Connect with us

Sponsored

Making Moves in the Gaming Market

Published

on

The following content is sponsored by eToro

eToro CopyPortfolios eToro CopyPortfolios eToro CopyPortfolios eToro CopyPortfolios

Advertisement

eToro Gaming_Shareable-01

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.

CompanyServiceTypeLaunched (Year)
Electronic ArtsEA PlayGame Subscription2014
SonyPlayStation NowCloud Gaming2015
MicrosoftXbox Game PassGame Subscription2017
AppleApple ArcadeGame Subscription2019
GoogleGoogle Play PassGame Subscription2019
GoogleStadiaCloud Gaming2019
NvidiaGeForce NowCloud Gaming2020
MicrosoftxCloudCloud Gaming2020
AmazonLunaCloud Gaming2020

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.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Comments

Sponsored

Decarbonization 101: What Carbon Emissions Are Part Of Your Footprint?

What types of carbon emissions do companies need to be aware of to effectively decarbonize? Here are the 3 scopes of carbon emissions.

Published

on

Scopes of Carbon Emissions Share

What Carbon Emissions Are Part Of Your Footprint?

With many countries and companies formalizing commitments to meeting the Paris Agreement carbon emissions reduction goals, the pressure to decarbonize is on.

A common commitment from organizations is a “net-zero” pledge to both reduce and balance carbon emissions with carbon offsets. Germany, France and the UK have already signed net-zero emissions laws targeting 2050, and the U.S. and Canada recently committed to synchronize efforts towards the same net-zero goal by 2050.

As organizations face mounting pressure from governments and consumers to decarbonize, they need to define the carbon emissions that make up their carbon footprints in order to measure and minimize them.

This infographic from the National Public Utility Council highlights the three scopes of carbon emissions that make up a company’s carbon footprint.

The 3 Scopes of Carbon Emissions To Know

The most commonly used breakdown of a company’s carbon emissions are the three scopes defined by the Greenhouse Gas Protocol, a partnership between the World Resources Institute and Business Council for Sustainable Development.

The GHG Protocol separates carbon emissions into three buckets: emissions caused directly by the company, emissions caused by the company’s consumption of electricity, and emissions caused by activities in a company’s value chain.

Scope 1: Direct emissions

These emissions are direct GHG emissions that occur from sources owned or controlled by the company, and are generally the easiest to track and change. Scope 1 emissions include:

  • Factories
  • Facilities
  • Boilers
  • Furnaces
  • Company vehicles
  • Chemical production (not including biomass combustion)

Scope 2: Indirect electricity emissions

These emissions are indirect GHG emissions from the generation of purchased electricity consumed by the company, which requires tracking both your company’s energy consumption and the relevant electrical output type and emissions from the supplying utility. Scope 2 emissions include:

  • Electricity use (e.g. lights, computers, machinery, heating, steam, cooling)
  • Emissions occur at the facility where electricity is generated (fossil fuel combustion, etc.)

Scope 3: Value chain emissions

These emissions include all other indirect GHG emissions occurring as a consequence of a company’s activities both upstream and downstream. They aren’t controlled or owned by the company, and many reporting bodies consider them optional to track, but they are often the largest source of a company’s carbon footprint and can be impacted in many different ways. Scope 3 emissions include:

  • Purchased goods and services
  • Transportation and distribution
  • Investments
  • Employee commute
  • Business travel
  • Use and waste of products
  • Company waste disposal

The Carbon Emissions Not Measured

Most uses of the GHG Protocol by companies includes many of the most common and impactful greenhouse gases that were covered by the UN’s 1997 Kyoto Protocol. These include carbon dioxide, methane, and nitrous oxide, as well as other gases and carbon-based compounds.

But the standard doesn’t include other emissions that either act as minor greenhouse gases or are harmful to other aspects of life, such as general pollutants or ozone depletion.

These are emissions that companies aren’t required to track in the pressure to decarbonize, but are still impactful and helpful to reduce:

  • Chlorofluorocarbons (CFCs) and Hydrochlorofluorocarbons (HCFCS): These are greenhouse gases used mainly in refrigeration systems and in fire suppression systems (alongside halons) that are regulated by the Montreal Protocol due to their contribution to ozone depletion.
  • Nitrogen oxides (NOx): These gases include nitric oxide (NO) and nitrogen dioxide (NO2) and are caused by the combustion of fuels and act as a source of air pollution, contributing to the formation of smog and acid rain.
  • Halocarbons: These carbon-halogen compounds have been used historically as solvents, pesticides, refrigerants, adhesives, and plastics, and have been deemed a direct cause of global warming for their role in the depletion of the stratospheric ozone.

There are many different types of carbon emissions for companies (and governments) to consider, measure, and reduce on the path to decarbonization. But that means there are also many places to start.

National Public Utilities Council is the go-to resource for all things decarbonization in the utilities industry. Learn more.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading

Sponsored

The Paris Agreement: Is The World’s Climate Action Plan on Track?

This graphic shows how close we are to achieving the Paris Agreement’s climate action plan, and what happens if we fail to reach its goal.

Published

on

Climate Action Plan

Keeping Tabs on the World’s Climate Action Plan

When the Paris Agreement came into force in 2016, it was considered by many to be a step forward in the world’s climate action plan. In the five years that have followed, more and more countries have established carbon neutrality targets.

Has it been enough to keep us on track? This graphic from MSCI shows where we are in relation to the Paris Agreement goal, and what may happen if we fail to reach it.

What is the Paris Agreement?

The Paris Agreement is a legally binding international treaty that lays out a climate action plan. Its goal is to limit global warming to well below 2 degrees Celsius (3.6 degrees Fahrenheit), and preferably to 1.5 degrees Celsius (2.7 degrees Fahrenheit), compared to pre-industrial levels.

A total of 191 countries have solidified their support with formal approval.

Tracking Our Progress

To date, signing nations are not close to hitting the goal set five years ago.

ScenarioGlobal Mean Temperature Increase by 2100
Pre-industrial baseline0℃ (0℉)
Paris Agreement goal range1.5-2.0℃ (2.7-3.6℉)
Government pledges3.0-3.2℃ (5.4-5.8℉)
Current policies3.5℃ (6.3℉)

Source: UN Environment Programme

Based on policies currently in effect, we are on track for 3.5 degrees Celsius global warming by 2100—far beyond the maximum warming goal of 2 degrees. Even if we take government pledges into account, which is the amount by which countries intend to reduce their emissions, we are still far from achieving the Paris Agreement goal.

What about the impact of reduced emissions due to COVID-19 lockdowns? The temporary dip is expected to translate into an insignificant 0.01 degree Celsius reduction of global warming by 2050. Without significant policy action that pursues a more sustainable recovery, the UN Environment Programme projects that we will continue on a dangerous trajectory.

“The pandemic is a warning that we must urgently shift from our destructive development path, which is driving the three planetary crises of climate change, nature loss and pollution.”
—Inger Andersen, Executive Director, United Nations Environment Programme

The World Economic Forum agrees with this viewpoint, and identified climate action failure as one of the most likely and impactful risks of 2021.

The Potential Consequences

If we fall short of the climate action plan, our planet may see numerous negative effects.

  • Reduced livable land area: Due to rising sea levels and increased heat stress, low-lying areas and equatorial regions could become uninhabitable.
  • Scarce food and water: Global warming may increase water and food scarcity. In particular, fisheries and aquafarming face increasing risks from ocean warming and acidification.
  • Loss of life: The World Health Organization projects that climate change will cause 250,000 additional deaths per year between 2030 and 2050.
  • Less biodiversity: About 30% of plant and animal species could be extinct by 2070, primarily due to increases in maximum annual temperature.
  • Economic losses: At 4 degree celsius warming by 2080-2099, the U.S. could suffer annual losses amounting to 2% of GDP (about $400B). If global warming is limited to 2 degrees, losses would likely drop to 0.5% of GDP.

What steps can we take to reduce these risks?

Advancing Our Climate Action Plan

Everyone, including investors, can support green initiatives to help avoid these consequences. For example, investors may consider company ESG ratings when building a portfolio, and invest in businesses that are contributing to a more sustainable future.

In Part 2 of our Paris Agreement series, we’ll explain how investors can align their portfolio with the Paris Agreement goals.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading

Subscribe

Join the 230,000+ subscribers who receive our daily email

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Popular