Gaming

Despite the setbacks of Ubisoft and Activision, the video game sector is still very buoyant

The video game industry has taken advantage of the pandemic and lockdowns, depriving people of many outdoor activities and encouraging more hours in front of screens at home. This industry, also driven by the rise of mobile games, now weighs 300,000 million dollars in revenue worldwide, more than music and cinema together, according to a study by the firm Accenture, which AFP had echoed in April 2021.

However, the giants of the sector have seen the price of their shares fall on the stock market in the past year. The French group Ubisoft, with 19,000 employees worldwide, for example, shows a drop of 43% in one year, when the American Activision Blizzard suffered a drop of 27%. These two editors have to deal with cases of harassment in particular. At Ubisoft, no fewer than three top executives resigned from their positions in July 2020, in connection with acts of misconduct or sexual harassment.

Publishers in crisis due to a toxic culture

Among them, the creative director and number two of the video game publisher, Serge Hascoët, as well as the director of the Canadian studios, Yannis Mallat. And since then, Ubisoft has experienced a wave of developer departures, according to a survey by the US site Axios published in late 2021. Many employees have denounced a toxic and sexist climate, while the macho culture remains very important in the video game. industry.

Activision Blizzard has also been rocked for many months by allegations of sexual harassment and discrimination. Bobby Kotick, his boss for 30 years, said in late 2021 that he was considering leaving the company if he couldn’t resolve those issues. According to a Wall Street Journal article, he had been aware of harassment at the company for years.

Weaker growth expected in 2022

These cases, which reflect a disastrous image of publishers, have disrupted the development of several games, while teleworking has already weighed on the productivity of teams, estimates Valentin Mory, a specialist in the sector within the analysis company AlphaValue. Many games have postponed their release date, such as Ubisoft’s action-adventure game “Skull and Bones”.

“In 2022, in general, we should see a slowdown, compared to the strong growth of the sector in 2020 and 2021”, he specifies. Sanitary restrictions are easing and players should be less diligent behind their screens. Additionally, “semiconductor shortages have caused delays in console productions, such as Sony’s PlayStation 5 line and Microsoft’s Xbox series.”

If many games are planned this year and finally have to be released, especially before the Christmas season, between September and December, “the effects on sales could only really be felt in 2023”, tempers Valentin Mory.

Strong long-term fundamentals

However, the fall of certain publishers on the stock market “creates opportunities for investors”, according to Thomas Alzuyeta, a specialist in the sector at the manager Kirao AM. “The markets have taken a short-term view, but all the people who started gambling during the pandemic will continue this habit,” he believes. “The industry has strong fundamentals, with people expanding their dominance from PC gaming to console, mobile gaming and streaming,” he said.

The video game market has 2.7 billion players worldwide, according to Accenture. It has grown by 500 million users in the last three years and is expected to gain another 400 million players by the end of 2023. While veteran gamers are still predominantly male, newcomers are 60% female, particularly gamers. phones, according to the market research company.

It’s no wonder that US group Take-Two Interactive, publisher of the GTA franchise, is willing to put $12.7 billion on the table to acquire developer Zynga, which specializes in mobile games like “FarmVille.” This acquisition could be followed by others in the sector, while Ubisoft, whose market capitalization remains below 6 billion euros, regularly appears as a potential target for giants like Microsoft.

growth relays

The video game industry is evolving. Initially, a publisher’s revenue was determined by the number of copies sold per game. In the 2010s, the “free to play” model took off, with games like “Wolrd of Warcraft” and “EverQuest.”

The concept is to provide free access to an online game, in which players have paid options, such as the ability to purchase small items or special properties for their characters through microtransactions. The goal is to create a community of gamers, who spend as many hours as possible in the game and are willing to spend to offer each other an enriched experience.

In 2017, Microsoft launched a new concept, based on video streaming platforms. Its “Xbox Game Pass” service gives access to a wide catalog of unlimited games, available on Xbox, PC and smartphone, through a monthly subscription. However, the American group remains the only one that has been successful with this type of offer for the moment.

Latest trend in the sector: non-fungible tokens, better known as NFTs. Ubisoft launched the Quartz platform in December 2021, freshly received by gamers, to acquire NFTs within their “Tom Clancy’s Ghost Recon Breakpoint” game. American game and console distributor Gamestop also intends to develop an NFT platform and invest tens of millions of dollars in the cryptocurrency sector, according to the Wall Street Journal.

This new business model, called “play to win”, consists on this occasion of encouraging players to get involved and progress in a game to obtain benefits, by obtaining rewards in the form of NFTs, which guarantee the authenticity and traceability of an asset on the blockchain. Virtual objects, such as a helmet or a machine gun, can be held in the form of NFTs.

“Publishers could then charge transaction fees when a player resells an NFT,” Thomas Alzuyeta underlines. However, “play to win” has yet to convince and is “only in its infancy,” warns the analyst. Waiting to see if the blockchain ecosystem could be a true engine of growth, players in the sector can bet on new game releases in 2022 to attract investors, such as ‘Ubisoft’s “Avatar: Frontiers of Pandora”, planned the same year than James. Cameron’s Avatar 2.

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