From Intel to Apple, Why has Digital Gaming Industry Become Investment Magnet for Companies?

In recent years, digital gaming has exploded into a massive industry, generating more revenue than Hollywood and the music industry combined. As gamers around the world continue to spend more time and money on video games, major companies are scrambling to invest in this lucrative market.??

In 2021, there were about 2.96 billion games globally. The number of people playing games on PCs, consoles, tablets, and smartphones is expected to surpass 3 billion this year and reach 3.32 billion by 2024.??

From tech giants such as Intel and Apple to entertainment powerhouses such as Disney and Warner Bros., everyone wants a piece of the gaming action. But what exactly is driving this investment frenzy, and why are companies pouring billions into the gaming industry???

We'll explore the reasons behind the gaming industry's investment appeal and why it has become a magnet for companies looking to secure their financial futures.

?

Market Drivers for Investing in the Gaming Industry

The gaming industry has experienced a surge in growth during the pandemic as a result of many people staying and working from home. Rather than struggling, the industry has thrived and is expected to grow by 19.6% in 2023.??

While the pandemic has affected many aspects of the gaming industry, in-person events for E-sports have been particularly impacted, causing the segment to face significant challenges.??

The growth of the gaming industry and subsequent investments are heavily reliant on the increasing number of users across various platforms, including mobile, console, and PC gaming. The main target audience for most games is young gamers, particularly those under the age of 25.??

One of the major market drivers is the affordability of high-graphic smartphones, which has made them accessible to a wider audience. Another contributing factor is the increasing internet penetration in areas that were previously lagging technologically. The rise in digital payments and multinational investments is also playing a significant role in this trend.

Top 5 Companies Investing in Digital Gaming in 2023

In 2022, the gaming industry generated an enormous revenue of $184.4 billion worldwide, with mobile gaming contributing around 50% of the total at $92.2 billion.?

The captivating and absorbing nature of online games makes them a lucrative avenue for generating income. Gaming companies recognize this potential and employ different techniques to monetize these opportunities.?

Here’s a list of the top 5 companies and their market capitalization in the digital gaming industry:?

?

Apple: In March 2019, Apple introduced Apple Arcade, a subscription service that provides access to a broad range of mobile games, including those developed in-house and by acclaimed brands and developers. With over 100 games on offer and a $2.06 trillion market capitalization, Apple works closely with creators to bring these games to the market.??

According to the Wall Street Journal, Apple earns more revenue from gaming annually than Microsoft, Sony, Nintendo, and Activision Blizzard combined, in part due to its 30% share of all game sales through its app store.

?

Microsoft: Microsoft owns Xbox Game Studios, previously known as Microsoft Studios, which includes 15 independent gaming studios. In addition, the company has a cloud gaming platform called xCloud, which was launched in 2019. This platform allows users to access a curated library of games through browsers and mobile devices as long as they have a subscription and Bluetooth controller.?

Recently, in January 2022, Microsoft made headlines with its announcement of a plan to acquire Activision Blizzard in a deal worth $69 billion, making it the biggest tech acquisition in U.S. history with a market capitalization of $1.7 trillion.?

?

?Alphabet: Google, or Alphabet as it is also known, introduced Stadia in 2019, which is a cloud gaming service that doesn't require any specialized hardware. Players can purchase a range of games from the Stadia store and play them using Wi-Fi or wired internet connections. Despite these features, Stadia did not perform as well as Alphabet had anticipated.??

As a result, the company is now reportedly shifting toward forging partnerships with game publishers for streaming technology. This new offering is being called Google Stream and will be provided to game publishers as a white-label solution. Currently, the market capitalization of Alphabet is $1.15 trillion.?

?

Tencent Holdings: Tencent Holdings, which generates the highest revenue among gaming companies globally, has a significant presence in mobile gaming. For instance, their PC emulator for PlayerUnknown's Battlegrounds mobile allows players to enjoy the game on their computers. The popular multiplayer battle royale game is available on both Android and iOS platforms.??

In addition to this, Tencent also owns other games, including League of Legends, which boasts a massive monthly active player base of approximately 180 million and a market capitalization of $439.67 billion. The mobile version of League of Legends, League of Legends: Wild Rift, has also attracted a growing number of players.?

Leveraging its expertise in mobile gaming, Tencent is now focusing on expanding its console gaming business segment to better compete with Western gaming companies.

?

?NVIDIA: NVIDIA designs graphics processing units (GPUs) for gaming and chip units for mobile devices. Its history dates back to 1999 when it invented the GPU, which helped the PC gaming market to grow. While gaming was previously only available on PC platforms, NVIDIA expanded its reach in 2022 by bringing games like Fortnite to iOS and Android apps.?

Furthermore, with a market capitalization of $385.36 billion, the company now offers its own cloud gaming service called GeForce Now. In 2022, NVIDIA partnered with AT&T to offer GeForce Now games to AT&T 5G network customers. In 2023, this partnership will expand to include AT&T fiber customers.

?

Conclusion

Given the massive revenue generated by the gaming industry, it's not surprising that companies are keen to invest. In 2020, the industry brought in $155 billion in revenue, and experts predict that this figure will increase to over $260 billion by 2025.

?

Interested to know more about the developing technologies in your industry vertical? Get the latest market studies and insights from BIS Research. Connect with us at [email protected] to learn and understand more.?