The video gaming sector around the world is enjoying something of a renaissance as it takes its place alongside TV and film streaming as one of the go-to forms of entertainment for people currently stuck at home during the ongoing lockdown period.
Developers are already starting to notice that the pandemic is providing a boost to their businesses, with Codemasters Group Holdings PLC (LON:CDM) highlighting last week that a shift to digital sales of its products had “accelerated greatly” during the lockdown period, which in turn had pushed up its profit margins as it was spending less on costlier physical copies of its games.
Even the UK government appears to have noted that there are now a significant number of public eyeballs on video game screens, with in-game advertising technology developed by firms such as Bidstack Group PLC (LON:BIDS) to be used to display messages encouraging players to stay at home.
The sectors rising fortunes have also caught the eye of brokers, with analysts at Berenberg singling out French computer game giant Ubisoft, the maker of the Assassins Creed franchise, as one of their favourites on the longer-term positives for the industry.
“In the short term, the whole video game segment is experiencing a boost from the lockdown,” Berenberg said, adding that in the US alone video game spending was up 60% year-on-year and that an increased level of player engagement during the quarantine period was also likely to have “permanent positive effects”.
Major video game developers across the Atlantic are reaping the benefits of this upsurge, with shares in FIFA developer Electronic Arts Inc (NASDAQ:EA) up 28% in the last month while World of Warcraft and Call of Duty owner Activision Blizzard Inc (NASDAQ:ATVI) has climbed nearly 23%.
Services groups also benefit
Alongside game developers themselves, those companies providing back-end services to help get their projects over the line are also seeing an uplift in demand.
On Thursday, AIM-listed Keywords Studios PLC (LON:KWS) said a surge in video game playing as a result of the coronavirus pandemic was driving “increased demand” for its development services alongside what it said were “strong growth tailwinds” in the industry as it readied for the release of new game consoles and streaming platforms.
READ: Keywords Studios highlights increased demand for development services as coronavirus drives surge in video gaming
Analysts at Liberum said in a note that with demand for video games surging, the company could see yet more customers as a push by developers to keep their expanded customer base happy will result in a “growing desire to oRead More – Source