businesses that make money with electronic entertainment – CVBJ


NGEL JIMNEZ DE LUIS

Atlanta

Updated Thursday, November 25, 2021 – 01:39 AM

A market has emerged around the video game sector which benefits tangentially from its success. Even chairs for “gamers” have their niche and their specialized businesses.

A “gamer” keyboard, at an event organized in Madrid.

The first person to become a millionaire during the California Gold Rush was Samuel Brannan. Journalist and businessman, Brannan founded the newspaper that informed all Americans that the coveted metal was found in the hills of Sacramento.

His was also, coincidentally, the only store in the area that sold picks, shovels and other tools needed for mining. They say he bought the rafts for 20 cents and then sold them for $ 15.

Thus was born one of the axioms of the business world. Not only can you make money with an activity, but also by providing the necessary tools to do it. In the United States, this expression is used literally as a formula for success: “sell spikes in the gold rush“.

And this is the formula that catapulted companies such as Nvidia, Razer, Steelseries or HyperX. Video games have become a lucrative business. Last year, according to consulting firm IDC, they moved around 152,000 million euros worldwide, overtaking cinema in terms of revenue.

But the money isn’t just used to create new titles or sell game consoles. Companies that sell accessories for playing, from graphics cards to monitors, mice, chairs and controllershave seen their incomes skyrocket in recent years.

Nvidia is perhaps the paradigmatic case. The company manufactures many graphics cards that PCs need to display games with the highest level of detail and realism. The share price has risen 135% over the past year and this despite the fact that its business of selling cards for mining cryptocurrency (the parallel processing technology of graphics cards is perfect for a use in this area) suffered a serious setback after China’s ban. Bitcoin “farms”. In the last five years the stock accumulates an increase of 1,300%.

For companies such as Razer, Mad Catz or Logitech, which manufacture controllers and peripherals of various types for electronic entertainment, the future is also very bright. According to the consulting firm Mordor Intelligence, the global market for this type of product was 6.8 billion euros in 2020 but the figure will double in 2026. “The rapid growth of esports has increased the demand for advanced keyboards and game controllers,” they explain.

New forms of gambling and the rise of streamers (players who broadcast their matches live) have created new opportunities for these businesses. Elgato, one of the brands of gaming accessories company Corsair, has been one of the most profitable. Its lighting panels and live broadcast control devices are among the most requested accessories by users of platforms such as YouTube or Twitch.

Thanks to them, Corsair’s profits grew 118% in 2020, reaching 134 million euros. “Our gaming and creator peripherals segment grew 83% and we exceeded $ 500 million in revenue,” they explain of the company.

The main problem facing the industry today is similar to that experienced by other sectors. During the Covid-19 pandemic, several manufacturers of gaming accessories experienced delays due to a lack of components and raw materials, as most of the manufacturing plants are located in China. In the case of graphics cards, the shortage was already long-standing, due to the demand for cryptocurrencies.

Supply issues for game consoles are also wreaking havoc. It is very difficult to find a PlayStation 5 or an Xbox Series X in the store, to put two of the newer and more advanced machines. The lack of semiconductors has forced Sony and Microsoft to cut production. It also reduces the demand for gaming accessories, at least until the many bottlenecks in the logistics industry are resolved.

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