On Christmas Day 1998, I was one of the millions of kids who completely freaked out with excitement after I unwrapped my brand-new Nintendo 64.
Over the next few years of my life, I’d enjoy playing games clike “Super Smash Brothers”, “Donkey Kong 64” and “Super Mario 64.” And of course, I’d take any opportunity to play them, frequently sneaking downstairs in the middle of the night to log in a few more hours.
Back then, that was the pinnacle of gaming. But 20 years later, it’s a much different picture.
Now, we have things like Major League Gaming, or MLG, where people compete in games like “League of Legends” and “Call of Duty.”
These are just a couple of games that are part of the $906 million esports industry. And as more gamers begin to compete, that number is only going to grow.
About 30% of the world’s population plays video games, according to the 2017 Global Games Market Report. That’s 2.2 billion people. And over 1 billion of them spend money while they play.
With all that money coming in, it gives us a great place to invest. But with so many choices, like game software, hardware such as microchips or game consoles themselves, or even video game publishers and more, it’s tough to choose where to put your money.
A good way to spread it out is with the ETFMG Video Game Tech ETF (NYSE: GAMR), a fund that includes 71 different companies in the video game industry.
But if you want to bet on a specific trend, I believe we’re at the forefront of a huge global shift into mobile gaming.
A More Convenient Way to Get Your Gaming Fix
For one thing, people are spending about three hours a day on their smartphones.
We’ve seen a shift happening with services like Netflix and YouTube TV, where people can watch whatever they want, whenever they want, even if that means not being at home. That’s been eating away at the cable market for years. And now, it’s happening with video games.
Like watching your favorite show, it’s way more convenient to get your gaming fix on a phone, which you can take anywhere.
We’ve also seen that gamers don’t hesitate to pour money into these games.
Usually, video games that you can get on your smartphone are a lot cheaper than the ones for Xbox or PlayStation. The ones that bring in the most money are actually free. However, these games give the user a ton of different options for “in-game purchases.”
For example, if you have to earn something like points or coins in a game to reach the next level, but don’t want to wait to earn them, you can just buy them with a credit card.
Selling things via mobile games works very well. Now that everyone is constantly connected, you’re always competing with someone.
That could be your friend, sibling or a professional that’s made a name for themselves online. So, to beat them, you’ll spend a few bucks here and there to improve.
For example, one of the most lucrative mobile games, called “Clash of Clans”, brings in $60 million per month from people buying the game’s currency.
Another example is “Fortnite”, which has exploded in popularity on consoles like Xbox, and is now making a name for itself in mobile.
The game is free to download, but in-app purchases generate over $2 million in revenue every day — and that’s just on iPhones and iPads, which means it doesn’t include Android users.
Mobile Gaming Will Be a $100 Billion Market
Looking at the big picture, mobile is overtaking the entire gaming industry.
Back in 2012, mobile represented just 18% of the overall picture. Then last year, it made $46.1 billion, which was 42% of the gaming industry’s $109 billion.
And in 2018, mobile is expected to exceed 50% of all gaming revenue.
Of the $138 billion that the video game industry is expected to make this year, mobile is expected to bring in over $70 billion worldwide.
By 2021, it’s expected to be a $100 billion market on its own. That’s more than the entire world of video games was worth just three years ago.
And at the forefront of this revolution is the No. 1 gaming country in the world: China.
This year, mobile gamers in China are expected to bring in a third of all the mobile revenue in the world: about $23 billion.
Last year, its biggest mobile game, “Arena of Valor”, generated $1.9 billion in sales.
China has been at the top of the gaming world for years. And of course, when the leader makes a big move like this, the world is expected to follow suit.
For example, Japan has a lot less people, but they love to spend on mobile games. This year, they’re expected to hit the $10 billion mark in revenue, about the same as the United States.
And India has recently caught mobile gaming fever, too. Indian gamers are expected to spend $1.1 billion this year on mobile.
That number is expected to more than double in the next two years, hitting $2.4 billion in 2020, making India the fastest-growing mobile gaming country.
Invest in the King of Gaming
Investing in the explosive growth in mobile gaming can be tricky. That’s because there are so many small companies that make up the market, with a few games each.
But one that stands above the rest is Tencent Holdings Ltd. (OTC: TCEHY).
Tencent is the king of gaming in China, and is currently the ninth-largest company in the world.
Right now, it has a 51% market share of the Chinese mobile gaming market. The last quarter alone it made $3.4 billion just from its mobile games.
With that sort of dominance, Tencent is a relatively safe way to invest in the surge of mobile gaming.
Regards,
Ian Dyer
Editor, Rapid Profit Trader
