Is the gambling industry an attractive proposition for investors?

The final months of 2021 promise to be as turbulent and unpredictable for financial markets as the past two years. Unusual and unprecedented events continue to unfold, from the Nigerian government launching its own digital currency to Tesla boss Elon Musk selling $5 billion worth of stock after asking his Twitter followers if he should.

Inflation here in Nigeria has started to come down after unbelievably high rates in recent years. According to the National Bureau of Statistics, the country’s consumer price index (CPI) showed that prices were 15.99% higher in October 2021 than they were 12 months earlier. Although still high, the rate has steadily declined over the past seven months.

Countries around the world are also grappling with rising interest rates. In the US and UK, where rates have been chronically low since the 2008 financial crisis, alarm bells are ringing as rates more than double central bank targets. So far, the Federal Reserve and the Bank of England have kept interest rates at historic lows. This means that those with excess liquidity, whether institutional investors or individuals, cannot earn returns above inflation without exposing their capital to financial market risk.

While some of these investors will turn to established cryptocurrencies like bitcoin and ether, or even newer altcoins like Floki Inu, many more will look to the stock market as a place to put their capital to rest. work.

There are thousands of options open to most investors, from stalwarts like oil companies and banks to modern, disruptive brands like Tesla and Deliveroo. One area that many retail investors are interested in is the gaming industry, especially since many are gamers themselves.

But is it an attractive proposition for investors right now?

The game continues to grow

In 2020, game companies made headlines when they reported huge spikes in the number of new gamers they were seeing downloading and using their content. This was not a new phenomenon; the growth of the gaming industry had been accelerating for several years.

Since the start of 2021, the stock prices of the biggest publishers have remained fairly stable, at least compared to 2020 levels. This despite the fact that player acquisition continues to look rosy, and titles like Call of Duty: Mobile, which had a very successful 2020, surpassed six million daily players in August 2021.

iGaming also seems very strong. North American markets are growing rapidly, especially as more US states allow online and mobile betting within their borders. On top of that, online casinos continue to create new ways for their players to enjoy classics like blackjack, with premium and live versions, as well as variants with special rules, such as free bet blackjack. For these reasons, iGaming companies also continue to perform well.

A blockchain future?

There is currently a huge demand for NFTs and other blockchain-related goodies. Amid all the excitement, EA recently announced that the company believes the future of gaming will contain these crypto collectibles. On the other hand, some companies such as Steam have already announced that they will not allow the use of NFT on their platform.

Although the announcement contains few details, most believe it would involve a change in the way in-game purchases are handled. NFTs could allow players to use microtransactions to purchase limited in-game items that could be resold to others in the future. There are legal and technical issues that need to be resolved before such a system can be made public, but the direction the industry is headed is clear.

With so much excitement surrounding NFTs at the moment, leading some speculators to invest huge sums in rare digital sketches, chances are they would be a big hit among crypto enthusiasts. The concept could also be lucrative for video game publishers who already derive a large portion of their revenue from microtransactions. Therefore, there is considerable upside potential if companies can achieve this.

Investment opportunities?

Everyone has different circumstances, so it’s important to do your own research or seek independent financial advice if you’re unsure how to invest your money. That said, game companies offer an interesting perspective. They have retained much of their growth in 2020 unlike companies like Peleton and furthermore the industry still seems to have plenty of room to innovate and grow.

If these factors align with your investment goals, the gaming industry may merit further consideration.

Robert D. Coleman