April 15, 2024
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According to a study by market research institute Newzoo, global sales of mobile games are estimated at around $92 billion in 2022. For comparison, the console gaming market is projected to have earned around $52 billion US in 2022, for PC games 38 billion US dollars. With the growing use of smartphones and tablets across the world, mobile games have reached a huge audience. The big development studios have recognized this and are regularly releasing more and more mobile games in addition to the classic PC and console games.

The elimination of CD manufacturing, supply chains, and storage results in high scalability, and cost-wise, it makes almost no difference whether thousands or several million copies of a game are sold digitally. The biggest cost item is the development of new games, which has now reached the level of Hollywood productions at large studios with costs in the hundreds of millions per successful game. For this reason, console manufacturers such as Microsoft (Xbox), Sony (Playstation) and Nintendo (Switch) have their own development studios.

You have divided the console market in an oligopolistic way and often also own your own publications. Smaller studios with few releases carry a significant concentration risk in the event of a flop. Big studios like Activision Blizzard or Ubisoft can usually cope with the risk of a setback with several developments a year, but here too a careful selection and diversification between different companies should form the basis for a portfolio.

True, the core of the industry’s value creation lies in game development, because even the most profitable franchises usually owe their profits to the video games on which they are based. Building on this, there are now various ways to successfully monetize these products. In addition to the proceeds from actual video game sales, merchandising, playing cards, films, series and much more are playing an increasingly important role for companies. The “Super Mario Bros. Movie” currently playing in cinemas makes it clear that one of the most successful video games of all time also works through the media.

Streamer = movie star.

Gaming is also conquering many other media besides consoles. Streaming services like YouTube or Twitch allow viewers to watch so-called streamers play live. The format is now very popular with the younger generation and successful streamers enjoy the reach of famous movie stars. Platforms benefit from the sale of subscriptions or the placement of advertisements.

In conclusion, it can be said that the gaming market is no longer limited to consoles and games. From the original niche, a microcosm of successful franchises has long since emerged, which has found a permanent place in the leisure activities of many people across all media. Investors should not overlook the gaming market and take a close look at the leading companies.

You can find this and other asset managers with investment opinions and strategies at www.v-check.de.

From the Börse Express PDF of 14 July 2023

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