Nintendo Switch boosts Game as it pushes esports and experience gaming

ETX Capital
Aug 23, 2017 · 2 min read

Game Digital delivered a strong second half performance thanks to sales of Nintendo’s Switch console. Total ‘mint market’ sales rose by 8.8% and 15.7% in the UK and Spain respectively due in large part to the new device. This would have been higher had it not been for supply problems with the console in the UK.

Gross Transaction Value climbed by 6.8% in the second half, to £325.4 million. Nevertheless, full-year revenues were lower and the turnaround needs work.

Hence the rationale for the bigger push into ‘esports’ and other mass participation gaming. Game says it will prioritise further development of its experience based gaming and esports by focusing management and capital resources on these areas. This looks like a sensible move.

Esports — where people professional gamers — is a fast growing industry by still relatively immature. IHS Markit said the market grew 19% last year to six billion hours of game time watched worldwide. It’s estimated that this will reach nine billion by 2021. $280m in advertising was generated with this projected to reach $1bn by 2021.

Game hopes to ride this wave and it appears to be making good early progress with the rollout of 18 BELONG venues in the UK.

Growth is picking up with today’s statement stating that Multiplay’s Digital sales more than doubled from £2.1 million to £4.5 million, whilst Multiplay’s Events and Esports sales increased nearly 50%, from £4.8 million to £7.1 million.

Meanwhile, increased focus on digital sales channels is also allowing Game to cut costs from its UK retail footprint to the tune of £5m. Investors cheered the new strategy and the turnaround in console sales in H2 with the shares jumping 17% on the open, before easing back to trade 14% higher.

Neil Wilson

Senior Market Analyst

ETX Capital

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