Playfully to more returns

The lockdown has increased interest in gaming to an unprecedented level. But the future of the industry is not unclouded. Several challenges could somewhat slow down the rapid growth of the industry. In this way, interruptions in the supply chain slow down production and lead to longer delivery times and higher prices for electronics. It is still uncertain whether this is just a correction of the market after the pandemic or the first signs of a market that is now more confronted with headwinds.

200 billion target

Newzoo (an analysis company) estimates that the global video game market will generate sales of roughly 176 billion USD in 2021. This is a slight decrease (-1.1 percent) compared to 2020, when the lockdown generated enormous interest in games in all regions and on all platforms. Nevertheless, it is estimated that the industry's revenue will rise to over 200 billion USD by 2023.

Growth drivers eSports, mobile gaming, AR and VR

Professional eSports and streaming services have become a billion-dollar business in recent years. The rise of high-winnings gaming tournaments has made gaming as popular in recent years as streaming platforms such as Twitch and video sharing platforms such as YouTube. This is good news for game providers and developers.

The market for augmented and virtual reality (AR and VR) is forecast to reach an average rate of $11 billion by 2026 and grow at an average rate of 18.5 percent from 2021 to 2026. This is mainly driven by genres such as shooters, adventures and simulations as well as by developments in areas such as education and tourism.

What is happening in China?

Mobile gaming is an area with a particularly strong growth potential, which already accounts for an estimated 52 percent of game sales in 2021. About 40 percent of this value comes from China, where almost a third of all mobile players worldwide live and providers such as Tencent and NetEase are based. However, it should be borne in mind that China has only recently limited the playing time for minors to a maximum of three hours per week, much has occurred in the opinion of the authorities.

Breaks in the supply chain and chip shortages as brakes

The lockdown has affected the functioning of almost all companies, including that of game studios, where high productivity and close cooperation between the individual production chains are required. Delays in the release of games affected numerous developments and releases throughout the market. The range of games for next- generation consoles has also been affected by the pandemic and will not be able to meet the planned goals for the rest of the year either. That's why some publications have already been postponed to 2022.

Hardware also affected

The negative effects also affect the hardware. The global shortage of chips leads to supply bottlenecks for many consumer electronics products, including next-generation consoles and components needed for high-end PC games. Both trends will have a negative impact on consumer spending on games as well as PCs and consoles.

2021 was a difficult year

Overall, however, it should be noted that the gaming industry has overcome a difficult hurdle this year. This has a positive signal effect for the further growth of the industry. These favorable prospects will give further impetus to video game stocks. The providers with the best chances include game developers and publishers, console developers and hardware manufacturers.

However, the risks of further regulations should not be overlooked.