How to Invest in Gaming Stocks: Top 5, ETF’s, E-sport, & VR


More and more people are beginning to see the benefits of investing in gaming shares. In just a few years, the focus on gaming and e-sports has expanded enormously, which of course has contributed to many benefits.

So, how do you invest in gaming stocks?

There are several ways you can go about investing in equities in gaming and e-sports. Here you can e.g. choose whether you want to invest in companies that manufacture games, offer games online or platforms that broadcast E-sports. Knowing which company is the absolute best is not the easiest thing to do and giving a direct answer to this is difficult.

As with most things in equities, it is important to look closely at the various companies that exist and then sift away the ones that you think will not deliver.

If you want to take part in the largest market shares, it is popular and well-known game manufacturers and games that you should invest in. To get started, you will also need a platform that you can use. An example of this is Webull.

I recommend that you look at four different aspects when choosing which company you want to invest in.

  • Do you invest in a “hope company” or does the company make money?
  • Is it the company that owns all its games in full?
  • Are the games delivered appreciated by the customers and are they of a high quality?
  • Does the company own own shares?

Why invest in gaming?

Gaming and E-sports is clearly a market that has become very large and this means that for you as an investor there is probably a lot of capital to raise.

Investing in gaming means that you invest your money in companies that are active in the gaming industry in one way or another, e.g. computer games, video games, casino games, e-sports or mobile games.

In recent years, it has been possible to see an increase and as it looks now, it does not seem to be leveling out.

Although Covid-19 has contributed to people losing their jobs and economic misery has spread around the world, the growth potential is great and looks very promising.

Here you also have the opportunity to choose whether it is pure shares, funds or ETFs that you want to invest in.

Why has gaming become big on the stock market?

The computer game world is followed by an ever-increasing audience higher and older, which means increased advertising revenue and thus greater winnings.

Interest in investing in gaming and e-sports has completely exploded in recent years, and as a result, the number of companies you can invest in has also skyrocketed.

Shares in the gaming market are expected to rise for many years to come, and the rise has even exceeded previous expectations.

If you decide to invest in gaming and e-sports stocks, we can reveal that the stocks that analysts expect to rise the most are:

  • Mobile games, thanks to the fact that they easily reach a very large audience. They are easy to find investors and the games are created in a short time. All this results in the shares being able to increase in value very quickly.
  • Computer games / consoles. This market was previously very dominated by the major game manufacturers, but today even smaller players can get good investors if they succeed in creating a prototype that convinces.
  • E-sports and Virtual Reality are predicted to rise most of all – in percentage terms, but not in real terms, and it is important to be aware of the difference.

Top 5 Gaming Stocks to Invest in

1. Invest in computer games and video games

We should not underestimate the fact that it is very popular to play computer games.

Ever since computers became part of most homes in the world, gaming companies have developed many different types of games.

Studies show that game manufacturers even spend several millions on ensuring that loyal fans always have new game creations to take part in, but the increased interest has also contributed to more and more people choosing to invest in video games or computer games.

Investing in computer games means that you invest in the gaming companies that are behind the games and just like with all other stocks, it is important to find the companies that are popular and that are at the forefront when it comes to new launches as well as quality.

2. Invest in mobile games

Investing in mobile games works much like investing in video games or computer games, but the market differs slightly.

A common misconception is that you think that gaming stocks only apply to casino games or e-sports, but the truth is that mobile games are incredibly popular and a really good way for you to invest your money.

A good example of a mobile game that has definitely gone well for is Candy Crush, which was initially owned by the Swedish company King.

However, Activision Blizzard chose to buy the game.

Activision Blizzard is also one of the world’s largest gaming companies behind games such as Worldcraft, Diablo and Starcraft.

Qiiwi Games is also a very popular company for those who want to invest in one or more games in their portfolio.

The company focuses specifically on developing games for tablets and mobiles. Investing in mobile games thus means that you invest in the companies that own or are behind the games in question.

Other listed companies that deal with mobile games are G5 Entertainment, which is behind game titles such as Hidden City, Mahjong Journey and The Secret Society.

3. What are E-sports stocks?

E-sports is something that has become incredibly big in recent years and where millions of people participate or watch the various competitions.

If you are interested in investing in E-sports shares, it may be a good idea to take a closer look at the companies that benefit extra from the extremely increased interest in sports and E-sports shares that are on the stock exchange.

Simply put, it can be said that an E-sports stock is simply a stock that is available for you to invest in.

The stock is provided mainly from platforms that offer streaming or similar services, but also from companies that develop the games that are played.

Some popular Swedish E-sports stocks to take a closer look at are MTG, which operates brands such as Dreamhack, ESL and InnoGames.

Another share is ESEN eSports, which develops streaming channels focused on Esport and gaming.

4. TIN Funds invests in gaming shares

If you think shares are far too risky, it may be worth choosing a fund instead.

With a good fund, you can make sure you spread your risks and still invest in gaming stocks, but in a slightly safer and less risky way.

If this is something that interests you, I recommend that you take a closer look at TIN Ny Teknik.

With this equity fund, you get a fund where the focus is on health, technology and digital brands. In the fund, you can find the Swedish game developer Embracer, which today is one of the largest game developers in Europe.

But that is just my reccomendation, there are of course a lot of good American gaming funds out there as well.

5. Gaming ETFs

You will also be able to trade gaming ETFs in the gaming sector.

ETF is an abbreviation that stands for Exchange Traded Fund.

The advantage of this is that you can trade them directly on the stock exchange and you do not have to wait the many days it can take before you have the fund in your account.

ETFs are thus traded in real time, just as they do with equities, but without the same high risk.

The fund makes it possible for you to invest in an entire industry and many different gaming companies, instead of investing in an individual company.

At the broker I use (Avanza) you can find a fund called, GAMING AVA which follows the Solactive Video Games Index which includes several popular gaming stocks such as Activision Blizzard, Capcom, CD Projekt Red, Electronics Arts, Embracer, Frontier, Konami, Nintendo, Paradox Interactive, Sega, Ubisoft, Stillfront and Take-Two.

Advantages / Disadvantages / Market

The gaming market is huge – and is expected to grow. Surveys from 2020 show that we spend an average of 6 hours and 20 minutes a week on mobile, computer and video games.

At the same time, the younger generation is growing up with these games available in a completely different way than those who grew up in the 70s, 80s and 90s.

The trend is that more and more time is being put into play.

In addition, time is also spent following other players via Youtube, Twitch and other social media. In 2019, it was estimated that e-Sport had 454 million spectators.

This was an increase of about 15% from the previous year. Forecasts from the industry said that the number of spectators was expected to be about 645 million in 2022.

Metaverse

Metaverse means that a game, and its community, becomes more than just the game itself.

For example, you can learn to play Fortnite and Minecraft better through different courses, go to fairs focused on a specific game or dress like certain characters.

Competitions, events and social contacts can even outweigh the game itself. Fortnite, Minecraft and Roblox can be mentioned here.

eSports

When a game gets enough players, it can be established in eSports. Thus, leagues, tournaments and in some cases world championships are held.

These games obviously get more media attention and in this way more players. In eSports, there are also people who make a living from being professional players.

In Sweden, eSports is not nearly as big as in, for example, some Asian countries. In several countries, the biggest tournaments are televised and thousands come to arenas to watch the matches via big screens.

Three technical innovations

1. VR

Virtual Reality is a technology that means that players experience the gaming world from a holistic perspective. This can be done, for example, via VR helmets or VR glasses.

2. Cross-platform

Cross-platform means that players from different platforms can meet in the same game.

It thus does not matter if the players are sitting at Playstation, computer or mobile. It makes the games even more accessible.

3. Blockchain

The unique thing about games that are developed on a blockchain is that several of the player’s paraphernalia can be taken out of the game and sent to friends or sold on an open market.

Those who play a lot can thus make money by selling various swords, chests or sacred drinks to players who would rather buy than play with them.

One of Sweden’s most famous games in this category is My Neighbor Alice, which was developed by the gaming company Antlerinteractive (I am from Sweden that’s why I used this example 😉

Advantages

All indications are that the gaming market will grow. This is both based on increased access (mobile games) and new technology (for example AI and Blockchain).

Those who invest in a company that can launch a gaming success should be able to expect a very good value development.

With new technical solutions, more spectators and a hope that e-sports will be approved as a sport, the market can both grow and change dramatically in the coming years.

Disadvantages

It is impossible to know which game will reach “Metaverse”.

In addition, trends and which games are popular can change quickly over time. Here, Pokemon Go can be mentioned as an example.

When it was released in Sweden, in 2016, it was possible to see players everywhere in society. Of course, there are still those who play Pokemon Go but it is definitely not as popular in Sweden today as 2016/2017.

Investing in a gaming company that has a single game thus entails a significantly higher risk than investing in a gaming company with several titles.

The smaller companies can thus have large fluctuations in value – depending on its success.

Conclusion

Tips for investing in gaming

How to finally choose to invest is not entirely easy to figure out, especially if you are new to the sector.

However, there is a lot to be gained from daring to let go and actually dive deep into this industry. The market as a whole is expected to grow by more than 9% per year and some specific submarkets are growing significantly faster than that.

It can be tempting to look at the absolute smallest companies to get the highest leverage if you hit it right, but you must not forget how difficult it can be to assess both companies and products.

If you do not have an eye for the industry and long experience, you probably do best to avoid the smallest companies.

If, on the other hand, you look at the larger companies, they often own many and large IPs with recurring income year after year.

A good example of such a company is Electronic Arts, which every year releases a new FIFA / NHL / NBA that incredibly loyal fans continue to buy.

The potential in Electronic Arts is probably more limited than in a smaller company considering all the knowledgeable people who follow the company, but you will probably not be surprised as often either.

With that said, an investment in small companies is not automatically associated with higher risk.

However, it requires more of you as an investor as you often need to understand or realize something that the market has not really taken on yet.

Four points to ask when investing in gaming companies:

  • Does the company make money or is it a company of hope?
  • Does the company fully own its games?
  • Does the company deliver quality products that are liked by consumers?
  • Is the company’s management competent? Do they own shares?

Hope I have been helpful, good luck and safe investing!

Sources

https://link.springer.com/article/10.1007/BF02104900

https://www.sciencedirect.com/science/article/abs/pii/S0278431914001881

https://www.sciencedirect.com/science/article/abs/pii/S0261517701000115

https://www.sciencedirect.com/science/article/abs/pii/0278431995000321

https://jpm.pm-research.com/content/35/1/82.short

https://www.emerald.com/insight/content/doi/10.1108/03074351011070242/full/html

https://joi.pm-research.com/content/29/4/67.short

https://www.tandfonline.com/doi/abs/10.1300/J073v20n02_05

https://absel-ojs-ttu.tdl.org/absel/index.php/absel/article/view/2463

Kevin

This article has been reviewed by our editorial board and has been approved for publication in accordance with our editorial policies.

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