Online gambling and cloud gamification

July 27, 2023

The cloud gamification market is projected to reach a volume of $1 billion by the end of 2021, according to Newzoo. The market growth is attributed to the proliferation of 5G, increasing computing power, and Microsoft’s xCloud cloud gaming service. Speaking of which, from September 15, 2021, thanks to iCloud, Android users can play games included in the Xbox Game Pass subscription in the cloud. There are competitors to this service: GeForce Now, Google Stadia, PlayStation Now, and others.

IGaming has become more available because of 5 G’s emergence and the availability of online casinos with amazing bonus offers. Many resources like NZCasinoHex help find the best $10 deposit bonus online casinos.

Investors want cloud gamification built on ecosystems that bring together different game publishers. In this way, ecosystems can offer future subscriptions that give access to various games. Microsoft plans to partner with key cloud companies and major game developers. Now analysts from Newzoo believe that the market will reach $4.8 billion by 2023, which makes this development vector worth a closer look.

Game subscriptions are another driver of the video game market. In Western countries, game subscriptions are in high demand due to steady growth in the number of games in the library and low prices. Investors also like game subscriptions because they increase the predictability of cash flows of game companies, whose financial results depend more on the release and success of a new game than on the macroeconomic situation. In addition, game subscriptions contribute to long-term revenue growth and the development of independent game studios.

The cybersports industry is one of the fastest-growing and highest-margin industries in the world. It generates solid revenues and attracts the attention of tech giants. Hundreds of millions follow the action and tactical geeks in virtual battles. Cybersports matches already draw more viewers than baseball, hockey championships, basketball, and some elite European soccer leagues.

Cybersports is promising because of the intersection of three highly profitable industries: sports, shows, and technology. All this allows the industry to be transformed into a powerful and high-margin ecosystem with multiple players. The industry is growing rapidly mainly due to the growing number of gamers and a highly engaged audience: popular online games do not have very high system requirements – they can be installed on virtually any modern computer.

Unlike soccer, cybersports have not yet fallen under the influence of bureaucrats and state institutions, which allows large manufacturers of games and gaming peripherals to turn this sport into a powerful business. Most cybersport events are sponsored by gaming companies, hardware manufacturers, and bookmakers. Sponsorship contracts and rights to show cyber events are the main sources of income for independent organizers and such high prizes for winners. For example, the Fortnite World Cup has a prize pool of 30 million dollars.

Newzoo estimates that the cyber sports industry revenue will grow from $947.1 million to $1,084 million from 2019 to 2021. 75% of the annual revenue for 2021 is from sponsorships and screenings of eSports events. Newzoo analysts forecast that the cybersports industry will generate about $1.617 billion in revenue by 2024. The audience will grow by 10.1 percent to about 728.8 million, according to Newzoo’s forecast. The most important market for cybersports is China, which accounts for about 25% of all revenue in the industry. We follow China, and together they generate about 50% of the industry’s revenue.

It is difficult for private investors to invest directly in cybersports: the industry is still very young, and the entry threshold for a cybersports company is quite high. Investing in a local cyber sports team and counting on a certain part of the profit is possible, but such a bet is prohibitively risky. A more reliable way is to invest in a thematic gaming ETF, mainly specializing in cybersports, and shares of companies involved in this industry, which we will discuss below.

Sector volatility

The video game industry is one of the world’s fastest-growing and most promising markets. Although it seems that the shares of game companies constantly show strong growth, this is not always the case. A game company’s stock dynamics are more strongly tied to new products and the number of users than to the macroeconomic situation. A failed release of a new game can easily collapse the company’s quotes.

In November 2017, Electronic Arts shares fell by 8.5% due to the scandal with in-game transactions in the paid game Star Wars Battlefront II. More solvent players had no trouble pumping up key characters in the game, thus having advantages over regular players, and it was virtually impossible to strengthen their characters without donating. In short, people bought the game, after which they had to invest more money to access cool characters and guns. As a result, EA had to change the whole system of character upgrading: only cosmetic accessories could be purchased for donation.

What is volatility in the stock market?

It is impossible not to mention the unsuccessful launch of the Battlefield V game, because of which the company’s shares were cheaper for three months. Everything is simpler: the game’s story campaign partly did not correspond to the historical reality, and many players saw more propaganda of new ethics in the new part of Battlefield than a revolutionary shooter. The company’s sales expectations fell far short – and the stock fell in price.

It is also important to remember that major investors and funds consider digital entertainment securities extremely risky. Because of this, investors are likely to dump gaming companies’ securities first during a down cycle or a prolonged economic crisis.

About the author: Maia Hall is an Igaming professional working at NZCasinoHex. She’s been involved in the industry for the past seven years and has gained a lot of valuable experience from working with different game providers: https://nzcasinohex.com/author/maiahall/

About the Author Elle Gellrich

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