How to Ethically Invest in Video Game Companies: A Clear and Knowledgeable Guide

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If you’re interested in investing in the video game industry, it’s important to consider ethical considerations before making any investment decisions. The gaming industry is a rapidly growing market, with an estimated worth of over $330 billion in 2023. With such a large market, it’s important to understand the impact that your investment decisions can have on the industry as a whole, as well as the potential ethical concerns that may arise.

how-to-ethically-invest-in-videogames

One of the most important considerations when investing in the gaming industry is understanding the impact that video games can have on society.

While many games are designed purely for entertainment, others can have a significant impact on the way that people think and behave.

For example, violent video games have been linked to increased aggression and desensitization to violence in some studies.

Additionally, “video game addiction” is becoming an increasing problem as people (often younger, able men) quit their jobs and “drop out” to play videogames all day.

Is that a net benefit for society?

As an investor, it’s important to consider the impact that the games produced by the companies you invest in may have on society, and to ensure that you’re comfortable with that impact.

Key Takeaways

  • Before investing in the gaming industry, consider the potential ethical concerns that may arise from the games produced by the companies you invest in.
  • Understand the impact that video games can have on society, and ensure that you’re comfortable with that impact before making any investment decisions.
  • As an investor in the gaming industry, it’s important to be aware of the potential impact that your investment decisions can have on the industry as a whole.

Understanding the Video Game Industry

Investing in the video game industry can be a lucrative opportunity, but it’s important to understand the industry before making any investment decisions. The gaming industry has experienced significant growth in recent years, with revenue expected to reach $330 billion by 2023 [1].

Video games have become a mainstream form of entertainment, with both PC and mobile games attracting millions of players worldwide. In addition, esports and streaming have gained popularity, with platforms like YouTube and Amazon investing in these areas.

The video game industry is comprised of various entities, including gaming companies, publishers, and developers. Gaming companies are responsible for creating and distributing games, while publishers handle the marketing and distribution of games. Developers are responsible for creating the game’s content and mechanics.

Revenue growth is a key factor in the success of video game companies. Many companies are looking at innovative mergers and acquisitions (M&A) as a way to expand their market share and secure revenue growth [2]. Nintendo Switch and Xbox are two major players in the console market, while mobile games like Candy Crush Saga have achieved massive success.

It’s important to note that the video game industry is not without its ethical concerns. Loot boxes, for example, have faced criticism for their similarities to gambling [3]. In addition, diversity and inclusion have been a concern in the industry, with efforts being made to increase representation and accessibility.

Overall, understanding the video game industry is crucial when it comes to making ethical investment decisions. By staying informed and aware of industry trends and concerns, you can make informed decisions that align with your values and goals.

[1] Source: https://www.statista.com/topics/868/video-games/

[2] Source: https://www.taylorwessing.com/en/insights-and-events/insights/2021/07/play-manda-investing-in-and-acquiring-video-game-companies

[3] Source: https://www.gamedeveloper.com/business/ethics-in-the-videogame-industry-a-mythbusting-and-scientific-approach

Key Players in the Gaming Market

key-players-in-the-gaming-market

When it comes to investing in the gaming industry, it’s important to know who the key players are. Here are some of the most notable companies in the gaming market:

Activision Blizzard

Activision Blizzard is one of the largest gaming companies in the world, with a market capitalization of over $70 billion.

The company is responsible for some of the most popular game franchises of all time, including Call of Duty, World of Warcraft, and Overwatch.

In recent years, Activision Blizzard has also been investing heavily in mobile gaming, which has become an increasingly important segment of the gaming market.

Electronic Arts

Electronic Arts is another major player in the gaming industry, with a market capitalization of over $40 billion.

The company is known for its sports games, such as FIFA and Madden NFL, as well as popular franchises like The Sims and Battlefield.

Electronic Arts has also been investing in mobile gaming, and has a number of successful mobile titles in its portfolio.

Nintendo

Nintendo is a Japanese gaming company that has been around since the 1980s.

The company is responsible for some of the most iconic video game franchises of all time, including Super Mario Bros., The Legend of Zelda, and Pokémon.

While Nintendo has traditionally focused on console gaming, the company has also been making moves into mobile gaming in recent years.

Tencent

Tencent is a Chinese conglomerate that has a significant presence in the gaming industry.

The company owns a number of gaming studios, including Riot Games (the makers of League of Legends) and Supercell (the makers of Clash of Clans).

Tencent has also invested in a number of other gaming companies, including Epic Games (the makers of Fortnite) and Activision Blizzard.

Microsoft

Microsoft is best known for its Windows operating system and its Xbox gaming console.

The company has a number of successful gaming franchises, including Halo and Forza, and has been investing heavily in cloud gaming in recent years.

Microsoft’s Xbox Game Pass service has also been gaining popularity, offering subscribers access to a large library of games for a monthly fee.

Other Notable Companies

Other notable companies in the gaming market include Unity (a popular game engine used by many developers), Zynga (a company known for its social and mobile games), Take-Two Interactive, and Rockstar Games (a subsidiary of Take-Two Interactive known for its open-world games like Grand Theft Auto and the Red Dead Redemption series).

When investing in the gaming industry, it’s important to keep an eye on these key players and their activities. While there are many other companies in the gaming market, these are some of the most influential and successful ones to watch.

Popular Video Games and Their Impact

popular-video-games-and-their-impact

When considering investing in video game companies, it’s important to understand the impact that popular games have on the industry. Here are some of the most popular games and their impact:

  • World of Warcraft: This massively multiplayer online role-playing game has been around since 2004 and has over 100 million accounts. While some critics have raised concerns about the game’s addictive qualities, it has also been praised for its positive impact on socialization and teamwork.
  • Fortnite: This battle royale game has become a cultural phenomenon, with over 350 million registered players. While the game is free to play, it generates revenue through in-game purchases of cosmetic items. Critics have raised concerns about the game’s violent content and its potential impact on children.
  • Call of Duty: This first-person shooter franchise has been around since 2003 and has sold over 300 million copies. While the games are popular, they have also been criticized for their violent content and potential impact on children.
  • Grand Theft Auto: This open-world action-adventure game has been around since 1997 and has sold over 345 million copies. The game is known for its mature content and has been the subject of controversy for its depiction of violence and sexual content.
  • Red Dead Redemption: This open-world western action-adventure game has sold over 36 million copies. The game has been praised for its storytelling and immersive gameplay, but has also been criticized for its depiction of violence and mature content.
  • Madden NFL: This football simulation game has been around since 1988 and has sold over 130 million copies. The game is popular among sports fans and has been praised for its realism, but has also been criticized for its potential impact on children.
  • FIFA: This soccer simulation game has been around since 1993 and has sold over 325 million copies. The game is popular among sports fans and has been praised for its realism, but has also been criticized for its potential impact on children.
  • Battlefield: This first-person shooter franchise has been around since 2002 and has sold over 60 million copies. The game is known for its realistic depictions of warfare, but has also been criticized for its potential impact on children.
  • The Sims: This life simulation game has been around since 2000 and has sold over 200 million copies. The game is popular among casual gamers and has been praised for its creativity and open-ended gameplay.
  • Apex Legends: This battle royale game has become popular since its release in 2019, with over 100 million registered players. The game is free to play and generates revenue through in-game purchases of cosmetic items.
  • Candy Crush: This puzzle game has been around since 2012 and has been downloaded over 3 billion times. The game is free to play and generates revenue through in-app purchases of lives and boosters.
  • NBA 2K: This basketball simulation game has been around since 1999 and has sold over 110 million copies. The game is popular among sports fans and has been praised for its realism, but has also been criticized for its potential impact on children.
  • Need for Speed: This racing game franchise has been around since 1994 and has sold over 150 million copies. The game is popular among racing fans and has been praised for its realism, but has also been criticized for its potential impact on children.

Understanding the impact of popular video games is an important part of making ethical investment decisions in the video game industry.

Investment Opportunities in the Gaming Industry

The gaming industry is a rapidly growing market with a lot of potential for investors. The market is expected to reach $268.8 billion by 2025, with a 4.7% CAGR between 2020 and 2025 . If you’re interested in investing in the gaming industry, there are several options available to you.

Video Game Stocks

One way to invest in the gaming industry is by investing in video game stocks. Some of the biggest video game companies in the world are publicly traded, including Activision Blizzard, Electronic Arts, and Take-Two Interactive. These companies have a proven track record of success and can provide investors with a solid return on investment. Consult an investment pro before investing.

ETFs

Another option for investors is to invest in exchange-traded funds (ETFs) that focus on the gaming industry. ETFs allow investors to gain exposure to a diverse range of companies within the gaming industry, which can help to mitigate risk. Some popular gaming ETFs include the VanEck Vectors Video Gaming and eSports ETF and the Global X Video Games & Esports ETF. Consult an investment pro before investing.

Mutual Funds

Mutual funds are another option for investors looking to invest in the gaming industry. Mutual funds are managed by professional fund managers who invest in a diverse range of stocks and other assets. Some mutual funds that invest in the gaming industry include the Fidelity Select Multimedia Portfolio and the T. Rowe Price Global Technology Fund.

Venture Capital

Venture capital (VC) is another way to invest in the gaming industry. VC firms invest in early-stage companies that have the potential for high growth. While investing in early-stage companies can be risky, it can also be very rewarding. Some VC firms that invest in the gaming industry include Andreessen Horowitz and Accel Partners.

Returns

When investing in the gaming industry, it’s important to keep in mind that returns can vary widely. While some companies may experience explosive growth, others may struggle to gain traction.

It’s important to do your research and invest in companies that have a solid track record of success and a strong growth potential.

I would also strongly suggest consulting with an investment professional before investing.

Assets Under Management

As the gaming industry continues to grow, assets under management (AUM) in the industry are also expected to increase. According to a report by Newzoo, AUM in the gaming industry is expected to reach $206.4 billion by 2025. This growth presents a significant opportunity for investors who are looking to invest in the gaming industry.

In summary, the gaming industry provides a range of investment opportunities for investors. Whether you’re interested in investing in video game stocks, ETFs, mutual funds, or venture capital, there are plenty of options available to you. As with any investment, it’s important to do your research and invest wisely to maximize your returns.

Ethical Considerations in Video Game Investments

When investing in video game companies, there are several ethical considerations that you should keep in mind. These considerations include ethics, environment, values, loot boxes, consumers, and employees.

Ethics

Before investing in a video game company, it is important to research their ethical practices.

This includes looking into their corporate social responsibility policies, their history of labor violations, and any controversies they may have been involved in.

Investing in a company with a poor ethical track record can lead to reputational damage and financial losses.

Environment

Another ethical consideration to keep in mind when investing in video game companies is their impact on the environment. Video game production can be resource-intensive, especially when it comes to energy usage, and companies that prioritize sustainability and environmental responsibility may be more attractive investments in the long term.

Values

Investing in a company that aligns with your personal values can be important for many investors. This may include companies that prioritize diversity and inclusion, support social justice causes, or have a positive impact on their local communities.

Loot Boxes

Loot boxes have been a controversial topic in the video game industry, with some critics arguing that they encourage gambling-like behavior in consumers. When considering investing in a video game company, it is important to look at their use of loot boxes and any potential legal or ethical issues associated with them.

Consumers

Investors should also consider the impact of a video game company on its consumers. This includes issues such as data privacy, fair pricing practices, and the potential impact of video game addiction on consumers.

Do we really want a society full of screen-addicted gamers who don’t step away from the monitor for hours at a time?

Or is the gaming industry becoming an invaluable entertainment sector where folks watch their favorite streamer and e-sports teams, getting enjoyment and happiness out of it for hours?

Employees

Finally, it is important to consider the treatment of employees when investing in a video game company. This includes factors such as fair wages, benefits, and workplace safety. Companies that prioritize employee well-being may be more sustainable investments in the long term.

Overall, investing in video game companies requires careful consideration of a wide range of ethical factors. By researching a company’s ethical practices and considering their impact on the environment, consumers, and employees, you can make informed investment decisions that align with your personal values.

Socially Responsible Investing in Video Games

If you’re interested in investing in video game companies but also want to ensure that your investments align with your values, you may want to consider socially responsible investing (SRI) or ethical investing. These investment strategies take into account environmental, social, and governance (ESG) factors, as well as impact funds, to identify companies that are making positive contributions to society and the environment.

When it comes to video game companies, there are a few factors to consider.

For example, you may want to look for companies that prioritize diversity and inclusion in their workforce and the content they produce.

You may also want to consider companies that are taking steps to reduce their carbon footprint or that are committed to ethical labor practices.

One way to identify socially responsible video game companies is to look for those that are included in sustainable investing or impact funds.

These funds typically invest in companies that are making a positive impact on society and the environment, and may also prioritize companies with strong ESG ratings.

Another factor to consider is the content of the video games themselves.

Some investors may choose to avoid companies that produce violent or offensive content, while others may prioritize companies that are creating educational or socially impactful games.

Overall, socially responsible investing in video games can be a complex and nuanced process.

It’s important to do your research and consider a range of factors, from ESG ratings to the content of the games themselves. If you’re interested in learning more, consider speaking with a financial advisor or exploring resources from companies like Schwab that offer guidance on sustainable investing.

The Impact of External Factors on the Gaming Industry

When it comes to investing in video game companies, it’s important to consider the impact of external factors on the industry. Here are a few key factors that have had an impact on the gaming industry in recent years:

COVID-19 Pandemic

The COVID-19 pandemic has had a significant impact on the gaming industry. With many people staying home due to lockdowns and social distancing measures, video games have become a popular form of entertainment.

As a result, many gaming companies saw increased revenue during the pandemic. However, the pandemic also disrupted supply chains and caused delays in game development, which could have long-term effects on the industry.

Legislative Actions

Legislative actions can have a significant impact on the gaming industry. For example, in 2020, the state of California passed a law that could potentially reclassify many gig economy workers, including video game streamers, as employees rather than independent contractors. This could have a significant impact on the business models of companies that rely on gig workers.

Economic Conditions

Economic conditions can also impact the gaming industry. During times of economic uncertainty, consumers may be less likely to spend money on non-essential items like video games. However, during times of economic prosperity, consumers may have more disposable income to spend on entertainment.

Environmental Concerns

Environmental concerns are becoming increasingly important in the gaming industry. As we mentioned earlier, gaming consoles are linked to a range of environmental threats, including the use of metals, plastics, and fossil fuels.

As a result, some gaming companies are taking steps to reduce their environmental impact, such as using renewable energy sources and designing more energy-efficient consoles.

Overall, it’s important to consider the impact of external factors on the gaming industry when making investment decisions.

By staying up-to-date on industry news and trends, you can make informed decisions that align with your values and investment goals.

Frequently Asked Questions

How do game developers address diversity and representation in games?

Game developers are increasingly aware of the importance of diversity and representation in video games. They are taking steps to ensure that their games reflect a diverse range of characters and perspectives. This can include hiring diverse teams, consulting with experts, and conducting research to ensure that characters are portrayed accurately and respectfully. Developers are also working to address issues such as sexism, racism, and other forms of discrimination in their games.

How did the video game industry make it easier for manufacturers to produce violent games?

The video game industry has faced criticism for making it easier for manufacturers to produce violent games. In the past, game ratings were not as strict as they are today, and there were fewer regulations governing the industry. This led to the production of many violent games that were not suitable for all audiences. Today, the industry is more regulated, and game ratings are stricter. Developers are also more aware of the impact that violent games can have on players, and they are taking steps to address these concerns.

What are the ethical considerations for investing in video game companies?

Investing in video game companies can raise ethical considerations. Some investors may be concerned about the content of the games, particularly if they are violent or promote negative stereotypes. Others may be concerned about the impact that games can have on players, particularly children. Investors should carefully consider these issues before investing in video game companies.

What are the professional issues related to investing in video game companies?

Investing in video game companies can also raise professional issues. For example, investors may be concerned about the reputation of the company, particularly if it has been involved in controversies or legal issues. Investors may also be concerned about the financial stability of the company, particularly if it is a start-up or a smaller company.

What are the best ways to invest in video game companies?

There are several ways to invest in video game companies, including buying stocks, investing in mutual funds or exchange-traded funds (ETFs), or investing in private equity or venture capital funds. Each of these options has its own advantages and disadvantages, and investors should carefully consider their goals and risk tolerance before making a decision.

Are there any publicly traded video game companies?

Yes, there are several publicly traded video game companies, including Activision Blizzard, Electronic Arts, and Take-Two Interactive. These companies are listed on major stock exchanges and can be purchased through a broker or online trading platform. Investors should carefully research these companies before investing to ensure that they meet their investment goals and risk tolerance.

Footnotes

  1. https://www.nasdaq.com/articles/an-overview-of-the-gaming-industry-and-ways-to-invest-in-it

  2. https://gamingstreet.com/how-to-invest-in-video-gaming/

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