Gaming investment- The Complete Guide

11 minutes

Introduction

The gaming industry worldwide topped the figure of $162.2 Billion in 2020. The biggest gaming markets are China and the United States. The customers of these two markets are almost half than that of the others around the world. The forecast also predicts that by the end of 2023, the global gaming market will cross the figure of $200 Billion. Because of the Coronavirus epidemic, the gaming industry flourished a lot in the year 2020. The lockdown led a lot of people to spend on the gaming sector, especially mobile gaming.

What is Gaming?

Gaming is to play electronic games using PCs, Consoles, Mobile Phones, or other mediums. The term gaming suggests the hobby of playing games or regular gameplay. This is a relaxing or entertaining activity for the people. The introduction of online multiplayer gaming was a huge boost in the sector as it is a type of online group hangout. Any person who is doing gaming is known as a gamer. It has been the part of many generations since the introduction of video games in the late 50s. The gaming sector is divided into three major categories Mobile Gaming, Console Gaming, and PC gaming.

Gaming Industry Potential

Gaming industry potential involves several pipelines. It is important to understand all the processes involved in the industry. For instance, the delivery of games to the customers, the distribution of each game, the ownership of the games, or the agreement of a specific industry with the gamers. The most famous gaming types in the present era are sports, action, shooting, role-play, and simulation. These games can be played solo or with other gamers too. Most online games are played among multiple gamers, becoming popular and preferable for many gamers to compete with someone in person than bots.

The mobile gaming sector holds a revenue of 48% of all gaming sectors in the last year. The yearly growth rate for the sector is 13.3%. The reason for the mobile gaming sector’s growth is the closure of gaming zones (often based on PC gaming and Console Gaming) and the access to smartphones for everyone. But the future of console gaming and PC gaming is also very bright. As of 2020, console gaming showed a growth of 6.8%, and as of PC gaming, it is 4.8%. The next-generation launch of consoles from big companies like Xbox and PlayStation can also be a huge jump in the console gaming sector. Simultaneously, the cost factor of these next-generation consoles will also bring PC gaming into play.

These games are played on three different devices nowadays, which are as follows:

PCs

Most PC games like Fortnite and Minecraft are distributed among the gamers without any cost. This strategy creates interest among gamers for a specific game. The revenue is generated with in-app purchasing or through monetization. There are also games which are available for a price, for instance, in the form of hard copies. PC gaming companies also generate revenue through distributors.  

Mobile and Tablets

The games for mobile and tablets are available on distribution platforms like App Store for iPhone and iPad users and Google Play for Android users. Other app stores provide games for mobiles and tablets. There is an agreement between the company and these providers/distributors. The revenue is generated with in-app purchasing or through advertisement. Some games are not available for free, so their cost implies the direct cash-flow for the providers. The revenue is then split between the company and the distributors. With the growth of the mobile and tablet market, the gaming sector for these devices is also improving a lot. Games that are streamed online to allow several other gamers to play simultaneously are becoming a popular type of mobile gaming.

Gaming Consoles

This is probably one of the most preferred options for most gamers. Gaming consoles are made specifically for gaming. There are three main distributors of gaming consoles Xbox by Microsoft, PlayStation by Sony, and Nintendo. Those companies who make games specifically for these gaming consoles must have a license and distribution agreement with one of these companies. In this way, the specific game for a specific console is distributed.

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Gaming Consoles Business Models

Probably the most traditional gaming model is the gaming console, business model. The companies sell their consoles for low-prices with almost no or very less profit margin. Then the revenue is generated by selling the games for the specific consoles. Nowadays, if a gamer buys one console, it can support many latest games for the coming years. This may not generate profit for the companies, but with a stable distribution pipeline, these companies are earning money through selling games. This is called the razor and blade strategy.

The popular three brands are now the go-to option for gamers, which means controlling many devices. This put these companies into a position where they can negotiate with the gaming companies to purchase the license for selling the games through their platform. For instance, if EA wants to sell the game FIFA through PlayStation, they have to have the license from Sony to sell the hard copies or downloadable copies on PlayStation. In this way, PlayStation will be earning from EA in the form of royalty.

Digital Distributors Business Models

The popularity of mobile and tablets among gamers also pushes mobile companies to improve their gaming specifically. The growth of game-optimized mobile phones and tablets has also improved the growth in the digital gaming sectors. Gamers are buying more and more online copies of the games rather than buying traditional hard copies like discs. There are new ways to earn money through digital gaming like monetizing through streaming apps through which gamers interact with each other. The popular platforms for digital distributer business models are mobile phones, tablets, and PCs.

Future Business Models

The traditional gaming consoles are losing their grip in the market because of the frequent use and access to the internet. It created new business opportunities for the gaming sector. Some games can be downloaded free from the internet just like any other software, and this free-to-play model makes digital gaming more and more popular. As the popularity of online gaming is increasing rapidly, the e-sport industry can also become popular in the future. The free-to-play models are increasing the software distribution business model in the digital gaming sector.

What Drive Gaming Industry Growth?

The continuous advancement in technology has already improved gaming over the last few decades. This is fascinating to think about what further improvements the gaming sector will make with the rise of technology?

Let’s have a look for upcoming amazing trends in the gaming sector:

Virtual Reality

Virtual Reality

Virtual Reality (VR) has already been introduced in many fields like surgical training, autonomous cars, VR therapy, and several others. It already has been a part of the gaming sector. Companies like Sony, Facebook, and Samsung have already introduced a VR headset for the gamers, becoming more and more popular. VR provides more realism in games, and gamers will like to have more realism in the games. Moreover, the VR gaming sector is predicted to have a worth of $32.8 Billion by 2023. This means there will be an average annual growth of 26% for VR gaming.

Augmented Reality

AR technology upgrades the visual of the user’s current physical environment with the addition of the computer-generated images (CGI) on the screen of the user’s device. Augmented Reality has also been a part of many sectors like surgical training, automated cars, and several more. It has already been a part of the gaming sector. The most popular AR Game in recent years was Pokémon Go. This game has already proved the rising future of AR gaming. Gamers are demanding more combinations of CGI and Games, which shows AR gaming’s potential in the future.

Mobile Gaming

Mobile gaming has shown a lot of growth in the gaming sector already. To date, almost half of the gaming sector is occupied by mobile gaming. The improvement in the hardware of mobile devices has already shifted many gamers to mobile gaming. Even online gaming is prioritized to play on mobile devices than PCs, Laptops, Gaming Consoles. It is expected that mobile gaming will be occupying the global gaming market by 60% in 2021.

Gaming – How to invest in Gaming ? | Gaming Stocks #copyportfolio #etoro

In the following video i covered what is gaming, the gaming opportunities, different gaming business models and different way of investing in gaming sectors and gaming stocks.

Invest in Gaming

There are many ways to invest in gaming industry but we are going to focus on the following:

Gaming Stock Investment

You can invest in any model of  gaming stock through stock investment. It means that you can buy shares of a particular company that you think has the potential to grow in the future. In this way, you will be making a profit from the company as the company grows. You will also become a shareholder or partner of the company after you invest in one. You can explore all the most relevant gaming stocks via eToro In The Game stocks breakdown 

Pre-IPO : Invest in Gaming startups

Pre- IPO (Initial Public Offering) is investing in a company by  units of stocks. The companies offer this selling of the stocks before the stocks are made public. Because you will be buying huge blocks of stocks, it means more risk is involved in this. That’s why companies offer a discount for the buyers in Pre-IPO placement.

If you want to learn more about IPO investment, you read more about it in our IPO Guide.

You can Invest through trusted online pre-platforms such as Equitybee, Sharespost, Raison.ai and EquityZen

Investing in pre IPO companies is risky yet beneficial. If you choose wisely and make the right investment, you can make huge money through pre IPO investment.

Gaming Copyportfolio Investment– Gaming Fund

Interested in CopyPorfolios?

67% of retail CFD accounts lose money

Copyportfolio is one of the premium services by eToro. This is an advanced version of copy trading. The In The Game Copyportfolio by eToro is specifically designed for investing in gaming stock sectors. The main aim of this is to reduce the risk and benefit the current market. The Copyportfolio is rebalanced every quarter to adapt to the best investing strategies. Each instrument in Copyportfolio is counted as a single trader, and each trade depends on the percentage of funds you have. It is similar to copying another trader. 

The minimum investment starts from $1000, invest in eToro Gaming funds today.

in the game copyportfolio

Gaming Investment Returns

By the end of 2020, eToro ‘‘In The Game’’  generated a gain of 70%. This is an impressive number, when compared to an average gain of 42% between 2015-2020. 

 The gaming investment sector is expected to be increased in 2021 according to analysis.

Summary

Gaming investment is a growing business globally. Since the introduction of smartphones, Gaming is growing gradually. This is one of the best industries to invest in. As technology is improving day-by-day, gaming is starting to  penetrate augmented reality and virtual reality. The industry also generated huge profits in previous years, and potentially, it will generate more in the future. There are several models in the gaming industry; each has its pros and cons. You can invest in this industry through several ways, especially Stock Investment, Pre-IPO placement, and Copyportfolio investment.

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