Before Covid-19 pandemic urge, the game console business was considered less attractive. But now the game console business is one that generates tens of billions of US dollars a year.
Just look at the research from NewZoo which states that the game console industry’s revenue this year has reached $45 billion with more than 700 million people playing games via consoles.
Niko Partners analyst Daniel Ahmad said gaming consoles are now much more profitable business for companies. Like Microsoft, Sony and Nintendo than it was a decade or two decade ago.
“We are now moving to a point where profitable hardware, profitable software, and network services play a much bigger role in keeping people in the gaming console ecosystem,” he said as quoted by CNBC International, Monday (23/11 / 2020).
Ahmad Daniel revealed that digital game distribution has enabled companies to earn large margins. It is larger than than having to sell physically in stores.
The company used to generate a $35 margin for games sold in physical stores. Now they generate a margin of $45 to US $ 60 from games that are sold digitally. Margins could increase by more than 95% if selling games exclusively as Sony did.
The gaming business can grow much bigger when there is a cloud game
The gaming business can get even bigger in the future because of the presence of cloud games, which allows users to play games on their devices from the company’s remote infrastructure. Such services are usually available via paid subscriptions, much like Netflix but for games, not for TV shows and movies.
In this business the big players are ready to fight. Call it Google with Stadia, Facebook gaming to Amazon which has released a cloud game service to win a market worth $160 billion.
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