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Online Gaming World vs World of Sports

28 May 2015 in Trading Ideas

In dark basements everywhere, gamers are doing battle online. And building a marketplace that’s social, cheap, and global. However concurrently, the focus on fitness has also paid off for many consumers and reaped benefits for sporting equipment manufacturers. Which trend ultimately wins out?

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ONLINE GAMERS KEEP GROWING – AND PAYING

The geeks shall inherit the earth. Unless they’re too busy gaming. Multiplayer Online Role Playing Games (MMORPG), where players assume roles and do battle over the internet, are booming. It’s social, it’s cheap, and it’s global. MMORPGs generate revenue from subscriptions and from selling virtual goods. PC gaming revenue rose 8% in 2012 to generate $20 billion worldwide, and it’s expected to hit $25.7 billion by 2016.1 Meanwhile, US sales of game consoles fell 21% in 2012.2 The console market is in a two-year slump as consumers increasingly play Web-delivered games.3

MMORPGs are attractive business propositions: the development cost and time required are a fraction of those for console games and online games can scale rapidly.

GAME ON

We grow up playing games, and as we get older, we continue to shell out for the necessary equipment, whether it’s for golf, soccer, or hiking the closest mountains. While the US economy tries to climb out of a long recession, US sales of sporting goods rose 7% in 20124, and the global market is expected to reach $303 billion by 2015.5 Increasing media exposure for events has helped boost the popularity of sports among the world’s population.

This World of Sports motif provides exposure to those companies that manufacture the apparel, footwear, equipment, and facilities that make us go, as well as sports content providers.

STOCKS IN THE ONLINE GAMING MOTIF

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STOCKS IN THE WORLD OF SPORTS MOTIF

stocks_world_of_sports

(1) Grant Brunner, “PC games are growing, but will that continue after the PS4 and Xbox 720 launch?”, ExtremeTech.com, March 29, 2013, http://www.extremetech.com/gaming/152053-pc-games-are-growing-but-will-that-continue-after-the-ps4-and-xbox-720-launch, (accessed May 17, 2013).

(2) Martha C. White, “Game Over? Why Video-Game-Console Sales Are Plummeting,” Time.com, Feb. 11, 2013, http://business.time.com/2013/02/11/game-over-why-video-game-console-sales-are-plummeting/, (accessed May 17, 2013).

(3) Cliff Edwards, “U.S. Video-Game Retail Sales Tumble 15 Percent in June,” Bloomberg, July 19, 2013, http://www.bloomberg.com/news/2013-07-18/u-s-video-game-retail-sales-tumble-15-percent-in-june.html

(4) Press release, National Sporting Goods Association, June 26, 2013, http://www.nsga.org/i4a/pages/index.cfm?pageID=4712, (accessed April 2, 2014).

(5) Press release, Global Industry Analysts, Feb. 2, 2012, http://www.prweb.com/releases/sporting_goods/sports_apparel_footwear/prweb9148721.htm, (accessed April 2, 2014).

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