The boom in online computer games continues. After the providers were able to further expand their business during the corona pandemic, the potential for further growth is huge for the coming years. And even though there is a thin line between online gaming and gambling, the bottom line is that players are entertained and at the same time earning some extra cash. Much like a few investments on regular gambling favorites like the Sattaking in India. The only difference is that players of online computer games have a better chance of winning.
How To Make Money Playing Video Games
New customer groups mean more sales potential. This is the forecast of professional business analysts for the online gaming industry. The virtual group participants experienced a significant change at this year’s Gamescom. The so-called TAM – the Total Addressable Market – is growing as a result of the higher average income of gamers.
US players grew by more than 30%
Overall, online gaming is increasingly gaining popularity among broader sections of the population and thus acceptance and self-confidence. Because of the corona lockdown, the advantages of e-sports competitions are not only known to insiders of the scene but are also used by billion-dollar industries such as Formula 1 to transfer the passion for racing into the virtual world. Share prices of companies in the sector are among the high flyers on the stock exchange this year.
The shares of the leading US players in this sector – Activision, EA Sports, and Take-Two Interactive – have each gained more than 30% in the current year. These price increases are understandable when looking at the last quarterly reports. The additional time available during the lockdown contributed to an acceleration of growth.
An example of the growth potential is the huge success of Fortnite. Thanks to the Battle Royal mode, the game has now had more than 350 million registered players worldwide (as of May 2020). With the success of Fortnite, developer Epic Games is now flexing its muscles against the giants of the US tech industry, Apple and Google. Epic is resisting the 30 percent fee for purchases made in the respective app stores and has requested a reduction in this fee. Since Fortnite is available for free and is primarily carried out through so-called in-game sales, this battle is about more than a few million. The growing support of companies like Microsoft and Spotify for Epic could mutate into a precedent and fundamentally put the 30% levy for other app stores up for discussion.
Global networking of the gaming community
New consoles such as the PS5 from Sony or the X-Box Series X from Microsoft are also expected in the second half of the year with great anticipation. These usually caused a flood of new games and deadline pressure for developers and design studios. Because the games should be available punctually at the busiest time, the Christmas business.
According to Adrian Daniel, however, investors who want to benefit from the growing trend in online gaming should consider a few points. Since there is a concentration of demand for computer games thanks to the global networking of the gaming community, the opportunity-risk profile of the development is changing. One example of this is the CD project from Poland – with the long-awaited release of the game “CyberPunk 2077” on November 19, 2020, the company is putting everything on one card. A postponement of the completion already caused higher volatility of the share in the course of the year, because otherwise, only another game with “The Witcher” dominates the company’s sales. However, if the demand for the game does not meet the high expectations,
More than 24 billion euros in sales in China
“For long-term oriented investors it makes sense to minimize the risk of the success of individual games as much as possible,” emphasizes Daniel. Here it helps either to rely on a larger number of companies, to leave the selection to an active fund manager, or to focus on business models that limit the risk in advance. This applies, for example, to development platforms with a large number of studios or recurring AAA games. In Daniel’s view, a global focus is also imperative for investments in this sector. The world’s largest market for computer games is China, with around 725 million users and, according to Statista, an estimated turnover of more than 24.5 billion euros in 2020.
“Investors also have the opportunity to rely on providers of the necessary hardware along the value chain. With Nvidia, the leading graphics chip designer, investors have already more than doubled their invested capital this year,” reports Daniel. Last but not least, a supplementary audit of the company for sustainability aspects makes sense. Companies such as Flutter Entertainment, for example, are exposed to increased regulatory risk by offering online gaming. “All in all, long-term investors have a wide range of options to benefit from the structural growth trend,” says the MainFirst fund manager.
