Why Investors Are Looking At Online Games As A Great Source Of Investment
by Arina Smith Investing 06 May 2020
According to financial analysts, Mobile Gaming is a $70 Billion USD industry in 2019. IN the next few years, it is expected to breach the $100 Billion USD mark! This has made investing in online games and gaming companies a very valuable and profitable investment option.
Any seasoned investor always wants to branch out and diversify his or her portfolio. They are always looking for industries, which show promise and are a relatively safe bet as an investment option. With the rise of mobile and internet penetration in third world countries like India and China, mobile gaming is expected to boom in the next few years.
In this article, we look at why online and mobile gaming has become such a rage in recent times. We also look at how games are changing and evolving to reflect the social and psychological reality of our times.
Why Mobile and Online Games are attracting an entirely new Target Audience?
You can say that games are an extension of our reality. They reflect what is happening around us and try to portray the same through an engaging and attractive script. The advancements in technology mean that game creators have addressed issues like slow loading, bad graphics, device optimizations, etc.
In other words, there is not only a game to appeal to diverse sensibilities; there are also games, which appeal to different geographical markets. The lure of creating the perfect game has reached such a zenith, that games on their own rake in billions of dollars, even when they start off as ‘Free Versions’.
To give you an example, summertime saga is a game, which helps you craft your existence in a real-life scenario. It works around personal tragedies, motivates you to build your life and eggs you on to become a successful version of yourself.
There are many positive instances where gamers have stated that a game has had a positive impact on their lives in multiple ways. There are also instances where games have not led to any good. However, the debate is open on that front.
What are some of the Big Names investing in the world of Online and Mobile Games?
While most of us know about big and established names like EA Sports, Epic Games, and Rockstar Games, we often do not know the companies investing in them as a lucrative business opportunity. Venture Capital firms are betting big on online and mobile games.
One company that is hedging its bets in this niche is Tencent Holdings. The China-based tech giant has purchased vast stakes, in-game developers, like Supercell, Epic Games, and others. According to sources within Tencent, the company feels that this medium is going to be the next big arena for entertainment, eclipsing television, and movies in the coming years.
Investment firms on Wall Street are actively diversifying the portfolio of their wealthy clients by picking up percentages in gaming companies. If you have been following the news, you will know about Goldman Sachs investing close to $200 Million in the popular gaming studio Voodoo.
While Wall Street was late to the party, firms and investors based out of China, Singapore, and Hong Kong were one of the first ones to jump on this trend.
What about the Ecosystem surrounding Mobile and Online Games?
It would be naïve to think that online games and mobile gaming do not foster a multi-billion dollar support system. These companies are involved in manufacturing cutting-edge cell phones and devices that bring about the best experience of playing.
We are also talking about modems, joysticks, CPUs, memory cards, data connectivity, and several other things, which are becoming increasingly successful because of the popularity.
If you were playing a good game, which makes you feel fulfilled, you would not want your experience to be dulled by a low RAM device. Likewise, you would not want your memory card to be full if you were using one with a lesser storage capacity. What are you going to do? You are going to buy the best one for yourself according to your pocket.
This provides investors with more fertile ground and a host of opportunities to invest. Gaming device manufacturers like Nintendo, Xbox, and Sony have seen a flurry of high investments in the last few years. They have used these investments to improve their products technologically.
How are National Governments waking up to this reality?
One of the good things that have happened in this regard is the elimination of labeling games as trifles! Bodies who were most responsible for this form of negative branding were national governments.
Over a period, they have also realized the enormous benefits and advantages of tapping into this revenue stream. This has not only led to more governmental involvement, but it has also increased regulations and control.
In most countries, ministries who look after Information and Technology are given the responsibility to review, regulate, and assess online games. National governments and ministries look after the following issues-
- Are online games too violent?
- Do the games have an innate sexually provocative nature?
- Are they compliant with Data Laws and Privacy concerns?
- Taxation policies on companies charging for games from their consumers?
- Licensing and regulatory framework compliance?
The online gaming and mobile gaming industry are growing rapidly. This is something, which has captured the imagination of audiences across cultures, ethnicities, age groups, and territories. With more advancements in technology, the experience is just going to get better in the future.
If you are an investor who is looking to diversify from traditional stocks and portfolios, you can think of investing in gaming. In this article, we have tried to look at some of the essentials of how the gaming universe works. We have also looked at some of the major players in the industry. In addition, we discussed a flourishing ecosystem, which is also a great indirect from if investment into gaming.
Can you think of some popular games, which you enjoy on a regular basis? Let us know in the comments section below.