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Investing in gaming: a sector enjoying significant growth

12/06/2020

Investing in gaming: a sector enjoying significant growth

With so many people across the world currently stuck at home, it is unsurprising that both physical and digital gaming sales have seen a recent surge. Not only do many people now have more free time, but the World Health Organisation is also encouraging people to stay at home and play – both to reduce Covid-19’s spread and to combat mental health issues stemming from isolation. 

In addition, the cancellation of live sporting events across the globe has benefitted the world of esports, with The Guardian stating that “the pandemic has accelerated what was already a growth industry”. 

Three ways to invest

Gaming Street, a hub dedicated to the business and finance of gaming, recommends three different methods to invest in the gaming sector:

  • Video games: which they describe as high value but high risk
  • Esports teams: which they believe are currently overvalued but may see long-term growth
  • Infrastructure companies: which they believe is an “effective, risk-adjusted and profitable way to get exposure to this space”

To avoid stock-specific risk, The Motley Fool recommends a fourth option: buying an exchange-traded fund focused on the gaming sector. Such funds own a range of video game stocks, which gives broader exposure to the market.  

Looking to the future

Things are looking rosy for the gaming sector in the current circumstances – but what about in the future? A portfolio manager at Alliance Trust believes that there is substantial scope for the industry to expand as a result of Covid-19.

He cites the increase in mobile devices, new global markets and enhanced gameplay through additional paid-for downloadable content as three things that will increase gaming industry revenues. “Exposure to this sector seems an incredibly attractive investment opportunity”, he says. Is it a sector that is on your radar?

Stable Rise Limited is not authorised or registered by the Financial Conduct Authority. The marketing materials are not intended to provide financial advice nor promote any individual financial products.

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