Making Moves in the Gaming Market
Gaming is a massive and hard-to-ignore market, but its continued rise has eluded many companies.
Though it has grown into a hundred-billion-dollar market, major tech giants and conglomerates had avoided entering the gaming sector in the past. It was seen as a very difficult market to succeed in, and rightfully so, with many commercial failures and failed investments.
But despite lackluster console launches like Nokia’s N-Gage and losses on big-name games like Square Enix’s Marvel’s Avengers, the gaming market is making more money than ever before, and the majors are starting to enter the playing field.
Today’s infographic from eToro shines a spotlight on the major moves and ongoing developments happening in the gaming market.
The Streaming Wars: Gaming Edition
Similar to the current fight for media supremacy in other mediums, the new gaming wars are focused on streaming and mobile.
One reason is that mobile is far and away the largest segment of the gaming market, and the fastest growing as well. At an estimated $85 billion, sales generated from mobile gaming will account for more than 50% of gaming revenue in 2020.
At the same time, mobile is one of the many sectors targeted by streaming services that can reach multiple devices (while console launches or exclusives limit competitors to a single device). The influx of cloud-based streaming services and their consistent subscription revenues have created a scramble to become the “Netflix” of gaming.
Enter traditional plays like Sony and Microsoft and tech giants Apple, Google, and Amazon. Each has launched either a cloud streaming service for games or a game subscription service, and in many cases a combination of both.
|Electronic Arts||EA Play||Game Subscription||2014|
|Sony||PlayStation Now||Cloud Gaming||2015|
|Microsoft||Xbox Game Pass||Game Subscription||2017|
|Apple||Apple Arcade||Game Subscription||2019|
|Google Play Pass||Game Subscription||2019|
|Nvidia||GeForce Now||Cloud Gaming||2020|
And with others like Walmart and Verizon considering their own gaming services, the field might become even wider in the near future.
Massive Acquisitions and Investments
While new companies are entering the gaming space, existing players are solidifying their positions.
Similar to what’s happening in television and film, one of the big markers of the gaming industry’s growth over the last decade is the increasing value of intellectual property and the ongoing drive to consolidate.
It’s especially notable when investments once considered outrageous have quickly recouped themselves. When Microsoft purchased Minecraft developer Mojang for $2.5 billion in 2014, the sandbox development game had sold more than 50 million copies. Fast forward to 2020, and Minecraft has sold over 200 million copies with almost 132 million monthly active users.
And Microsoft isn’t alone in buying third-party studios. Sony, Electronic Arts, and Activision Blizzard have all been purchasing other developers. Social game juggernaut Zynga has continued to buy rival mobile games, and Chinese giant Tencent’s 2016 acquisition of Clash of Clans developer Supercell was the most expensive ever at $8.6 billion.
Other companies are finding different avenues to join the fray. Amazon purchased streaming service Twitch for $970 million in 2014, which seems to have paid off with more than $230 million in yearly ad revenue by 2018, despite the company hoping for double that figure.
Meanwhile, Facebook opted to enter the nascent virtual reality gaming space with a $3 billion acquisition of VR device maker Oculus in 2014, though it has still far from recouped that investment.
Gaming Valuations Keep Climbing
The biggest reason new and old players alike are trying to enter the gaming market is simple: money in gaming keeps growing.
The largest gaming companies in the West, Activision Blizzard and Electronic Arts, saw multibillion-dollar revenues climb by more than 15% from 2019 to 2020 according to company earnings. In Asia, Nintendo saw an 80% jump in revenues over the same period, while the largest gaming and tech conglomerate Tencent saw a year-over-year increase of 29% for Q2 2020.
On one hand, the catalyst of COVID-19 keeping potential consumers at home and more willing to engage with games has been a boon to the market. On the other, those developments were already underway before the pandemic began, with exponential growth in subscription and recurring revenues.
That’s why investors are eager to capitalize on the market. Game and software developer Epic Games, which scored massive successes with Fortnite and its Unreal game development engine, raised $1.78 billion in capital investments in 2020 for a valuation of $17.3 billion before a potential IPO.
And the esports market is no exception. North America’s professional League of Legends league is projected to become fully profitable in 2021, and franchise spots for teams that cost up to $25 million are now worth upwards of $100 million. Big-name advertisers including Mastercard, Nike, Verizon, and BMW are partnering with either the league or teams directly.
Considering gamers make up an estimated 34% of the global population, and more developments on the horizon for the gaming market including new consoles and mediums, the industry’s rise isn’t expected to slow down anytime soon.
How Can Investors Take Part?
eToro’s InTheGame CopyPortfolio* gives investors direct access to the growing gaming market.
Curated by experienced and proven investment teams, the thematic portfolio offers exposure to a broad range of developers and companies invested in gaming, with no management fees.
*Your capital is at risk.
CopyPortfolios is a portfolio management product, provided by eToro Europe Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.
CopyPortfolios should not be considered as exchange traded funds, nor as hedge funds.
An Introduction to MSCI ESG Indexes
With an extensive suite of ESG indexes on offer, MSCI aims to support investors as they build a more personalized and resilient portfolio.
An Introduction to MSCI ESG Indexes
There are various portfolio objectives within the realm of sustainable investing.
For example, some investors may want to build a portfolio that reflects their personal values. Others may see environmental, social, and governance (ESG) criteria as a tool for improving long-term returns, or as a way to create positive impact. A combination of all three of these motivations is also possible.
To support investors as they embark on their sustainable journey, our sponsor, MSCI, offers over 1,500 purpose-built ESG indexes. In this infographic, we’ll take a holistic view at what these indexes are designed to achieve.
An Extensive Suite of ESG & Climate Indexes
Below, we’ll summarize the four overarching objectives that MSCI’s ESG & climate indexes are designed to support.
Objective 1: Integrate a broad set of ESG issues
Investors with this objective believe that incorporating ESG criteria can improve their long-term risk-adjusted returns.
The MSCI ESG Leaders indexes are designed to support these investors by targeting companies that have the highest ESG-rated performance from each sector of the parent index.
For those who do not wish to deviate from the parent index, the MSCI ESG Universal indexes may be better suited. This family of indexes will adjust weights according to ESG performance to maintain the broadest possible universe.
Objective 2: Generate social or environmental benefits
A common challenge that impact investors face is measuring their non-financial results.
Consider an asset owner who wishes to support gender diversity through their portfolios. In order to gauge their success, they would need to regularly filter the entire investment universe for updates regarding corporate diversity and related initiatives.
In this scenario, linking their portfolios to an MSCI Women’s Leadership Index would negate much of this groundwork. Relative to a parent index, these indexes aim to include companies which lead their respective countries in terms of female representation.
Objective 3: Exclude controversial activities
Many institutional investors have mandates that require them to avoid certain sectors or industries. For example, approximately $14.6 trillion in institutional capital is in the process of divesting from fossil fuels.
To support these efforts, MSCI offers indexes that either:
- Exclude individual sectors such as fossil fuels, tobacco, or weapons;
- Exclude companies from a combination of these sectors; or
- Exclude companies that are not compatible with certain religious values.
Objective 4: Identify climate risks and opportunities
Climate change poses a number of wide-reaching risks and opportunities for investors, making it difficult to tailor a portfolio accordingly.
With MSCI’s climate indexes, asset owners gain the tools they need to build a more resilient portfolio. The MSCI Climate Change indexes, for example, reduce exposure to stranded assets, increase exposure to solution providers, and target a minimum 30% reduction in emissions.
An Index for Every Objective
Regardless of your motivation for pursuing sustainable investment, the need for an appropriate benchmark is something that everyone shares.
With an extensive suite of ESG indexes designed specifically for sustainability and climate change, MSCI aims to support asset owners as they build a more unique and personalized portfolio.
Tracked: The U.S. Utilities ESG Report Card
This graphic acts as an ESG report card that tracks the ESG metrics reported by different utilities in the U.S.—what gets left out?
Tracked: The U.S. Utilities ESG Report Card
As emissions reductions and sustainable practices become more important for electrical utilities, environmental, social, and governance (ESG) reporting is coming under increased scrutiny.
Once seen as optional by most companies, ESG reports and sustainability plans have become commonplace in the power industry. In addition to reporting what’s needed by regulatory state laws, many utilities utilize reporting frameworks like the Edison Electric Institute’s (EEI) ESG Initiative or the Global Reporting Initiative (GRI) Standards.
But inconsistent regulations, mixed definitions, and perceived importance levels have led some utilities to report significantly more environmental metrics than others.
How do U.S. utilities’ ESG reports stack up? This infographic from the National Public Utilities Council tracks the ESG metrics reported by 50 different U.S. based investor-owned utilities (IOUs).
What’s Consistent Across ESG Reports
To complete the assessment of U.S. utilities, ESG reports, sustainability plans, and company websites were examined. A metric was considered tracked if it had concrete numbers provided, so vague wording or non-detailed projections weren’t included.
Of the 50 IOU parent companies analyzed, 46 have headquarters in the U.S. while four are foreign-owned, but all are regulated by the states in which they operate.
For a few of the most agreed-upon and regulated measures, U.S. utilities tracked them almost across the board. These included direct scope 1 emissions from generated electricity, the utility’s current fuel mix, and water and waste treatment.
Another commonly reported metric was scope 2 emissions, which include electricity emissions purchased by the utility companies for company consumption. However, a majority of the reporting utilities labeled all purchased electricity emissions as scope 2, even though purchased electricity for downstream consumers are traditionally considered scope 3 or value-chain emissions:
- Scope 1: Direct (owned) emissions.
- Scope 2: Indirect electricity emissions from internal electricity consumption. Includes purchased power for internal company usage (heat, electrical).
- Scope 3: Indirect value-chain emissions, including purchased goods/services (including electricity for non-internal use), business travel, and waste.
ESG Inconsistencies, Confusion, and Unimportance
Even putting aside mixed definitions and labeling, there were many inconsistencies and question marks arising from utility ESG reports.
For example, some utilities reported scope 3 emissions as business travel only, without including other value chain emissions. Others included future energy mixes that weren’t separated by fuel and instead grouped into “renewable” and “non-renewable.”
The biggest discrepancies, however, were between what each utility is required to report, as well as what they choose to. That means that metrics like internal energy consumption didn’t need to be reported by the vast majority.
Likewise, some companies didn’t need to report waste generation or emissions because of “minimal hazardous waste generation” that fell under a certain threshold. Other metrics like internal vehicle electrification were only checked if the company decided to make a detailed commitment and unveil its plans.
As pressure for the electricity sector to decarbonize continues to increase at the federal level, however, many of these inconsistencies are roadblocks to clear and direct measurements and reduction strategies.
National Public Utilities Council is the go-to resource for all things decarbonization in the utilities industry. Learn more.
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