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.
Visualizing the Global Silver Supply Chain
Nearly 50% of global silver production comes from South and Central America. Here’s a look at the global silver supply chain.
Visualizing the Global Silver Supply Chain
Although silver is widely known as a precious metal, its industrial uses accounted for more than 50% of silver demand in 2020.
From jewelry to electronics, various industries utilize silver’s high conductivity, aesthetic appeal, and other properties in different ways. With the adoption of electric vehicles, 5G networks, and solar panels, the world is embracing more technologies that rely on silver.
But behind all this silver are the companies that mine and refine the precious metal before it reaches other industries.
The above infographic from Blackrock Silver outlines silver’s global supply chain and brings the future of silver supply into the spotlight.
The Top 20 Countries for Silver Mining
Although silver miners operate in many countries across the globe, the majority of silver comes from a few regions.
|Rank||Country||2020 Production (million ounces)||% of Total|
|8||United States 🇺🇸||31.7||4.0%|
|18||Papua New Guinea 🇵🇬||4.2||0.5%|
|19||Dominican Republic 🇩🇴||3.8||0.5%|
|N/A||Rest of the World 🌎||34.2||4.4%|
Mexico, Peru, and China—the top three producers—combined for just over 50% of global silver production in 2020. South and Central American countries, including Mexico and Peru, produced around 390 million ounces—roughly half of the 784 million ounces mined globally.
Silver currency backed China’s entire economy at one point in history. Today, China is not only the third-largest silver producer but also the third-largest largest consumer of silver jewelry.
Poland is one of only three European countries in the mix. More than 99% of Poland’s silver comes from the KGHM Polska Miedź Mine, the world’s largest silver mining operation.
While silver’s supply chain spans all four hemispheres, concentrated production in a few countries puts it at risk of disruptions.
The Sustainability of Silver’s Supply Chain
The mining industry can often be subject to political crossfire in jurisdictions that aren’t safe or politically stable. Mexico, Chile, and Peru—three of the top five silver-producing nations—have the highest number of mining conflicts in Latin America.
Alongside production in politically unstable jurisdictions, the lack of silver-primary mines reinforces the need for a sustainable silver supply chain. According to the World Silver Survey, only 27% of silver comes from silver-primary mines. The other 73% is a by-product of mining for other metals like copper, zinc, gold, and others.
As the industrial demand for silver rises, primary sources of silver in stable jurisdictions will become more valuable—and Nevada is one such jurisdiction.
Nevada: The Silver State
Nevada, known as the Silver State, was once the pinnacle of silver mining in the United States.
The discovery of the Comstock Lode in 1859, one of America’s richest silver deposits, spurred a silver rush in Nevada. But after the Comstock Lode mines began declining around 1874, it was the Tonopah district that brought Nevada’s silver production back to life.
Tonopah is a silver-primary district with a 100:1 silver-to-gold ratio. It also boasts 174 million ounces of historical silver production under its belt. Furthermore, between 1900 and 1950, Tonopah produced high-grade silver with an average grade of 1,384 grams per tonne. However, the Second World War brought a stop to mining in Tonopah, with plenty of silver left to discover.
Today, Nevada is the second-largest silver-producing state in the U.S. and the Tonopah district offers the opportunity to revive a secure and stable source of primary silver production for the future.
Blackrock Silver is working to bring silver back to the Silver State with exploration at its flagship Tonopah West project in Nevada.
A Complete Visual Guide to Carbon Markets
Carbon markets are booming. But how do they work? In this infographic, we show how carbon markets are advancing corporate climate ambitions.
A Complete Visual Guide to Carbon Markets
Carbon markets enable the trading of carbon credits, also referred to as carbon offsets.
One carbon credit is equivalent to one metric ton of greenhouse gas (GHG) emissions. Going further, carbon markets help companies offset their emissions and work towards their climate goals. But how exactly do carbon markets work?
In this infographic from Carbon Streaming Corporation, we look at the fundamentals of carbon markets and why they show significant growth potential.
What Are Carbon Markets?
For many companies, such as Microsoft, Delta, Shell and Gucci, carbon markets play an important role in offsetting their impact on the environment and meeting climate targets.
Companies buy a carbon credit, which funds a GHG reduction project such as reforestation. This allows the company to offset their GHG emissions. There are two main types of carbon markets, based on whether emission reductions are mandatory, or voluntary:
Mandatory systems regulated by government organizations to cap emissions for specific industries.
Voluntary Carbon Markets:
Where carbon credits can be purchased by those that voluntarily want to offset their emissions.
As demand to cut emissions intensifies, voluntary carbon market volume has grown five-fold in less than five years.
Drivers of Carbon Market Demand
What factors are behind this surge in volume?
- Paris Agreement: Companies seeking alignment with these goals.
- Technological Gaps: Companies are limited by technologies that are available at scale and not cost-prohibitive.
- Time Gaps: Companies do not have the means to eliminate all emissions today.
- Shareholder Pressure: Companies are facing pressure from shareholders to address their emissions.
For these reasons, carbon markets are a useful tool in decarbonizing the global economy.
Voluntary Markets 101
To start, there are four key participants in voluntary carbon markets:
- Project Developers: Teams who design and implement carbon offset projects that generate carbon credits.
- Standards Bodies: Organizations that certify and set the criteria for carbon offsets e.g. Verra and the Gold Standard.
- Brokers: Intermediaries facilitating carbon credit transactions between buyers and project developers.
- End Buyers: Entities such as individuals or corporations looking to offset their carbon emissions through purchasing carbon credits.
Secondly, carbon offset projects fall within one of two main categories.
Avoidance / reduction projects prevent or reduce the release of carbon into the atmosphere. These may include avoided deforestation or projects that preserve biomass.
Removal / sequestration projects, on the other hand, remove carbon from the atmosphere, where projects may focus on reforestation or direct air capture.
In addition, carbon offset projects may offer co-benefits, which provide advantages that go beyond carbon reduction.
What are Co-Benefits?
When a carbon project offers co-benefits, it means that they provide features on top of carbon credits, such as environmental or economic characteristics, that may align with UN Sustainable Development Goals (SDGs).
Here are some examples of co-benefits a project may offer:
- Biodiversity: Protecting local wildlife that would otherwise be endangered through deforestation.
- Social: Promoting gender equality through supporting women in management positions and local business development.
- Economic: Creating job opportunities in local communities.
- Educational: Providing educational awareness of carbon mitigation within local areas, such as primary and secondary schools.
Often, companies are looking to buy carbon credits that make the greatest sustainable impact. Co-benefits can offer additional value that simultaneously address broader climate challenges.
Why Market Values Are Increasing
In 2021, market values in voluntary carbon markets are set to exceed $1 billion.
|Year||Traded Volume of Carbon Offsets (MtCO₂e)||Voluntary Market Transaction Value|
*As of Aug. 31, 2021
Source: Ecosystem Marketplace (Sep 2021)
Today, oil majors, banks, and airlines are active players in the market. As corporate climate targets multiply, future demand for carbon credits is projected to jump 15-fold by 2030 according to the Task Force on Scaling Voluntary Carbon Markets.
What Qualifies as a High-Quality Carbon Offset?
Here are five key criteria for examining the quality of a carbon offset:
- Additionality: Projects are unable to exist without revenue derived from carbon credits.
- Verification: Monitored, reported, and verified by a credible third-party.
- Permanence: Carbon reduction or removal will not be reversed.
- Measurability: Calculated according to scientific data through a recognized methodology.
- Avoid Leakage: An increase in emissions should not occur elsewhere, or account for any that do occur.
In fact, the road to net-zero requires a 23 gigatonne (GT) annual reduction in CO₂ emissions relative to current levels. High quality offsets can help meet this goal.
Fighting Climate Change
As the urgency to tackle global emissions accelerates, demand for carbon credits is poised to increase substantially—bringing much needed capital to innovative projects.
Not only do carbon credits fund nature-based projects, they also finance technological advancements and new innovations in carbon removal and reduction. For companies looking to reach their climate ambitions, carbon markets will continue to play a more concrete role.
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