The investment interest for the gaming sector has increased thanks to the high-end revenues attached to the industry; in fact, it has long surpassed the revenue of both the movie and music spaces combined.
Gaming as a focus of the business world came to be one of the leading trends for the technology sector in 2019.
Read below to find out about the critical developments in the gaming market through the year.
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Give me my free report!Gaming trends 2019: Upside for the gaming business
The projections of the esports industry have been attached to the growth in hours spent by consumers watching games through platforms such as Twitch, owned by Amazon (NASDAQ:AMZN); YouTube; or Mixr, Microsoft’s (NASDAQ:MSFT) venture into public streaming.
A market report from research firm Newzoo in June 2019 projected that in 2019, 2.5 billion people would spend a combined US$152.1 billion on video games.
Some other highlights from the report include the continued rise of console gaming as mobile growth took a step back for the second year in a row. The report indicated that this decline in yearly growth was due to a lack of new blockbuster mobile games.
However, the mobile segment continues its dominance as the biggest money-maker for the entire sector, with US$54.9 billion coming from smartphone gaming.
The public esports scene noticed one of its first public company blockbuster merger and acquisition (M&A) activity 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 corporation. In December, the company 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).
Gaming trends 2019: Google challenges console gaming
After a pile up of rumours, 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 with the versatility of streaming video games through an internet connection, rather than the established disc or download based model.
The proposition of cloud-based streaming platforms for gaming had been tried in the past to little success. Google attempted to reverse the course this time around with a product promising 4K streaming capabilities and online interaction options with viewers.
However, at launch, the product faced criticism from both 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 and then 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 indicated.
Why are Google and Apple are investing heavily in the gaming market?
Read our FREE outlook report on the gaming market!
Give me my free report!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 for the space make an appearance
The interest in esports as a subsection in the space grew enough to warrant its own 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 Toronto Stock Exchange (TSX).
The Evolve E-Gaming Index ETF (TSX:HERO) retains 49 holdings as part of an index tracking for esports stocks. It’s 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).
The fund also carries international names like Nintendo (TYO:7974), Bandai Namco Holdings (TYO:7832) and Ubisoft Entertainment SA (EPA:UBI).
Since its inception and as of Friday (December 20), the fund has seen a value increase of 11.81 percent, representing a C$2.35 gain per share for investors.
Meanwhile, the Roundhill BITKRAFT Esports & Digital Entertainment ETF (ARCA:NERD) also made its debut in June.
“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 have also aided in the expansion of these names in the eyes of investors.
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.