Stock market experts always look out for mega investing opportunities. There are investors who could be looking at the swiftly growing gaming industry.
Gaming Trouncing Movie and Music Industries
The entertainment industry is a great investment opportunity, but within this sector it is the gaming industry that is bringing in the most earnings, even trouncing the music and movie industries. Total revenue for the gaming industry in the US exceeded $23.5 billion in 2015, a 5% jump from the previous year. A significant contribution to this is the shift towards digital software from physical games.
The past 5 years have seen video game publishers bringing about myriad digital offerings which helped expand their direct-to-consumer channels. And with mobile gaming having emerged and become a global sensation, and virtual reality and eSports emerging, the industry is set to be taken by storm with more opportunities for growth. The video game industry is composed primarily of the PC, console and mobile. Of these the console and mobile gaming sectors are booming, while the PC sector, though booming, is witnessing poor computer sales.
PC Stocks Continue to Decline as Console Earnings Rise
Stocks of PC giants IBM and HP (HPQ) continue to decline, and for the last 12 months have been down double digits. They should therefore be ideally considered long term investments. The advancements in console gaming have kept increasing its popularity. Sony’s PlayStation 4 (PS4) has managed to sell 40 million units globally and is the leader of the pack ahead of Xbox One by Microsoft and Wii U by Nintendo. In fact the 40 million units global sales figure is close to double that of what Xbox has achieved.
And Sony (SNE) isn’t sitting still. It is updating the PlayStation platform for supporting 4k functions and virtual reality, all high potential growth areas. Sony’s stock, though, has been down in the past year though it has managed to reconcile some of the losses. Console gaming has, on the whole, limited potential for upsides or downsides and continues to be a blue chipper.
Massive Potential of Mobile Gaming
Set to eclipse both the console and PC gaming industries in the coming 5 years is the mobile industry. Mobile gaming has come a long way in the past two decades. Thanks to advanced smartphones, computer capabilities can be replicated on the mobile phone, leading to a more satisfying gaming experience. And let’s not forget the VR headsets clubbed with mobile phones that take entertainment and gaming to a whole new level. We know just how popular the Angry Birds game is, becoming a cultural icon too. Not only that, games like Candy Crush, FarmVille and Clash of Clans have also become popular pastimes, bringing their creators tons of earnings.
Mobile Gaming in the Public Market
Mobile gaming’s entry into the public market has been a mixed bag, however. Zynga (ZNGA) and Glu Mobile (GLUU) are among those publicly traded companies that have struggled. Activision Blizzard’s acquisition of King Digital in a $5.9 billion deal has been removed from the NYSE. In spite of the limited success on the public financial market, mobile gaming is set to experience rapid growth.
So while the video game industry is growing fast, the stock market hasn’t quite reflected that. While there has been a spike in shares due to more digital downloads, console manufacturers and mobile developers continue to struggle. It is therefore important to be patient while investing here.
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