The coronavirus pandemic has claimed many casualties, with tens of thousands infected worldwide, and thousands tragically losing their lives to the virus. As discussed before, the virus outbreak has taken its toll on global markets, with the full impact of its spread on world markets still unclear.
Many industries were impacted by the virus. Travel was one of the first to take a hit, for the obvious reason of numerous people cancelling non-essential trips. In addition, the tech industry also suffered significant losses, especially in companies that are heavily dependent on China’s manufacturing power. Now, the virus is threatening to plague yet another industry: Gaming.
GDC Postponed Indefinitely; E3 cancelled
The Game Developers Conference (GDC), an annual event held in San Francisco, is the largest and one of the most important events in the gaming industry. With blockbuster brands such as Microsoft, Sony and Facebook in attendance, the event is usually home to many significant announcements and unveilings.
However, as the mid-March event drew near, the same leading names gradually pulled out, citing various reasons relating to the coronavirus. As more and more industry leaders announced their intention to miss this year’s event, the entire conference was put in question until it was finally cancelled, or “postponed” according to its organizers, who were “genuinely upset and disappointed not to be able to host (guests) at this time.”
Following the cancellation of GDC, another major gaming event E3, was also cancelled. GDC is the largest event for game developers, however E3 is the largest exhibition for the entire industry, usually involving the unveiling of new gaming consoles and blockbuster games. However, in light of the coronavirus pandemic, the event, scheduled for June 2020, has also been cancelled.
Several other events have been cancelled, including the Mobile World Congress (MWC) in Barcelona, and the Geneva International Motor Show.
The Isolation Factor
Despite the heavy financial toll suffered by the coronavirus threat, there is another variable that has actually helped the gaming industry: Isolation. During the factory shutdown in China in early February, millions were forced to be confined to their homes, which resulted in them looking for means of entertainment that did not require going outside — and many turned to mobile gaming.
During the first week of February, more than 200 million apps were downloaded in China from iTunes, a 40% increase compared to the same period last year. A significant number of the apps downloaded were games, which led to a 17% jump in the Tencent stock. Tencent is one of the largest internet companies in China and the creator of numerous mobile games. In mid-February, its stock reached a 19-month high.
The Impact on the Gaming Industry
With the cancellation of GDC and factory activity in China still not fully recovered, there’s no doubt that the gaming industry could be facing losses. However, as Q1 2020 draws to a close, there is a possibility that at least some of these losses will be evened-out by an increase in remote downloads and online purchases. And yet, we will have to wait for the next earnings season to get real figures and see exactly how the industry was impacted by the coronavirus.
Regardless, the gaming industry is still a major market segment, which is projected to grow to $196 billion by 2022. With the introduction of new technologies, such as VR and AR, and the continuing growth of smartphone penetration, the industry will be here long after the current pandemic subsides. On eToro, investors could gain exposure to this growing market through the InTheGame Smart Portfolio, which includes stocks from companies such as Tencent, Microsoft, Sony, Zynga, NVIDIA, EA, AMD, Take Two and Nintendo.
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