The screens at many homes have been on fire, proverbially. The education industry’s shift online has been talked about enough due to the novel coronavirus pandemic. The fun that kids are having, enjoying gaming at home, has got lesser attention perhaps.
Large number of people around the world continue to spend less time outdoors, thanks to COVID-19 fears. Gaming companies are having a home run. Every home where a kid has a smartphone, tablet, gaming consoles, or even a PC is having more than some gaming time.
It has sparked a gaming boom around the world which has never been seen before.
Yesterday’s gaming industry had kids (and adults too) looking at the screen and playing the games all by themselves. During the last decade, they graduated to gaming consoles for television screens while personal devices allowed them to play alone. Today’s games are collaborative, making the opportunity grow manifold.
Connected gaming is fast changing the industry. It has all the elements of drama, action, opportunity and tonnes of money that can change hands very fast. The launch of one successful game can change the fortunes of the industry. Imagine picking up that right stock!
Big boys play online
In the 1970s, the idea of coloured clothing and white ball was introduced for cricket. With his playboy looks, Imran Khan’s tee shirt with the lines ‘Big Boys Play at Night’ caught the fancy of the television audiences worldwide.
As the gaming industry is shifting online, it is once in a lifetime opportunity for companies too. Sony, Nintendo and Microsoft have been in this business for long. Amazon entered the business with its acquisition of Twitch. With the online market offering limitless opportunity for a global market, Alphabet (Stadia) and Apple (Arcade) are now getting ready for the game.
Companies are already reaping a boom in demand. Tencent, the world’s biggest video gaming company by revenue, found its customers enjoying online gaming more than ever before as the world went into a lockdown.
The strong growth of the industry during the first quarter has driven homebound people to spend more time as options for entertainment at home. The global economy may have been left tottering due to the pandemic but it has given these companies a new lease of life.
Cloud – the new gaming platform
That has brought a fundamental change in the industry as it shifts to cloud-based gaming. Multiplayer gaming sessions are now a familiar sight at homes across the world. Teenagers can now stay glued to their screens, with the ear pods in place, as they strategise the next moves, playing and talking to each other.
As and when cloud gaming gets bigger, studios may have little choice but sharing their new launches as well as popular games with a large platform. Since that platform will be accessed by the big and small players, it will have a pull factor too.
It has often been a ‘winner takes all’ market. A few years ago, it was mobile gaming that had caught on and the world could not have enough of them. Do the names of Rovio Entertainment and Imangi Studios ring a bell? Perhaps their games Angry Birds (launched in 2009) and Temple Run (launched in August 2011) respectively will, since it changed the fortunes of the two companies!
According to Statista, Rovio Entertainment’s revenues jumped from € 6.5 million in 2010 to € 173 million in 2013. It further increased to € 297.2 million euro as it licensed its brand for movies and merchandise. While Rovio launched several others games, no other game from the Finnish brand could become as popular.
Cloud-based gaming is giving smaller companies an opportunity to take on the might of the biggies. That is just one part of the emerging opportunity. Electronic Arts stock has not been at its best but Activision Blizzard has been loved by investors as it trades near its highest in five years.
Activision has taken gaming to a new level as its recent launch, Warzone, allows cross platform play across modes. Friends playing on Xbox, PlayStation or PCs can compete with each other. It has raised the bar for getting more people to play online across platforms.
While the industry is growing at a scorching pace, a real threat could be industry regulation. China restricted the launch of new games in 2018 over concerns around children’s health.
Higher speed, more excitement
The spread of 5G around the world could make the youth even more hooked on to online gaming. Anywhere gaming, with lifelike graphics and great connectivity could have solved the challenge faced by buffering. Console makers, e-Sports companies, gaming platforms, niche gamers, YouTubers and several others have an opportunity to make a name. And some money.
People watching e-Sport have now been growing at an exponential pace. Investors are keeping a close watch on the growing numbers of fans. This report says that there are 454 million e-Sports watchers around the world. More people watch e-Sports than digital platforms like Netflix, HBO, ESPN and Hulu combined, it adds.
The youth, and some adults too, are sure to be hooked on to online gaming. Others may sit and watch them. It is an opportunity to invest in upstream stocks – chipmakers, game creators, large platforms, gaming gear makers and more. Investors often look to ride such disruptions in the market.
Companies have sounded the bugle. Let the games begin!
Ashutosh Sinha is the founder of WordWiseWeb Media. Read his weekly column on the business of sport here. He can be connected on Twitter at ashutoshsinha00