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Should Investors be Looking at the Gaming Industry?

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Gaming Industry

Photo by Florian Olivo on Unsplash

 

In the late 1970s and early 1980s, the video game industry was young and exciting. New technology was allowing people to play video games at home for the first time and investors were throwing everything they could at it, in the hopes of striking big returns.  

However, in 1983, the North American video games market crashed. This was due to market saturation and a lack of quality control as publishers rushed to get titles to retailers as quickly as possible. 

The industry never truly returned to the pre-crash peaks when you adjust for inflation, though it appears to be getting close. So are we seeing the beginnings of a new bubble, or is there genuine cause for investor optimism? 

 

Record Revenues

There are countless times in living memory where investors have got over-excited about a particular asset or industry and driven its share price up to unjustifiable, astronomical levels. Recent examples include the 2017/18 Bitcoin boom, the dotcom bubble and potentially even Tesla right now. 

Several major gaming companies, including Electronic Arts, Take-Two Interactive, Ubisoft, and Microsoft are all trading near or above record levels. 

But these high share prices are not without merit. These companies are posting record revenue and profit figures, and most are expected to benefit from the launch of the new generation of consoles in the coming weeks. 

 

iGaming

iGaming, which is the term for businesses that offer sports betting and online casino games through a website or an app, is also performing well. The 2018 changes to US federal law have meant new markets have begun opening in the country and many of the established players from around the world are trying to build a market share. 

Even in established markets like Europe, revenues continue to grow with gross gaming revenues from casino games alone expected to reach €25 billion this year. 

Recent innovations of “live casinos” have helped to make online casino games more engaging for many players, which has led to more customers and longer gaming sessions. 

Photo by SCREEN POST on Unsplash

 

Mobile Gaming & Microtransactions

While both new consoles and innovations in iGaming are helping to drive stronger revenues and stock prices, the biggest drivers of growth in the gaming industry come from mobile games and microtransactions. 

The microtransaction model has become ubiquitous in recent years. It started first with casual games played through social media sites like Facebook and smartphone apps offering the option to purchase in-game items and extra lives, but this has since found its way to other games. 

Take-Two Interactive, one of the companies that have been enjoying a rising share price, has seen its revenues and profits surge thanks to microtransactions. 

Its Grand Theft Auto Online game is generating significant revenues, despite it being more than seven years old. Red Dead Online is also helping to keep the two-year-old game alive. Both titles enjoy high levels of player engagement thanks to regular updates that keep users returning to the game. 

In 2019, Take-Two made almost 60% of its profits from microtransactions in its online games, while in May 2020, the company announced that it had seen its profits increase by 116%. 

 

Long Term Revenue

As well as helping older games to have a longer lifespan, the content that generates microtransactions doesn’t require the same level of upfront development that is required for a new game. 

This means that video game developers are able to make more money for much longer periods of time from their intellectual property with lower associated costs. 

Valve, the creator of Counter-Strike: Global Offensive, announced at the end of 2018 that the game would become free-to-play. The game, which was six years old at the time, remained incredibly popular with fans thanks to skins and other customisations that generated revenue through microtransactions. 

The game still sees hundreds of thousands of concurrent players on the Steam platform, eight years after it was released. 

 

A Good Investment?

Gaming companies are enjoying rising revenues and profits. The monetisation model for most video games has been evolving over the last few years to one that generates more revenue from fewer releases.  

Based on this, and an ever-growing number of players, gaming companies may be good investments. 

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Jays reliever Green and Canadian slugger O’Neill nominated for comeback player award

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NEW YORK – Toronto Blue Jays reliever Chad Green and Canadian slugger Tyler O’Neill of the Boston Red Sox were named finalists for the Major League Baseball Players’ Association’s American League comeback player award on Monday.

Chicago White Sox left-hander Garrett Crochet was the other nominee.

New York Yankees outfielder Aaron Judge, Los Angeles Dodgers designated hitter Shohei Ohtani and Kansas City Royals shortstop Bobby Witt Jr. were named player of the year finalists.

The award winners, selected via player voting, will be named Saturday before Game 2 of the World Series.

Green, who missed most of the 2022 and ’23 seasons after undergoing Tommy John surgery, was a high-leverage option for the Blue Jays this past season and filled in at closer over the second half of the campaign.

The right-hander converted his first 16 save opportunities and finished the year with a 4-6 record, 17 saves and a 3.21 earned-run average over 53 appearances.

O’Neill, a native of Burnaby, B.C., also endured back-to-back injury-plagued seasons in ’22 and ’23.

After being traded to the Red Sox in the off-season, O’Neill set an MLB record by hitting a homer in his fifth straight Opening Day. He finished with 31 homers on the year and had an OPS of .847.

This report by The Canadian Press was first published Oct. 21, 2024.

The Canadian Press. All rights reserved.

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Panthers’ Reinhart named NHL first star after posting nine points over four games

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NEW YORK – Florida Panthers centre Sam Reinhart was named NHL first star of the week on Monday after leading all players with nine points over four games last week.

Reinhart had four goals, five assists and a plus-seven rating to help the Stanley Cup champions post a 3-0-1 record on the week and move into first place in the Atlantic Division.

New York Rangers left-winger Artemi Panarin took the second star and Minnesota Wild goaltenderFilip Gustavsson was the third star.

Panarin had eight points (4-4) over three games.

Gustavsson became the 15th goalie in NHL history to score a goal and had a 1.00 goals-against average and .962 save percentage over a pair of victories.

This report by The Canadian Press was first published Oct. 21, 2024.

The Canadian Press. All rights reserved.

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Browns QB Deshaun Watson’s season ended by ruptured Achilles tendon, team said he’ll have surgery

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CLEVELAND (AP) — Deshaun Watson won’t finish the season as Cleveland’s starting quarterback for the second straight year.

He’s injured again, and the Browns have new problems.

Watson ruptured his right Achilles tendon in the first half of Sunday’s loss to Cincinnati, collapsing as he began to run and leading some Browns fans to cheer while the divisive QB laid on the ground writhing in pain.

The team feared Watson’s year was over and tests done Monday confirmed the rupture. The Browns said Watson will have surgery and miss the rest of the season but “a full recovery is expected.”

Watson was injured on a noncontact play in the second quarter of Cleveland’s 21-14 loss to the Bengals and carted off the field in tears.

It’s the second significant injury in two seasons for Watson, who broke the glenoid (socket) bone in his throwing shoulder last year after just six starts.

The 29-year-old went down Sunday without being touched on a draw play late in the first half. His right leg buckled and Watson crumpled to the turf. TV replays showed his calf rippling, consistent with an Achilles injury.

He immediately put his hands on his helmet, clearly aware of the severity of an injury similar to the one Jets quarterback Aaron Rodgers sustained last year.

As he was being assisted by the team’s medical staff and backup Dorian Thompson-Robinson grabbed a ball to begin warming up, there was some derisive cheers and boos from the stands in Huntington Bank Field.

Cleveland fans have been split over Watson, who has been accused of being sexually inappropriate with women.

The reaction didn’t sit well with several Watson’s teammates, including star end Myles Garrett, the NFL’s reigning Defensive Player of the Year, who was appalled by the fans’ behavior.

“We should be ashamed of ourselves as Browns and as fans to boo anyone and their downfall. To be season-altering, career-altering injury,” Garrett said. “Man’s not perfect. He doesn’t need to be. None of us are expected to be perfect. Can’t judge him for what he does off the field or on the field because I can’t throw stones for my glass house.

“Ultimately everyone’s human and they’re disappointed just like we are, but we have to be better than that as people. There’s levels to this. At the end of the day, it’s just a game and you don’t boo anybody being injured and you don’t celebrate anyone’s downfall.”

Backup quarterback Jameis Winston also admonished the uncomfortable celebration.

“I am very upset with the reaction to a man that has had the world against him for the past four years, and he put his body and life on the line for this city every single day,” he said. “The way I was raised, I will never pull on a man when he’s down, but I will be the person to lift him up.

“I know you love this game. When I first got here, I knew these were some amazing fans, but Deshaun was treated badly and now he has to overcome another obstacle. So I’m going to support him, I’m going to lift him up and I’m going to be there for him.”

The injury is yet another twist in Watson’s tumultuous time with the Browns.

Cleveland traded three first-round draft picks and five overall to Houston in 2022 to get him, with owners Dee and Jimmy Haslam approving the team giving Watson a fully guaranteed, five-year $230 million contract.

With a solid roster, the Browns were desperate to find a QB who could help them compete against the top AFC teams.

The Browns had moved on from Baker Mayfield despite drafting him No. 1 overall in 2018 and making the playoffs two seasons later.

But Watson has not played up to expectations — fans have been pushing for him to be benched this season — and Cleveland’s move to get him has been labeled an abject failure with the team still on the hook to pay him $46 million in each of the next two seasons.

Watson’s arrival in Cleveland also came amid accusations by more than two dozen women of sexual assault and harassment during massage therapy sessions while he played for the Texans. Two grand juries declined to indict him and he has settled civil lawsuits in all but one of the cases.

Watson was suspended by the NFL for his first 11 games and fined $5 million for violating the league’s personal conduct policy before he took his first snap with the Browns. The long layoff — he sat out the 2021 season in a contract dispute — led to struggles once he got on the field, and Watson made just six starts last season before hurting his shoulder.

Cleveland signed veteran Joe Flacco, who went 4-1 as a starter and led the Browns to the playoffs.

Before Watson got hurt this year, he didn’t play much better. He was one of the league’s lowest-rated passers for a Cleveland team that hasn’t scored 20 points in a game and is back in search of a franchise QB.

___

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