Source: telegraph.co.uk

Invest in Gaming

With the market at all time high, I am very cautious with any new investments. While the tech stocks has been roaring, they are also likely to be the first to sell off in a crisis so I have been looking out for new industry to invest in.

I was reading up on potential new investments but that was taking up a lot of time! It was like taking a new module in university again. So I became lazy and decided to take alternative approach to this.

In fact, this is a method that I have known for ages. In my view, the fastest way to understand a new industry is to speak with the INDUSTRY EXPERT. These are the people with insider knowledge of the industry, deep insights and with a pretty accurate view of the industry trends. So through a close friend, I was introduced to Mr Mufizal Mokhtar.

One of the coolest guy I know!

Mufizal, aka Jai, was the Senior Art Director in Ubisoft. Ubisoft is the company behind the successful gaming franchise of Assassin’s Creed. He now runs his own company, HMO Collectibles, which specialise in making intricate collectible figurines.

Jai came over to Singapore to give a closed door session for our students at VIC! While there were many confidential content, I thought the portion of open content is useful for the public too! So here is my summary of what Jai shared.

Gaming Industry is Larger than You Think

While the most visible part of the entertainment industry are the movies, it was highlighted that the gaming industry is WAY bigger. The Hollywood industry is worth about US$38billion, while the Gaming Industry is worth about US$140 billion. It is a huge industry riding on the success of the movie franchises.

“They create movies to sell toys, not the other way round.”

Gaming is Recession Proof

Jai shared that when he was creating games, he noticed that the demand for it was not affected by the economy much. In fact when the economy was bad, the demand for games seemed to be higher as it is a form of escapism.

“Imagine, you could spend just $70 for 200hours of entertainment”

Gaming is All Ages

Jai also shared about the misconception of gaming. Most people only view it as online games, shooting each other etc. But it also includes the big Toys Market which ranges from baby toys (Mattel, Hasbro) all the way to adult collectibles like this.

“Everyone likes to collect toys. Kids collect Pokemon while adults collect watches. Different but still toys”

Gaming Success is All About Marketing

When big companies develop a new game, millions of dollars and thousands of manhours are poured into it. So it is a MUST for the gaming companies to MARKET like crazy. He said most games will have a shelf like of 1-2 years so the marketing effort in those few years are crucial. Do you see any new marketing campaign recently? I certainly have!! The new Assassin Creed and Total WarHammer Series! Assassin Creed is by Ubisoft and Warhammer is by Games Workshop. Both are listed companies.

Mobile Gaming vs Console Gaming

There is a rising trend for Mobile Gaming as more and more people are on the phone. However, he also highlighted that Console Gaming on PS4 and Xbox is unlikely to go away as those are attracting a different group of gamers. In short, Mobile Gaming is for casual games and Console Gaming is for more serious gamers. Mobile Gaming: Glu Mobile, Console Gaming: Nintendo.

Future of Gaming

Talking about the future, Jai postulated that the future of gaming will be in Virtual Reality. The ability to create full immersion will be the key to future of gaming. You are no longer constrained by the keyboard or console. You will be experiencing the game as though it is reality, and he has observed a few companies moving towards that now. Oculus and Nintendo are heavily investing on VR now.

My View

While I have not been gaming for years, I do see the huge potential in gaming. While this industry is pretty recession proof, it could be cyclical as the performance tends to be higher when they release new games. I will look for companies with very strong gaming franchise and good financials! For example, Ubisoft.

On a side note, take a look at Ubisoft share price. I noticed that it did spike up during the 2000 and 2008 crisis! haha well it could be coincidental. We will know when the next crisis comes.

Source: google.com

P.S. Thank you Jai for his unreserved and insightful sharing! You can find out more about his artwork here. I am very keen to get this nice statue from Jai’s HMO! It is so beautiful (P.P.S. it is fully handmade!)

See you soon!

Investing Always,

Pete

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