2021 IS THE YEAR OF VIDEO GAME INVESTMENTS - NOT ONLY FOR GAMESTOP

WHY YOU SHOULD CONSIDER VIDEO GAME INVESTMENTS

When your government forces you to stay home thanks to a worldwide pandemic, your options for entertainment become pretty limited. Many of us have turned to gaming to occupy our free time that is now spent at home - and the investment world has taken note. As the world changes, typical investment strategies have changed as well. Video game investment is on the rise, and we should be paying attention. Before you say it - this goes way beyond GameStop.

The gaming industry - a rising investment trend

Online chatter about new generation gaming consoles (such as the Playstation 5 or XBOX Series X) is getting harder to ignore. You somehow hear about it even if you’re not a gamer. Those two consoles conveniently released around the 2020 holiday season, so naturally many were talking about their desire for one. Here is the interesting thing; with so many out of work and a global economy nearly shut down - they still sold out. During the month of December, one would be hard pressed to find either of these consoles in stores, with many being forced to pay into the thousands from resellers and scalpers.

There is something to be gathered from that. Even in unprecedented economic turmoil and mess, there are groups of people who will not be deterred from buying the latest and greatest in gaming. Investors have been paying attention to this for a while now, and this year has been the ultimate test as to whether video game investing could be a viable option for stable returns. 

The gaming market is huge. It’s currently valued at €133 billion and projected to hit over €242 billion by 2026 with a 10.5% compound annual growth rate (source). That is a growth which investors can’t turn a blind eye to, so investing in video game stocks have been on the rise in 2020.

Video game investments can greatly diversify your portfolio as well. They can behave differently from other stocks and are fairly stable once console makers and developers are established. An example of this are gaming ETFs, which have been popular this year. A strong performer is the Wedbush ETFMG Video Game Tech ETF (GAMR). They were the first to specifically target video game investments, and have laid down an interesting path for how to invest in video games. Even amidst the dark economic days during March 2020, their returns haven’t disappointed. In fact, their shares have doubled in value from this point last year and continue to steadily increase.

SOURCE CNBC.COM

How the current landscape exists

Well-established games have begun switching to formats where users can explore their environment and directly interact with other players, commonly referred to as massive multiplayer online or MMO games. More importantly, developers can take advantage of this, with in-game purchases, upgrades and rewards - all sources of income for gaming companies that were previously nonexistent. It’s because people are using these gaming platforms as proxy hangouts. World of Warcraft had over 1.1 million users on streaming platform, Twitch, tuned in just to watch them release a new gaming mode. In 2018, the League of Legends competition finals alone netted over 200 million viewers. 

There is an addiction to playing and even watching people play these games, and in the meantime, that all skyrockets the value of the game and the developing company behind it. Look at what happened with Fortnite. Thanks to its massive success with the mixture of in-game purchasing and player communication, the developing company, Epic Games, is now valued at a staggering $17 billion, nearly 10 times what it was worth in 2012.

This behavior isn’t specific to console and computer games. Mobile gaming is in fact an even bigger player. According to Wedbush ETFMG, they currently value mobile in-game purchases at $60 billion, and current video game investors should be keen on penetrating that market as well, as it will only grow as long as smartphones exist. Considering the state the world is in, it’s only sensible investors would gravitate towards companies that are creating these types of games.

A new way of investing

On top of everything else, next generation games are shifting from third party publishers to self owned IPs. Gaming will become the next big franchises. From projects like Red Dead Redemption 2, which grossed $725 million on its weekend release, to League of Legends recently crossing eight million daily active players, these types of games will make the shift to being self-owned so more profits line the pockets of its creators and potentially the community of gamers. 

At STOKR, our digital marketplace enables investment into the financial rights of a company via Security Token Offerings (STOs). Gaming companies, like Exordium, have chosen this route to finance their flagship game Infinite Fleet. Infinite Fleet is currently raising funds on STOKR’s marketplace - you can read the full details of their STO here. Big crypto players, such as Tether, have already shown interest in this offering via STOKR. 

STOs are rising in popularity, and video games have begun to make their presence felt in this form of fundraising.

To wrap up

The most important thing to take into consideration is how effectively the video gaming industry hasn’t wavered much in a social and technological landscape forever changed by a once-in-a-generation pandemic. Over two billion people play video games around the world, and people are figuring out how to monetise the time people spend while playing. The idea to invest in video games may not have been an obvious thing for new or even seasoned investors to come up with, but it’s important to highlight its budding potential. 

Key takeaways

• Gaming has currently been an important bedrock for a society that has limited interaction with other people. This is an investment opportunity for anyone looking at it the right way.
• Most of the leading gaming companies and ETFs involved with gaming are seeing steadily rising value and impressive returns, a good thing for investors new to the game.
• Console, computer and especially mobile gaming are trending in formats that prioritise the players’ ability to interact with others and purchase their way through the game - an important money maker for developers.
• Infinite Fleet, a sci-fi MMO game is currently offering its security token on STOKR. Those interested can invest as little as $100 via Euros, Bitcoin or Tether. For more information about this project, check this link.

IMPORTANT

STOKR S.A. is not endorsing or otherwise recommending any investment in any offering available on its website. Any decision to make an investment should be made after reviewing the definitive legal documentation for the investment which will include representations by you that you are meeting any relevant regulatory requirements and that you have conducted such investigations as you deem necessary to make an informed investment decision. Please consult before investing your own investment, legal, accounting and tax advisors in order to make an independent determination of the suitability and consequences of making an investment.

BY DIAMAAN GUEYE