Meta: Are you looking to invest in gaming? Check out our guide with top tips on what to consider and avoid.
While many industries have seen their income tumble during this challenging period, gaming has gone in the opposite direction. Interest in gaming has rocketed with more players than ever before, thanks to a very special 2020.
Globally there are now 2.7 billion gamers, with an equal split roughly between the sexes. While it's traditionally seen as something that only the young are interested in, one in five gamers is aged over 50. This widespread appeal is the secret of its success and the reason why it's predicted to generate £160 billion in revenue in 2020.
But gaming isn't just a current success; it's expected to continue to grow, with 12% forecast between 2021 and 2025. It then leaves plenty of capacity for investors, making the sector attractive for any portfolio.
If you are interested in gaming and invest? Here’s what to consider when investing in gaming.
High Risk, High Reward
One of the most obvious possibilities is investing in the latest game that's tipped for the top. However, in a crowded market with an abundance of choice, it's challenging to find the next big-money first-person shooter that will top COD.
If you back a game that captures the imagination of the public, the rewards will be magnificent. However, there are so many factors which can quickly derail a game's success; this is a high-risk strategy.
Video Game Stocks
Rather than backing a single title, investing in the stock of a video game studio may be a less volatile strategy. Choosing the studio rather than a specific game will give you exposure to all of their titles, reducing the potential risk while still offering stable returns.
To diversify even further, you could opt for an ETF. This spreads your interest across a portfolio of gaming studios which are actively tracked. This diversification is an excellent investment strategy and for an industry such as gaming, could represent one of the best approaches.
Choose Spread betting for eSports
There has been plenty of noise around esports, and it's already become a cultural phenomenon. Audience numbers for esports have continued to climb, and it now attracts the top advertising sponsors.
The popularity of esports has seen a flurry of activity in the market, but although continued growth is anticipated, be wary of investing right now. The general consensus is that esports teams are currently overvalued, and there will be a correction in the short to medium term.
There is long-term growth in esports but to secure a return in traditional stocks and shares; the valuation must be right; the market isn't at this point just yet.
Spread betting offers an alternative for those who want to invest in esports. By allowing investors to benefit from both rising and falling markets, you can include esports in your portfolio without having to wait.
Infrastructure and Tech
The popularity of individual studios or the performance of their games can rise and fall, as particular genres fade in and out. An alternative to investing in the performance of the games and studios is backing the tech that makes it all possible.
Companies such as Discord, Unreal Engine, Twitch and Skillz provide the required tech and infrastructure, which supports the success of gaming. Investing in this area minimises your exposure to the success of a genre while still benefiting from the performance of gaming overall.