Videogaming Outlook 2023

Listening to the @S&PMarketIntelligence @NeilBarbour (and @SteveSadin as a guest expert) excellent webinar on the video gaming global market ("Video Gaming's M&A Land Grab and the Bridge to the Metaverse"), thinking about M&A, R&D and tax rates, revenue opportunities for 2023 and 2024 and how this may impact corporate value. Discussed the market players and recent acquisitions (Facebook/Oculus; Microsoft/Activision) and then investor value potentially created through multiverses, identity layers across metas, blockchain gaming, crypto within gaming, and who will become the Netflix of gaming. NFT ownership by gamers was substantial and substantially more than crypto value. In 2021 video streaming generated $70.84B globally but video gaming generated $195B. 1.2B video streaming customers, nearly 3B video gamers. Videogaming appears to have more new product opportunities, and the ability to increase revenue per user over video streaming.

I think it interesting that in digital tax discussions video streaming companies are oft mentioned as corporations that need to pay more local tax. In terms of revenue and earnings, what do the largest players generate? Nintendo ($14.3B revenue, $5.3B net earnings, 24% net margin), Sony ($25B), Microsoft/Activision ($16.3B), Tencent ($13.9B) versus by example Netflix ($30B revenue, $5.2B net income, 17.2% net margin). According to the Apple /Epic Games lawsuit, in 2020 Epic generated $3.85 billion in revenue and a 40% profit margin. EA generated nearly $7B revenue for 2022 at 11.3% margin. The large stock value ramp for both video and gaming was of course the pandemic years of 2020 and 2021. But going forward, gaming looks more interesting to generate shareholder value. Which begs one of the questions of the webinar: Will the large technology or video streaming companies acquire video gaming companies?

I also want to understand how institutional and fund investors perceive the impact on shareholder value of digital tax initiatives? Until the next webinar... https://www.spglobal.com/marketintelligence/en/events/webinars/video-gamings-ma-land-grab-and-the-bridge-to-the-metaverse