It’s not hard to grasp why the shares of companies such as Electronic Arts (EA) - Get Report, Activision Blizzard (ATVI) - Get Report, Take-Two Interactive (TTWO) - Get Report and Nintendo (NTDOY) have held up relatively well during the market’s recent plunge.
With tens of millions of U.S. and European consumers for now spending the vast majority of their time at home, a number of popular games and gaming platforms have witnessed usage spikes. Among other things, we’ve seen:
- Gaming platform Steam set new records for concurrent users, with over 20 million users reported on multiple occasions.
- Activision disclose that free-to-play title Call of Duty: Warzone obtained 15 million players in the first four days following its March 10 launch.
- Italian telco Telecom Italia disclose that its internet traffic has risen by more than two-thirds, while also noting that games such as Fortnite and Call of Duty are responsible for much of the spike.
- Nvidia (NVDA) - Get Report state that its GeForce Now cloud gaming service, which came out of beta in early February, has seen “Founders” subscriptions sell out in Europe, while adding that North American memberships are likely to sell out as well. Founders subscriptions come with a 90-day free trial, after which they cost $4.99 per month for the rest of 2020.
- Microsoft (MSFT) - Get Report and Nintendo witness temporary outages for their respective Xbox Live and Nintendo Online multi-player gaming services. Nintendo Online was down was for nearly nine hours on Tuesday.
Also, while conditions are beginning to improve in China, mobile app data firm App Annie did report that China’s average weekly game downloads rose 80% in February, when the impact of the COVID-19 outbreak on China was at its peak. And Chinese tech giant Tencent (TCEHY) stated on a Wednesday earnings call that its users “are increasing their time spent on a whole range of digital content services, including [Tencent’s] online games, video, and reading services,” amid the COVID-19 outbreak.
Notably, Tencent also thinks that the effects of some of the changes in consumer and business activity that have happened in recent weeks will prove to be “structural,” meaning they impact behavior long after the COVID-19 outbreak has subsided. “[We] think that there will be some temporary changes in consumer behavior [that] revert to normal relatively quickly, but there'll also be some structural changes to consumer and especially enterprise behavior that will be longer lasting,” said Tencent chief strategy officer James Mitchell.
Should Mitchell prove right, the jump in global gaming activity that has been seen in February and March could be more than just a short-term positive for various companies exposed to the gaming industry -- from game developers and console owners, to GPU developers and mobile app store owners.
And provided that consumer sentiment has improved by then, the current uptick in gaming activity might also end up being a positive for the reception given to Microsoft and Sony’s next-gen consoles -- the Xbox Series X and PlayStation 5, respectively. Each will each contain a powerful AMD AMD processor and rely on a large solid-state drive (SSD) for storage.