Macroeconomic forces continue to affect all investment sectors, including gaming. Following the early pandemic highs into 2022, there was a downward trajectory in gaming investment, but the new year could see a reshaping of what gaming investments can achieve.
There is some debate about how resilient the game will be to bigger recessions. 2023 could put the theory to the test as ongoing inflationary pressures and a potential recession are set to affect the viability of both video game spending and investment.
Here, the Investing News Network (INN) presents its gaming investment outlook for 2023.
Can gaming investments level up in 2023?
Raj Lala, president and CEO of Evolve Funds, told INN that the outlook for gaming stocks remains high in his view.
The positive outlook is based on how consumers view their gaming spending habits amid global economic pressures.
“Many gamers don’t think of gaming and esports as free spending. It’s a necessity in their social life,” he told INN.
Evolve offers investors access to gaming investments through the Evolve E-Gaming Index ETF (TSX:HERO). Top holdings include NetEase (NASDAQ:NTES), Activision Blizzard (NASDAQ:ATVI), Electronic Arts (NASDAQ:EA) and Nintendo (TSE:7974).
“Because gaming is a cheap form of entertainment, the sector is relatively recession-proof compared to other sectors,” said an ETF executive.
Lala added that he is encouraged by the effective shift to a fully subscription-based revenue model in addition to standard one-time purchases of games and hardware.
The NPD Group’s executive director and video game industry analyst, Mat Piscatella, said as part of the 2022 mid-term review, the continued shortage of consoles and short release windows for titles will pose challenges in the near term. I said yes.
“However, in the long term, the video game industry’s growth prospects remain stronger than ever,” he wrote.
Microsoft’s attempted acquisition of Activision Blizzard under scrutiny
The biggest deal in gaming investment history is currently up in limbo due to regulatory overhauls in both Europe and the US.
In early 2022, Microsoft (NASDAQ:MSFT) announced a proposed acquisition of gaming giant Activision Blizzard (NASDAQ:ATVI). The latter’s games catalog includes popular titles such as Call of Duty, World of Warcraft, Starcraft, and Diablo.
As such, the deal faces antitrust voices and considerable scrutiny from Microsoft’s biggest competitor in the console market, Sony (NYSE:SONY). The Call of Duty franchise in particular is a game console mainstay, and the deal would be exclusive to his PC and Microsoft’s Xbox console, leaving Sony’s PlayStation in the cold.
As Microsoft gears up for its ongoing legal battle with the FTC in the US in early 2023, it’s clear that the deal will continue to dominate the headlines this year.
If Microsoft can clear any regulatory hurdles, the deal will add a significant library of games to its catalog and enhance its upcoming game subscription service, Xbox Game Pass.
Ampere Analysis analyst Piers Harding-Rolls shared his view of 2023 with GamesIndustry.Biz, saying he expects the deal to go through, but with more concessions than expected. had.
Analysts expect Microsoft will have to make some concessions to complete the acquisition.
“These can focus on Game Pass inclusion for games and the availability of titles on other services,” said Harding-Rolls. “I think it’s more likely that we’ll make concessions and come to an agreement rather than a cancellation,” he said.
As for the timeline for when the deal will close, analysts said it could close in the first half of 2023 if Microsoft concedes sooner or later. could be “delayed until late 2023.”
China’s role in the 2023 Games
The Chinese games market is an important center of the video game landscape.
However, according to Niko Partners, it marked the first decline in gaming revenue in 20 years in 2022.
A number of factors contributed to a 2.5% year-over-year decline in revenue, totaling $45.44 billion.
However, one of the most significant problems pointed out by experts is the lack of new games from the international market due to a freeze on new licenses by China’s video game regulator.
According to Lala, the situation will improve in 2023 as the country resumed approval in April 2022, giving Chinese gamers more options.
In fact, Niko Partners plans to bring over 100 imported games to the Chinese market with the coveted ISBN license in 2023.
“We expect import game approvals to return to their normal rhythm in 2023,” said the researchers.
Niko Partners President Lisa Hanson told GamesIndustry.Biz: The latest approval for imported games was June 2021.
Tips for investors
Video game investments struggled throughout 2022. While it doesn’t look like an immediate recovery, it’s clear that the game’s fundamentals are still strong.
Analysts and experts are bullish on both spending trends and market conditions in 2023.
don’t forget to follow us @INN_ Technology For real time news updates!
Stock Disclosure: I, Bryan McGovern, have no direct investments in any of the companies mentioned in this article.
Investing News Network does not guarantee the accuracy or completeness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect those of Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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