In November last year gaming empire Roblox went public and when the market closed on the day of their launch the company was valued at $45.3 billion. Since their IPO, shares have remained steady around the $70 mark and Q1 2021 results are looking positive. To those without kids, or uninterested in gaming, this company leapt out of the blue to become one of the most talked-about IPOs of the decade.
Roblox isn’t just a single game, it’s a collection of millions of games, all generated by its users. It’s the YouTube of the gaming world. Users can download the app for free and browse through the myriad of games available to play both solo and with friends or strangers.
In-app purchases are one of Roblox’s main revenue streams and, as with any video game connected to iTunes or PayPal, there are the obligatory stories of distraught parents finding a huge bill at the end of the month for unauthorised purchases by their unwitting children. Roblox makes money through the sales of its in-game currency ‘Robux’, which users buy to unlock more advanced features and customisations. In 2020 the total purchases of Robux virtual currency, including Robux not spent that year totalled $1.88 billion.
Of Roblox’s 37.1 million users as of Q4 2020, it is estimated that the majority of them, at 29%, are aged between 9 - 12 years old, with each user spending an average of 2.6 hours a day logged in and actively playing.
The global gaming industry is huge, estimated to reach a value of $287.1 billion by 2026. And whether you are more into Pong than Among Us, the undeniable reach of gaming, especially during the global lockdowns of 2020 and 2021 when entertainment options have been limited - especially for kids - have propelled this industry forwards.
With the end of the pandemic in sight, but far from over, this industry is thriving. As of last year, it is believed that China is the largest gaming market worldwide with a revenue of $40.85 billion, with the US close behind generating an approximate $36.92 billion in annual revenues. Of the gamers in the US, 66% of over 12 years old’s are gamers, up from 58% in 2013.
There are a huge variety of public gaming companies out there to invest in, from Electronic Arts Inc. (EA) and Nintendo Co. Ltd (NTDOY) to Microsoft Corp. (MSFT) and Sony Corp. (SNE), and many more in between. There are games to suit every taste, age group and ability, even games for non-gamers. Computer and console gaming has been part of popular culture since the 1970s but has risen astronomically since the birth of esports, where stadia of fans bite their nails in anticipation of their heroes beating opponents at games like League of Legends to win multi-million dollar prizes.
The esports industry, once representative of a subset of sports culture, is set to surpass $1.5 billion and viewership of approximately 646 million by 2023. Its relevance surged after celebrities like Michael Jordan and Drake championed it, alongside an increasing amount of coverage from traditional sports outlets like ESPN, and, at least in part, the meteoric rise in popularity of Fortnite.
Whether you’re more shoot ‘em up or hide and seek, word search or carjacking, the gaming sector is booming. There are multiple investment opportunities that look only set to grow as our lives become more digital.
There’s a skill to gaming and a science to being right.
