their game “Overwatch” and “Call of Duty”.
Last year the income from the export of video games totaled $ 1.1 billion, up 26.7 percent more than last year, according to Newzoo. Earnings growth of tiberindwa took place thanks to sponsorship, advertising, merchandise sales and tickets.
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