Keep Calm And Start Playing Video Games

In recent years the video game industry has grown tremendously – video game companies have embraced innovation and reshaped the whole industry. Experts are forecasting that the sector will generate $196 billion in revenues by 2022.

But what is the situation in light of the latest economic developments and the COVID-19 crisis that has pushed the global economy and many industries over the edge?

In contrast to many other industries, the video game industry proved generally more resilient and many stocks even benefited from the lockdown period and the stay-at-home environment. With many people stuck at home and unable to work all over the world, online gaming has seen record numbers of players join during the pandemic and has actually experienced a boom as a result of the crisis.

Here I will analyze two stocks that represent the video game industry and show their seasonal patterns in the course of a calendar year. As many readers probably know, seasonal effects are predictable patterns that recur almost every year. These effects serve to determine whether a short or long position in certain stocks is statistically highly likely to be profitable. They reoccur due to various events that take place during the year (e.g. tax and balance sheet deadlines, earning reports, sport events, investor sentiment…) and determine the price trends of individual stocks.

Video games: in line with the new social distancing trend?

Not only do online video games tick all the boxes regarding the requirements imposed during the pandemic – from social distancing to isolation to quarantine - but they also provide us with that rare feeling of social interaction that many people have craved for months.

One of the companies handling the current situation quite well is Activision Blizzard – an American video game holding company based in sunny California. The company publishes, develops and distributes interactive entertainment software and peripheral products and is one of the biggest producers of video games including some of the most durable franchises (World of Warcraft, Candy Crush, Overwatch). This year the sun has definitely been shining for the company, as it has reaped nice profits during the pandemic.

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