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Analyst Explains Why Multiple Video Game Related Stocks Plummeted Early This Week

Much has been made of EA’s plummeting stock values and revenue streams in the wake of the lackluster consumer response to the second season of Apex Legends, but there’s more to this story than meets the eye. In fact, a number of major gaming-related corporations have seen a reduction in the value of shares thanks to a number of factors.

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As explained by Michael Pachter, a prominent industry analyst frequently discussed for his predictions concerning gaming retail giant GameStop, stock prices for the industry leaders have mostly been inhibited thanks to an overconfidence in unproven mediums. Patcher argues that, while major publishers and producers in the gaming space seem to have their sights set on up-and-coming content delivery avenues like streaming and subscription services, investors and consumers remain dubious.

via: pcworld.com

What’s more, Activision Blizzard has taken a major hit as a result of their investments in the esports scene. We’ve known for quite a while that Blizzard has been trying to make Overwatch the premiere platform for esports, but the fact of the matter is that investors simply aren’t all that willing to commit. Activision Blizzard seems to want to take a major piece of a pie that as of yet doesn't really exist, and it’s taking a toll on their Wall Street performance.

Pachter further elaborates that publishers likely don’t stand to make much money on the esports scene to begin with. They may hold the rights to the game and the delineation of surrounding media, but, at the end of the day, the ones who really cash in on this trend will be Amazon, proprietor of popular game streaming site Twitch, and Google, the company behind YouTube.

via: overwatch-world.com

Further complicating the esports matter is the fact that the scene is so incredibly segmented that backing only one or two games doesn’t seem to be financially viable. While thousands upon thousands of viewers may tune in to watch an Overwatch championship, thousands more may only be interested in League of Legends, Hearthstone, or CS:GO. It’s tough to hone in on a market that’s so split up and volatile, and it’s made many investors question why so many businesses seem to be pushing esports.

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Finally, the longevity of certain games, as well as fan interest as a whole, is a major cause for concern for those with a lot to lose. To paraphrase Pachter, while it’s relatively safe to bet that mega-popular sports like soccer and football will still be around in fifty years, it’s a pretty safe bet that esports communities for titles like Overwatch or Apex Legends won’t be. While some argue that there’s still a good amount of money to be made in the here and now, those hoping for a more stable investment won’t be allured by something so flash-in-the-pan-esque.

via: offgamers.com

That’s to say nothing of the numerous recent controversies surrounding the monetization of games in recent months. With proposed legislation in multiple countries threatening to break up the gambling empire which companies like EA and Activision Blizzard have built over the years, these companies don’t exactly come off as attractive.

Time will tell what’s to become of these corporate titans; the market is often unpredictable, and none are incapable of bouncing back from this recent negative trend.

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