More time at home equals more time spent on activities like gaming, watching movies, streaming shows, etc. The closure and limited operation of outdoor entertainment locations like sporting venues, concert halls, and movie theatres have led to people switching over to other forms of entertainment. One could say that the pandemic has proved to be a blessing for electronic gaming stocks. Companies like Electronic Arts and Activision Blizzard are potential investment candidates.
Stock performance of the best gaming stocks 2020
As per a report by the NPD Group, US consumers spent 30% more year-on-year on gaming during the recently concluded second quarter of 2020. Activision Blizzard is up 36.6% since the beginning of 2020 and up 53.9% since the March market crash. Electronic Arts, another gaming giant, has risen by 19.6% year-to-date and is up 47.7% since hitting a low in March. The acquisition of King Digital by Activision Blizzard in 2016 led to a growth in revenue of more than 10%.
Game platforms and engines are driving growth
Game platforms like Steam and Unity seem to be driving a significant proportion of the gaming industry’s growth. The number of concurrent users on the Steam platform has grown from 6 million in 2012 to over 20 million in 2020. There are over 1 billion Steam accounts. Unity has also been experiencing strong growth thanks to its model of charging game developers a fee only after they make $100,000 in revenues. Unreal Engine, a game engine owned by Epic Games also follows a similar approach. It charges game creators a fee only after they reach $1 million in gross revenues.
Where does Activision Blizzard fit in?
Activision Blizzard is very well-known for games like Call of Duty and Candy Crush. The company recognized the shift towards mobile gaming and capitalized on the trend with Candy Crush. During the second quarter of 2020, it added 101 million new active users to its 327 million strong user base. The company has more Call of Duty games in its product pipeline as well.