Investment plays to consider July 9, 2024

Investment plays to consider

Gaming enthusiasts and investors alike have reason to celebrate as National Video Games Day comes around not once, but twice a year! The first occurs on 8th July, while the more widely recognised celebration takes place on 12 September. National Video Games Day honours the vast contributions of video games to our culture, from fostering social connections and mental challenges to offering endless hours of entertainment.


What is the size of the video games market globally?

The video game industry is not just a cultural phenomenon but also a substantial economic force. The size of the global video game market is estimated to be in the range of US$217 billion to US$248 billion as of 2022 and 2023, with projections for continued growth. Here’s a breakdown from different sources:

  • Statista: Estimates the global gaming market at around US$248.52 billion in 2023.
  • Grand View Research: Places the market size at US$217.06 billion in 2022.
  • Precedence Research: Puts the figure at US$248.52 billion in 2023 and expects it to reach US$664.96 billion by 2033.

Despite slight variations in these figures, the consensus is clear: the video game industry represents a dynamic and rapidly growing segment with significant investment potential.


Which are some of the stocks and ETFs that can give investors exposure to this market?

Investors looking to tap into the video game market have two principal avenues: direct investment in company stocks or through Exchange-Traded Funds (ETFs). Here are some options for each:

Video Game Stocks:

  • Activision Blizzard (ATVI): A large, established company that develops and publishes popular video game franchises like Call of Duty, World of Warcraft, and Candy Crush.
  • Electronic Arts (EA) is another major player in the industry, known for games like FIFA, Madden NFL, and The Sims.
  • Take-Two Interactive (TTWO): Develops and publishes games such as Grand Theft Auto, Red Dead Redemption, and Borderlands.
  • Nintendo (NTDOY): A leading console manufacturer with popular franchises like Mario, Zelda, and Pokemon.
  • Sony (SONY): While not exclusively a gaming company, Sony develops and manufactures the PlayStation console, which is a major player in the industry.

Video Game ETFs:

  • VanEck Video Gaming and eSports ETF (ESPO): Invests in a variety of companies in the video game industry, including developers, publishers, and esports companies
  • Roundhill Video Games ETF (NERD): Focuses on companies that develop and publish video games.
  • Global X Video Games & Esports ETF (HERO): Another option that provides exposure to a basket of video game and esports companies.


Important things to consider before investing in video game stocks or ETFs:

  • The video game industry can be cyclical, with fluctuating sales and stock prices depending on new game releases and consumer trends.
  • There is a risk that new technologies or business models could disrupt the industry.
  • As with any investment, it’s important to do your research before investing in video game stocks or ETFs.


Are there any stocks in the Singapore market that are exposed to this sector?

While there are no major video game developers or publishers listed on the Singapore Exchange (SGX), there is one company that offers some exposure to the sector:

  • Winking Studios (WS): This company is one of Asia’s largest art outsourcing and game development studios. They provide art creation and development services and even publish some of their own games. While not a pure-play on the gaming industry, their business is reliant on the success of the video games they support.

    It’s important to note that Winking Studios is a smaller company with a market capitalisation of around S$55.9 million. This means it may be more volatile than some of the larger, more established video game companies mentioned previously.


How can Phillip Securities help you gain exposure to this sector?

Phillip Securities can potentially help you gain exposure to the video game sector in a few ways:

Guidance from Investment Advisors:

  • Consultations: Phillip Securities may have investment advisors who can discuss your investment goals and risk tolerance. They can potentially recommend video game stocks or ETFs that align with your investment strategy.


Here are some things to keep in mind:

  • Investment research: It’s important to do your research before investing in any stock or ETF, regardless of what a financial advisor might recommend.
  • Commissions and fees: Trading stocks and ETFs through Phillip Securities might involve commissions or fees. Be sure to understand these fees before you invest.
  • Risk tolerance: The video game industry can be cyclical, so there is always a risk for your investments. Make sure you understand the risks involved before investing in this sector.

It’s recommended that you contact Phillip Securities directly to discuss your specific investment goals and see if they offer investment products and services that align with your needs for gaining exposure to the video game sector.


Disclaimer

These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

About the author

Elston Soares

Elston Soares is an editor with Phillip Securities Research

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