The videogame industry has been on a high over the past year. The pandemic, which coincided with the launch of a range of new generation consoles, helped the gaming industry to emerge as one of its biggest beneficiaries.
In fact, the global videogame industry earned more revenues than the sports and movie industry combined as the pandemic put everything to a standstill. Although the economy has finally started reopening and restrictions are being lifted, the videogame industry is likely to enjoy this high given the popularity it has generated over the year.
Pandemic Gives Thrust to Gaming Industry
As the pandemic wreaked havoc, gamers scrambled for new consoles, games and gear since the other sources of entertainment were closed. According to IDC, the global videogame industry grew 25% to $191.12 billion in 2020. In the United States alone, more than $59.6 billion was spent on gaming alone. This included buying new consoles and hardware, according to the NPD Group.
The pandemic has been one of the biggest reasons for the industry’s growth in the past few months but the gaming industry had already started flourishing some time back. In fact, according to Adweek, revenues from videogames came in at $139 billion in 2019, which was already higher than NFL, NBA, MLB, and NHL combined.
According to a Guardian report, videogames are now close to some of the biggest Hollywood projects. Another reason behind the robust performance by the gaming industry is that the launch of a series of new-generation consoles had coincided with the pandemic.
Moreover, spending on videogames increased another 30% in the first quarter of 2021. People downloaded around 1 billion titles every week in the quarter, which was 15% higher on a year-over-year basis. Also, game downloads on
Alphabet, Inc.
’s
GOOGL
Google Play grew 20% to 11 billion year over year in the first quarter. Consumer spending on games hit $22 billion in the first quarter.
Momentum to Continue
Videogames have given millions a respite during the pandemic when they stated at home and didn’t have other options of entertainment. Although vaccines have been rolled out and the economy is reopening, people are still hesitant about visiting public places. This in a way is going to help the gaming industry as it is still a safe bet as a source of entertainment.
According to Newzoo, global videogame revenues could reach $189.3 billion in 2021. Presently, there are around 2.7 billion gamers across the world now, which is expected to surpass 3 billion by 2024 as more games and consoles are released.
Stocks to Watch
The videogame industry started 2021 on an optimistic note thanks to the pandemic. The situation is likely to remain the same, resulting in surging sales in the coming days. This thus makes it an opportune time to invest in gaming stocks that are set to gain in the near term.
Microsoft Corporation
MSFT
is one of the leading videogame makers and manufacturers of hardware and accessories. The company has been expanding its footprint in the industry and recently announced that it will be acquiring the videogame maker ZeniMax Media.
The company’s expected earnings growth rate for the current year is 35.4%. The Zacks Consensus Estimate for current-year earnings has improved 5.8% over the past 60 days. Microsoft carries a Zacks Rank #3 (Hold).
Electronic Arts Inc.
EA
is a leading developer, marketer, publisher and distributor of interactive games (video game software and content). It distributes gaming content and services through multiple distribution channels as well as directly to consumers (online and wirelessly) through its online portals.
The company’s expected earnings growth rate for next year is 11.5%. The Zacks Consensus Estimate for current-year earnings has improved 5.2% over the past 60 days. Electronic Arts has a Zacks Rank #3. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Activision Blizzard, Inc.
ATVI
is a leading developer and publisher of console, online and mobile games. The company’s
Call of Duty
is one of the most popular gaming franchises globally. Its Overwatch League can be considered a pioneer of the e-sports concept.
The company’s expected earnings growth rate for the current year is 8.9%. The Zacks Consensus Estimate for current-year earnings has improved 3% over the past 60 days. Activision Blizzard carries a Zacks Rank #3.
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