Should You Invest In The Gaming Industry In 2021?

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Investing is an excellent way to make extra money. No matter if you’re investing frequently or occasionally, it allows you to leverage your knowledge of businesses and industries and make a profit. Of course, investing is not risk-free, so you should be careful when selecting an industry to invest in.

Naturally, while some industries are considered risky, they can also bring better profits. On the other hand, while some investments are a lot safer, it can take a while before you make a significant profit. Nevertheless, out of numerous industries, you can invest in, gaming is one of the more interesting ones.

The gaming industry is continuously growing. While some investors cite the pandemic as one of the biggest reasons for the industry’s growth, the truth is that the gaming industry has been growing for quite a while now. In fact, the global video game market is valued at $138.4 billion, which is a significant increase from 2012, when the market was valued at only $52.8 billion.

Basic Video Game Industry Tips

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Gamers are the driving force behind the gaming industry’s growth. According to PlayToday, there are around 3.1 billion gamers worldwide, which is undoubtedly good news for potential investors. However, before you decide to invest, you should check out some key aspects of the gaming industry, learn how gaming companies generate revenue, and what factors may affect the stock value of a gaming company.

The first thing you should know about the gaming industry is that it encompasses the development, marketing, and sale of video game software and hardware, such as computer parts, consoles, and more. At the same time, the industry includes the esports scene, which is perhaps the only branch of the industry that suffered in the past two years because of COVID-19 lockdown restrictions.

Because of how diverse the gaming industry is, there are plenty of different stocks investors can get. If you plan to invest in stocks and companies that create and sell video games, an important thing to know is that the company’s stock value can fluctuate depending on the time of the year.

For example, such companies generally see increased revenue during holiday seasons when the sale of video games increases. Additionally, a release or announcement of a new title, especially if it’s a game that’s part of a popular franchise, can also affect company stocks.
Of course, things are never that simple with buying shares and investing in the future.

Quite often, even the news of a rival company releasing a new title can affect other companies’ stock value, which is why it’s crucial to know the market like the palm of your hand before you start investing in it.

Apart from PC and console video games, the mobile gaming market represents a big portion of the gaming industry. In fact, nearly 50% of the entire video gaming revenue worldwide was attributed to smartphone games in 2020. Similar to PC and console video games, smartphone game developers earn their revenue by selling their games.

However, in the mobile phone game industry, it’s much more common to allow gamers to download and play the game for free while offering a variety of in-game purchases.

In some cases, these purchases include small quality of life improvements, while in other games, players can often purchase premium features or gain access to content that’s generally time-gated. Regardless of their approach, the latest data from Statista shows that the entire F2P mobile gaming revenue is $13.2 billion in North America alone.

Top Video Game Stocks to Monitor

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These are just the basics of how some gaming companies operate, and there’s more information you should consider before investing. However, while we can’t cover all the variables you should take into account, we can give you a few pointers to help you get started.

Therefore, we’ve compiled a small list of some of the most notable companies you should keep an eye out for.

Activision Blizzard, Inc. (NASDAQ: ATVI)

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Activision Blizzard was founded in 2008 through the merger of one of the biggest console video game publishers (Activision) and Vivendi Games, which is the parent company of Blizzard Entertainment. The company’s portfolio includes franchises like World of Warcraft, Diablo, Call of Duty, and many others.

While the company’s value per share dropped towards the end of 2018 from $80 to $40, its price has been steadily increasing ever since with only minor fluctuations. Nowadays, the stock value of the company is $92.34 per share. Furthermore, according to the data from StockMarket, the current average recommendation for ATVI is 1.19, and analysts are advising a strong buy.

Nintendo (OTCMKTS: NTDOY)

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Nintendo is one of the biggest Japanese gaming companies and one of the oldest gaming hardware manufacturers in the entire world. The company is known for its legendary franchises like Mario and Donkey Kong. In addition to video games, Nintendo also manufactures consoles like Game Boy, Super Nintendo, Wii, and Nintendo Switch.

In 2020, the company’s revenue skyrocketed by 34%, and one of the major contributors was Nintendo Switch, which sold nearly 80 million units. Nintendo’s success continued in 2021, and even though the stock value fluctuated between January and July, it stayed between $68 and $78 per share. At the time of writing this article, Nintendo’s stock is valued at $72.69 per share.

Zynga (NASDAQ: ZNGA)

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Unlike Activision Blizzard and Nintendo, Zynga is a company that specializes in the development and marketing of social games on mobile platforms, such as Android and iOS. The company revenue is a dividend between advertising services and smartphone game downloads, and the sale of in-game perks and virtual goods. Most of Zynga’s revenue comes from its most popular games, such as social casino Zynga Poker, Farmville, Empires & Allies, and Words with Friends.
Zynga’s stock value reached an all-time high at the start of 2021 with $12.32 per share. Even though the price dropped slightly to $10.53, the analysts on StockMarket still believe that Zynga’s stock is worth investing in.

Microsoft Corporation (NASDAQ: MSFT)

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Brands like Microsoft need little to no introduction. The company develops and licenses enterprise and consumer software, and it’s best known for the Windows operating system and productivity software like Microsoft Office. Microsoft also owns Xbox, which is a gaming brand that produces consoles. In addition, it has also acquired numerous other companies and platforms over the years, such as LinkedIn, Skype, and many others.

At the time of writing this article, the value of Microsoft’s stock is $277.94 per share, and it’s only slightly less than this year’s highest value, which was $280.69. The value of Microsoft’s stock has been on a gradual increase ever since 2017. Moreover, it seems that Microsoft is keen on investing even more in its video game platform.
Namely, among its numerous acquisitions, Microsoft also acquired ZeniMax Media in March 2021 and its subsidiaries, such as id Software and Bethesda Softworks, which developed games like Doom, Quake, The Elder Scrolls, and Fallout series.

Summary

Stock trading requires extensive knowledge of the market you are investing in, the industry, and much more. It’s important to remember that even though some investments are safer than others, no investment is entirely risk-free.
At the same time, you should know that the companies mentioned in this article made the list thanks to market demand. In other words, investing in these companies will not guarantee you profit. Ultimately, the decision to invest is entirely up to you, so make sure to use your best judgment before you decide to invest.

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