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Should I invest in the gaming industry?

17/03/2023

In August 2022, data from gaming industry trade body Ukie revealed that the UK gaming industry enjoyed at least £7.7bn of investment from January 2017 to June 2022. Already sizeable, the COVID-19 pandemic gave UK gaming an even bigger boost, with people looking to stay entertained when cooped up at home. 

But with the pandemic now over, is the gaming industry still an attractive prospect for investors? 

 

Top stock market performers

In both the UK and beyond, various gaming and gaming-related companies’ stocks are available on a number of stock exchanges. Top industry performers to watch, according to experts, include: 

  • Roblox Corp. Roblox is known for its innovation, as well as its focus on an ecosystem rather than individual games, which experts believe leaves room for growth.
  • Electronic Arts Inc. Experts forecast a 12% CAGR for EA into 2028. 
  • NVIDIA Corp. Overall, NVIDIA has seen steady growth since 2015. 

Investors may choose to invest in individual gaming stocks, or funds which include a gaming element. 

 

Future gaming revenue streams

The gaming industry is one that continues to grow and innovate – with games and platforms like Fortnite and Roblox demonstrating that the next big thing could always be just around the corner. 

However, industry experts predict that other big things could be around the corner. Virtual reality could continue to enhance immersive gaming experiences. Physical merchandising sales could offer additional revenue streams for gaming brands. 

The esports industry is one that has seen significant growth in recent years, with the CAGR of esports predicted to stand at 11.1% from 2019 to 2024. 

However, despite the potential, there are risks. The evolution of technology could render some platforms – and therefore some companies – redundant unless they too evolve. The threat of government regulation – particularly with regards gaming addiction – could impact on the industry. 

What’s more, stock prices in this sector can be more volatile and companies valued higher than in other sectors, increasing the potential level of risk.

While digital escapism seems set to continue, the key for investors is to research the market fully to understand trends, risks and opportunities before investing. 

 

“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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