COVID-19 Draws Gaming Addicts As Cloud May Push Fever to a New High

Published: July 7, 2020 6:40 PM

As the gaming industry is shifting online, it is once in a lifetime opportunity for companies too.

COVID-19 Draws Gaming Addicts As Cloud May Push Fever to a New HighAs and when cloud gaming gets bigger, studios may have little choice but to share their new launches as well as popular games with a large platform.

By: Ashutosh Sinha

The screens at many homes have been on fire, proverbially. The education industry moving online has been talked about enough due to the pandemic. The fun that kids are having, enjoying gaming at home, has perhaps got lesser attention.

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A 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.

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 too. Today’s games are interactive and collaborative, making the opportunity even bigger.

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!

COVID-19 Draws Gaming Addicts As Cloud May Push Fever to a New HighRecord quarter for the gaming industry

Big boys play online

In the late 1970s, the idea of colored clothing and white ball was introduced for cricket. 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 game 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 on 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.

COVID-19 Draws Gaming Addicts As Cloud May Push Fever to a New High(Source: Stockal)

Cloud to take gaming sky high

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 strategize the next moves as they play and talk to each other.

As and when cloud gaming gets bigger, studios may have little choice but to share 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 2011) 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 as it licensed its brand for movies and merchandise. While Rovio launched several other 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 (NASDAQ: EA) stock has not been at its best but Activision Blizzard (NASDAQ: ATVI) 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.

5G to catapult gaming

The spread of 5G around the world could make the youth even more hooked on 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 is now huge too. According to Roundhill BITKRAFT Esports & Digital Entertainment ETF, there are 454 million e-Sports watchers around the world. More people watch e-Sports than Netflix, HBO, ESPN, and Hulu combined.

The youth, and some adults too, are surely going to be hooked on to online gaming for hours on end. 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.

Let the games begin!

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