In today’s Exponential Investor

  • Just 2% growth in 2021: why is this good news?
  • How many games can you find out there?
  • Virtual reality features in gaming, but where else?

The mainstream media would have you believe that the gaming lockdown boom of 2020 is coming to an end.

Source: venturebeat.com

Here at Southbank Investment Research, we have spent a lot of time and effort researching the UK and global game markets.

With no disrespect to Newzoo, we think that they’re wrong.

Don’t be fooled by the apparent slowdown in 2021        

In order to get some context, remember that the video/online game market received a huge boost in 2020, which was a record year for sales in the UK.

With millions of people stuck in their homes during the pandemic, video/online gaming became one of the few sources of entertainment.

In fact, in 2020, the UK saw a 17.8% increase in the value of video games sales compared to 2019.

In addition, the number of video game users in the UK increased from 33 million to 36 million. This means that around 50% of the UK population are now “gamers”.

The value of the UK video games market grew to £7.16 billion in 2021. This is a 2% increase on 2020.

The figure includes spending on new consoles, mobile games, gaming software and virtual reality (VR) equipment. This includes headsets and goggles.

Normally, when looking at market growth rates, a 2% increase isn’t something to get excited about.

Given the extraordinary conditions in 2020, which inflated sales that year, the fact that there was an increase at all is what really matters.

It’s also useful to look at the global video gaming market.

In 2021, the global video gaming industry was estimated to be worth $178.73 billion.

This is an increase of 14.4% from 2020.

Again, when considering the likely impact of the easing of lockdown restrictions (i.e. less need for people to confine themselves to indoor activities at home) this is an impressive outcome.

Better accessibility, improved products

There are many reasons why the video gaming market is growing.

Firstly, the ease at which video games can be accessed. There are more games at our disposal than ever before.

For example, if you have iOS, you can simply go on to the App store, explore the catalogue of 984,000 games and download them to your phone.

You can also access  games on Android, via the Google Play Store.

Next, new technology developments on popular gaming platforms have kept gamers coming back for more.

For example, the PlayStation 5 and Xbox Series X/S are the latest versions of their respective models.

In particular, the Xbox, released back in 2001, was only good for gaming.

However, nowadays, it’s far more versatile.

On the Xbox Series X/S, you can listen to music, explore the internet and chat with friends.

In terms of the actual gaming, you can enjoy 4K gaming, which is ultra-high-definition gaming.

It offers four times the number of pixels than conventional 1080p graphics, making for a much more vivid gamer experience.

In the first 24 hours of its launch in November 2020, 1.2-1.4 million units of the Xbox Series X/S were sold.

Finally, innovation is having an impact.

Virtual reality: actual bonanza!

For example, virtual reality (VR) is something that is reshaping the gaming and technology industries.

As well as gaming, VR has commercial uses in retail, education, and business training.

In essence, VR provides a simulated experience of a fictional world. Within it, users can communicate and interact. This is often done via the use of headsets and goggles.

For instance, Facebook (NASDAQ: FB) has created its flagship Oculus Quest 2 VR headset. It comes with several games.

One of these is called Onward – a best-selling survival and combat game.

Revenues from the VR market in the UK increased 43% from 2020 to 2021.

Two obvious companies are tech conglomerates Microsoft (NASDAQ: MSFT) and Sony (LSE: 0L83).

Microsoft is the creator of Xbox and Sony is the creator of PlayStation.

However, they are also disrupting the fast-growing VR market.

Microsoft has an ongoing partnership with HTC Corporation, in which it sells its HTC Vive Pro 2 Headset.

According to PCMag, it’s the highest resolution VR headset on the market.

Sony has its own VR models, known as PSVR (PlayStation virtual reality).

Sony’s VR models are unique in that they can run off its PlayStation console, rather than more expensive PC systems.

The latest version is known as PSVR 2 and hooks up to the PlayStation 5. It provides a first-of-its-kind gaming experience.

It’s due to be released in the second quarter of 2022.

Finally, Electronic Arts (NASDAQ: EA) is another tech conglomerate.

The company publishes several popular games, including the FIFA football games and The Sims life simulation games.

FIFA 22 was the top-selling video game in the UK for 2021.

There may well come a point when the video game industry becomes boring and mature. That time is not now. As noted above, we have nothing against Newzoo. We just think that they’re wrong.

Until next time,

Elliott Playle
Contributing Editor, Exponential Investor

PS Gaming is an exciting area which features in the portfolio of Southbank Investment Research’s Frontier Tech Investor portfolio. However, it is not the only one. Click here to find out more about how a UK energy firm is rolling out the technology to create a 100% clean, UNLIMITED “super fuel”.