Since the start of arcades in the 1980s, global advancements in the gaming industry has since boomed. This is most notably seen in the way companies in this sector obtain profits. Currently, more than half a billion people play video games via dedicated consoles, so it is no question why this industry is poised to generate approximately 45 billion dollars in revenue this year. This uptake makes companies such as Microsoft and Sony great investment opportunities for any enthusiast.
With Microsoft’s Xbox Series X/S and Sony’s PlayStation 5 now both on sale, both companies are diving deeper into software and subscription services. This is mainly because the need for virtual, streaming and instant services has risen amongst consumers due to the coronavirus pandemic’s effects. The increase in games’ digital distribution has allowed gaming firms to rake in more significant profit margins than when selling physical copies in stores. Digital copies of gaming products enable companies to cut out any middleman or reseller and maintain a monopoly on the market, which allows for more competitive pricing. Overall, it seems like the trend is likely to continue, as both Microsoft and Sony sell digital-only versions of their new consoles (i.e., no disc drive). Aside from the increase in demand for consoles and associated products, gaming companies are also building up their player base across a range of different devices, such as computers and smartphones. Microsoft released its xCloud gaming service in September, allowing users to play a game that is streamed directly to their device.
This notable increase in revenue of approximately 160 billion dollars has prompted other tech giants to step into the gaming spotlight. This is most notably seen by Google, Amazon, and Facebook, releasing cloud gaming services recently. Overall, other companies hope to profit from this market by being a digital game distributor or by using game streaming as an advertising tool. Considering their profitability, investing in any of the companies mentioned above seems to be a wise financial strategy.