Learn more about the theme «E-gaming: much more than just a “game”».
E-gamers target the Olympics
The fact that the real and the digital world are increasingly merging into one another is evident not least from the e-gaming market itself. Even now, e-sports matches lasting hours are attracting sell-out audiences to real venues. This is hardly surprising, given that prizes worth millions are at stake. According to estimates by market intelligence provider Newzoo, in 2017 around USD 700 million was up for grabs in this type of competition. It is thought that this figure will rise to USD 1.5 billion by as early as 2020. E-sports athletes themselves are far from being satisfied with these ever higher prizes, though; they are also looking to raise their profile and prestige. Gamers could, for instance, compete for medals for the first time at the Olympic Games in Paris 2024. Discussions between the Olympic Committees and the e-sports community are already well under way.
Push for innovation making the tills ring
But it is not only gamers who are anticipating an exciting future – stock market players, too, are taking a keen interest in the innovations in the video games segment. That’s because these innovations could also boost company profits – and thus also to their share price. Nintendo recently scored a direct hit in that respect. Due to strong demand for its new games console Switch, at the end of October the Japanese company practically doubled its profit forecast for the 2017/18 financial year (ending 31 March). At the same time, the sales target for the Switch was jacked up from 10 million to 14 million devices. The stock market is joining in these celebrations: in 2017, the value of the company rose by around three-quarters. But competitors are not taking things lying down: November, for instance, saw Microsoft put the Xbox One X, the first games console with integrated 4K resolution, into stores. Unlike Nintendo, the games segment is not the decisive factor influencing Microsoft’s fortunes – but even so, the segment (which also takes in gaming software and services and the online service Xbox Live) accounts for around a tenth of the whole group’s turnover, and the trend is upward. In “Xbox Software and Services”, Microsoft posted a noteworthy 21% increase in revenues in Q1 2017/18. And, following substantial losses in 2013 and 2014, Sony has now succeeded in turning that situation around. Its management recently adjusted the profit forecast for the current financial year significantly upwards: it is set to hit JPY 500 billion, a figure last achieved in 1998. One of the big drivers behind this is the PlayStation 4, with more than 60 million of these consoles having been sold since its launch four years ago.
Driving profits beyond the sector
There is one success story that has been unrivalled in the sector in recent years: Nvidia. While the US group is not directly a games company, it is closely connected with the sector through its processors. The gaming segment account for USD 1.56 billion in sales in the last quarter alone, primarily for graphics cards. The California-based company also recently created a massive stir in the consoles arena, when the Nintendo Switch, Nvidia’s Tegra superchip, succeeded in winning out against market leader AMD. Swiss-based Logitech is likewise profiting from the growing number of e-gamers. The company offers mice, keyboards, headsets and controllers for all games enthusiasts. To accompany the first-person shooter game “Battlefield 1” from Electronic Arts, Logitech has even brought out special products designed to give the gamer an advantage through accurate, rapid-response hardware.
Gaming” profits: new tracker certificates on e-gaming shares
Leonteq is now offering interested investors the opportunity to build on this innovation-driven growth sector. To that end, two tracker certificates are being launched on the Solactive Electronic Gaming Index. The open-ended products are offered in two currency tranches, CHF and USD. It allows holders to participate 1:1 (less a management charge of 1.35% p.a.) in the share price trend for the sector. The Index includes the big hitters in the sector. In addition to the companies already listed, it also covers South Korean games developer Nexon, the US company Take-Two Interactive, and the Japanese Capcom. The Index features a total of 20 companies, the majority of whom are headquartered in Asia. Only companies of sufficient size and liquidity make it into the equally-weighted barometer, which is rebalanced half-yearly. The 20 shares with the highest capitalization are ultimately included in the Index. Since the baseline value uses the total return variant, dividends feed into the calculation on a net basis. The track record of the Solactive Electronic Gaming Index is impressive: the index has risen by more than half since its launch on 21 July 2016.