Investing in video game companies?

So it recently dawned on me that I, as well as a massive number of other video game nerds pay way too much attention to the actual industry. Generally speaking, we know whether a game (or sometimes a company) will crash and burn or be a hit long before the actual investors do.

Doesn't that give us a big leg up on the investors? Doesn't that mean that geeks who spend all day reading game news have a pretty solid chance at coming out ahead when investing in games?

Combine that with the fact that game stock prices are currently crashing, doesn't that make it a very good time to try to buy stocks while they are cheap?

I haven't really invested before, but this makes me want to try.
Does anyone with any knowledge on investment have opinions or advice on this?

Oridaellin:
Doesn't that mean that geeks who spend all day reading game news have a pretty solid chance at coming out ahead when investing in games?

Absolutely not. What a games fan appreciates from the industry, and what sells, are often two different things. Think of all the small-time indy devs beloved by gamers, and compare them with the huge, bloated, juggernauts that are 'killing the industry'. A smart investor places his/her money where the solid returns are, and gamers traditionally hate cash-cows. We like to think that small, plucky devs deserve their big shot but it's always CoD that tops the charts come Christmas. The same is true of other industries too - just compare what does well at the Sundance Film Festival and what actually does well at the box-office. The fact of the matter is that buffs, connoisseurs, fans and nerds actually make up a very small percentage of the true market. Most games are still bought by parents who don't play games for kids who only really want to play what's hot in the playground at the moment, whether we like it or not.

Well a year or two ago, I thought it would be a pretty good idea to invest in CD Projekt because GoG seemed to really be taking off, but I didn't have the funds and now they've quadrupled in stock price.

Other than that, I'm just not sure what to invest in. It's hard finding something that seems like a good bet but is also publicly traded.

I can't bring myself to invest in companies like EA, Ubisoft, and Activision because they seem so bloated, moronically run, and anti-consumer that they can't possibly stay on top forever.

I don't really have much of an idea about investing, though.

Sees joined date
Sees post count

Instantly suspicious of clever advertisement

Silentpony:
Sees joined date
Sees post count

Instantly suspicious of clever advertisement

Hmm, does raise an eyebrow I'll admit, but surely if they were an advertisement they'd mention a specific company they wanted us to invest in?

Personally speaking, I prefer the diversification that mutual funds provide, rather than buying stocks in individual companies. Annual charges can be pretty low if you shop around, especially for index-linked funds. That and investing in a single industry like gaming carries a risk of the whole industry tanking.

Just one man's opinion, of course. Speak with a financial adviser if you need actual advice.

Silentpony:
Sees joined date
Sees post count

Instantly suspicious of clever advertisement

It's not that clever unless it's linking to something to invest in.

1) Compared to Kickstarter, investing is a thousand times smarter than Kickstarter. Kickstarter is doing what investing normally does, except the person handing over the money doesn't get a share of the profits.

2) On the other hand, people making games you want not be interested in selling shares (it's their company and they want to keep it that way), particularly unless you've got A LOT of money to invest - probably thousands, more likely tens to hundreds.

3) As a shareholder, you've no real power. Basically, you're handing them your money, hoping to get a return, but they're not remotely interested in your input into game-making beyond your money.

4) Investing, as a small investor, is usually the dumbest game in town.

You know all those big funds and investors who keep "beating the market"? Well, if they're doing better than average, someone's doing worse than average: and that's nearly always small, individual investors. Sure, you might be one of the lucky ones who does well, but odds are you won't. You want to invest, hand your money to a large and reputable professional outfit.

Oridaellin:
So it recently dawned on me that I, as well as a massive number of other video game nerds pay way too much attention to the actual industry. Generally speaking, we know whether a game (or sometimes a company) will crash and burn or be a hit long before the actual investors do.

Doesn't that give us a big leg up on the investors? Doesn't that mean that geeks who spend all day reading game news have a pretty solid chance at coming out ahead when investing in games?

Combine that with the fact that game stock prices are currently crashing, doesn't that make it a very good time to try to buy stocks while they are cheap?

I haven't really invested before, but this makes me want to try.
Does anyone with any knowledge on investment have opinions or advice on this?

We can't do that cuz most of us are low income.

Marik2:

Oridaellin:
So it recently dawned on me that I, as well as a massive number of other video game nerds pay way too much attention to the actual industry. Generally speaking, we know whether a game (or sometimes a company) will crash and burn or be a hit long before the actual investors do.

Doesn't that give us a big leg up on the investors? Doesn't that mean that geeks who spend all day reading game news have a pretty solid chance at coming out ahead when investing in games?

Combine that with the fact that game stock prices are currently crashing, doesn't that make it a very good time to try to buy stocks while they are cheap?

I haven't really invested before, but this makes me want to try.
Does anyone with any knowledge on investment have opinions or advice on this?

We can't do that cuz most of us are low income.

I think Addendum said she was a rich investor at some point. Kind of wondering what she'll say here.

In most basic terms, what I would say is that its only a good idea to invest in a company if you're reasonably certain that things are going to go well for them long term. See: cannabis in Canada. Lotta people made a lot of money by taking the governing group in Canada at their word and investing in weed a year or two ago when it was getting cooking. That easily could have blown up in their faces if the liberals had lost majority, favour or just said fuck it - the money would just be gone with no recourse. The other example would be tesla, where shit got super real for a while, and if you believe the interviews with Musk it easily could have all exploded just a little while ago. Nobody wants their livelihood riding on crazyness like that - particularly when you have shortsellers actively working to increase the odds of a failure so they make some money. Seriously, look up "prominent shortseller says..." and then line it up with the companies stock value. They say shit specifically to spook people so they can make a buck.

The actually publicly traded game companies generally also have gads of subsidiaries that you need to know about before you can make a call on their future prospects - sony has like a dozen subs ranging from tech to insurance, as opposed to activision which has maybe ten difference game studios. Its one thing to say "I know when COD comes out activision will see a little boost" but first, that isn't impressive knowledge because everyone knows it, and second, what the other subs are doing will still have an effect on the overall stock value, so if they're sucking shit then your COD bump will be mitigated. Add on to that the fact that "a little bump" from a game being released is day-trading AKA idiot gambling (it has worse odds than just going to a casino) and you can't depend on it long term. I work with day traders - those guys are nuts, and they spend most of their time frantically tracking and working their stocks to make money. Some of them do well for themselves, but considering I work 40 salaried hours per week and get paid even if things get rough for a month or two, while they work 80 and get fucked if things dry up, I feel I have the better deal.

Overall, I don't know if I would suggest investing in an entertainment company long term. Getting in on the ground floor of a company that ends up becoming a stand by (you may not love activision today, but if you started investing the moment they went public you would have made a tidy sum) is awesome, but it requires you to basically predict what is going to be popular and whole companies dedicate their every moment to doing that and still can't get it down. If you new that fortnight was going to rule the world of a bunch of 8 to 16 year olds you could have made some bank on that, and if you feel that the epic games store will be successful now might be a good time to look at tencent, but personally I prefer to put my money in long term funds. I'll never get rich that way, but that's why I have day job - all this shit is extra cash for traveling for me.

If you want a hawt teep, CN may be worth investing in - they're developing technology (its in the news, this isn't insider) to ship crude oil more effectively and safely to the coast, so we can cut the influence of the volatile US market. Of course, this is going to take a year or two, and in the meantime if a certain pipeline comes through this whole scheme will get shittered. Feel like gambling?

Let me know when Nintendo allows non-Japanese to buy stocks.

A lot of games companies are publicly traded. Nothing's stopping you from buying stock in them.

...Though personally, I'd avoid it.

...Even though I probably could have made a boatload by shorting Nvidia stock towards the end of the cryptobubble.

Saelune:
Let me know when Nintendo allows non-Japanese to buy stocks.

Is that so? Shame. They seem like a pretty safe investment, particularly in the long term.

JoJo:
Personally speaking, I prefer the diversification that mutual funds provide, rather than buying stocks in individual companies. Annual charges can be pretty low if you shop around, especially for index-linked funds. That and investing in a single industry like gaming carries a risk of the whole industry tanking.

Just one man's opinion, of course. Speak with a financial adviser if you need actual advice.

That is the advice of all the CFPs (Certified Financial Planner) I know, and I actually know 3 CFPs, all fiduciaries as well (if the distinction means anything to you.) The whole idea is to take "emotion" out of investing to keep the investor from making mistakes.

Oridaellin:
Combine that with the fact that game stock prices are currently crashing, doesn't that make it a very good time to try to buy stocks while they are cheap?

Right now prices may be down and it could actually be a good time to get in, or they could go even lower and an investor will lose. A good investor or CFP doesn't try to "guess the market" they use long term investing strategies to make smaller gains over longer amounts of time. In the end you wind up making more than going for larger gains in the short term.

Emotion or any personal ties to or knowledge of investing in a specific company or industry is actually a bad thing as opposed to a good thing. It may make someone overconfident in trying to "beat the market" and that's where the amateur investor loses big, and the experienced investor reaps the reward of the amateur's money or stocks.

Another tip, never buy a specific commodity or stock someone is advertising. Its simple really, the guy buying advertising time is usually trying to sell a commodity or stock that they own. Meaning they think its a better time to be selling rather than buying. Example: if you are hearing radio or TV ads telling you to "buy gold" or "buy silver" it is most likely the WORST time to buy gold or silver. Otherwise the people buying advertising would be using that money to buy more gold or silver, rather than an attempt to try and sell what they have.

EvilRoy:
In most basic terms, what I would say is that its only a good idea to invest in a company if you're reasonably certain that things are going to go well for them long term. See: cannabis in Canada. Lotta people made a lot of money by taking the governing group in Canada at their word and investing in weed a year or two ago when it was getting cooking.

The smart move is to get into politics, at which point it's surely just incidental you know your party is going to open up some part of the state sector to private competition or legalise something. And if you just happen to invest in this area beforehand, hey, no big problem.

If you are investing in stocks, you want something that is going to last a long time, preferably through several ups and downs.

If you are investing in one of the indies, you are investing in potential that may or may not come, or if it does, will do so in a long time.

Both have have high risk and rewards. Kodak was a household name but digital cameras killed camera film so it went belly up. Clorox not only survived the Great Depression but its still holding strong.

Sega, likewise, was the main competitor with Nintendo, with the Dreamcast being a revolutionary game system. Its now reduced to just selling games, often on the very systems of its once mortal enemy, Nintendo. Also likewise, Nintendo keeps reinventing the gaming console as much as Madonna reinvents herself and that largely seems to work.

MMO's likewise are tricky. World of Warcraft has been around longer than some game enthusiast have been alive, but that doesn't mean they all will. Remember Wild Star? The what if Pixar did a PG-13 space opera comedy? Yeah, they shut down their servers this last November.

Do your research, figure out what ones are going to be around for a while. Chances are there is going to be another Super Mario, Final Fantasy, Mortal Kombat, or Street Fighter so those are probably safe bets. And Hay, not all your eggs in one basket.

Agema:

EvilRoy:
In most basic terms, what I would say is that its only a good idea to invest in a company if you're reasonably certain that things are going to go well for them long term. See: cannabis in Canada. Lotta people made a lot of money by taking the governing group in Canada at their word and investing in weed a year or two ago when it was getting cooking.

The smart move is to get into politics, at which point it's surely just incidental you know your party is going to open up some part of the state sector to private competition or legalise something. And if you just happen to invest in this area beforehand, hey, no big problem.

Eh, I dunno - the whole weed thing was still a risk because there was no guarantee the liberals would go through with their promise whether they unwilling or unable. On top of that, had the sale regulation been harsh or difficult to work with (ontario...) then the stocks could have tanked before anyone had a chance to jump ship. Honestly I wonder if the sudden burst of money that flowed into cannabis stock was a major player in the success of passing legislation - can't go back on a promise with that much money riding on it, you would be crucified by every investor big and small that you screwed. Plus this hardly ever happens. Like, a new thing being legalized or a slam dunk new industry or win is pretty rare. Maybe coke gets legalized eventually or some shit, but not for the next 20 years so there's no point getting excited now.

We had a funny one the other day. Great big contract for new train cars in vancouver that Bombardier(canadian) was so certain it would win, got outbid by the Siemens (germans), went crying to the government and got slapped down because we have strict free trade competition rules, Germans get a billion dollars and they're gonna use their US plant instead of the one in canada. It should have been a sure thing for Bombardier based on shipping overhead and border issues alone, but no, they fucked it. And their stock took a shit. Again. Luckily nobody was surprised because they suck, but still. Some new investor lost his shoes on that one.

saint of m:
If you are investing in stocks, you want something that is going to last a long time, preferably through several ups and downs.

Not really so. If your day trading then you likely going to be trading stocks within a few days or a few weeks although there's nothing really wrong holding something long-term especially if you made a large investment (a few thousand easy) and get some money off the dividends while you're at it.

If you're trading via fund manager then it would be best to hold on for at least 5 years but by which case you're far better off investing mainly into monthly funds.

The problem with investing with large companies is that the share prices are extremely high therefore you need to invest very high as of a result to make a worthwhile profit. The price of the shares at first may not look expensive but quickly adds up when your looking into buying thousands of shares at a time.

Buying low and selling high would be the only strategy if you want to limit the amount of investment you make. Making money off the dividends will take time and if the company sinks during that time so does your money.

If you don't have much and but willing to risk all of the money you stake, looking at small indie gaming companies would be a sure risky bet but the rewards will be great if the company far succeeds in the industry.

Oridaellin:
we know whether a game (or sometimes a company) will crash and burn or be a hit long before the actual investors do.

Uh-huh. I'm waiting for the inevitable collapse of Nintendo for 10 years, but sure.

Doesn't that give us a big leg up on the investors? Doesn't that mean that geeks who spend all day reading game news have a pretty solid chance at coming out ahead when investing in games?

Nope. Geeks are pretty self-centered in their game analysis, while lots of game companies bank on a much wider audience than just geeks.

Combine that with the fact that game stock prices are currently crashing, doesn't that make it a very good time to try to buy stocks while they are cheap?

Are they? Can you provide the charts?

I haven't really invested before, but this makes me want to try.
Does anyone with any knowledge on investment have opinions or advice on this?

My main advice: don't invest money that you don't want to lose. The stock market is finicky and can switch directions just because a butterfly in China flapped its wings the wrong way, so be sure to plan at what point you'll sell before buying anything.

Oridaellin:
Does anyone with any knowledge on investment have opinions or advice on this?

I'm not offering financial advice here, but for the most part, the AAA corps are profitable. They turn over billions a year. The main issue is that there's very little "growth" and that's the thing shareholders really want.

If you have money and invest it into ActiBlizz or Ubisoft, (not EA, they lost $3b after BFII and $350mill after the disaster of BF5), you'll make "something". The something you'll get is dividends paid out based on profit. But if there's no growth, your shares don't go up in value and thus neither does your investment. The best thing you want as a shareholder is to buy when shares are low, then as a company grows and the share price goes up, sell high for profit. ActiBlizz will net you dividend cheques, but very little growth.

Note a quote from this article:

Activision released "Call of Duty: Black Ops 4", the latest version of its blockbuster franchise on Oct. 12 and earned more than $500 million in the first three days of release.

However, these initial sales figures disappointed investors who had higher expectations.

The company made $500mill in sales, but investors were "disappointed". They don't want dividend cheques, they want growth, and that's what you won't get with AAA games publishers. The only way they can really go is down, as EA is doing its best to demonstrate. ...SWBFII cost them $3bill market value, another "10% loss after BF5 delay, and some hundreds millions more since its release.

KingsGambit:
]The company made $500mill in sales, but investors were "disappointed". They don't want dividend cheques, they want growth, and that's what you won't get with AAA games publishers.

Well, the whole point of investing is to get dividends. What likely happened was that Activision gave this huge impressive power point presentation how they will be able to stuff their turkeys with $100 bills at the end of the year and instead the investors got a goose...Stuffed with $100 bills. One thing that companies don't want are investors placing their money somewhere else so they often get creative with figures. Some dodgy companies *cough*cough*TellTale*cough*cough would even resort to ponzi schemes to make their figures look good.

mad825:

KingsGambit:
]The company made $500mill in sales, but investors were "disappointed". They don't want dividend cheques, they want growth, and that's what you won't get with AAA games publishers.

Well, the whole point of investing is to get dividends. What likely happened was that Activision gave this huge impressive power point presentation how they will be able to stuff their turkeys with $100 bills at the end of the year and instead the investors got a goose...Stuffed with $100 bills. One thing that companies don't want are investors placing their money somewhere else so they often get creative with figures. Some dodgy companies *cough*cough*TellTale*cough*cough would even resort to ponzi schemes to make their figures look good.

Dividends are absolutely a legit reason, but it's not what most investors want. They won't want a few % ROI (return on investment), getting a cheque twice yearly paying out 0.3c a share or whatever.

Some people absolutely want to invest their money into "safe" companies. Companies that are proven to generate profits and thus dividends. But most investors want serious growth so that share prices increase. Someone who invested a couple of $1,000s in Apple in 1997 would be a millionaire today because of the crazy growth they experienced in the Naughties. If share prices double, your $1,000 becomes $2,000 and that's what these guys want, only not double, they want more!

It's why these guys are so shortsighted, they'll undermine gameplay and ruin the reputation of their games to make as much as they can in the shortest space of time. Nothing else matters. Not long term, not reputation, not quality, not loyalty, just short term profit. Buy low, sell high, move on.

I don't know about TellTale TBH....to my knowledge, I didn't think they were publicly traded before they went bankrupt?

KingsGambit:

mad825:

KingsGambit:
]The company made $500mill in sales, but investors were "disappointed". They don't want dividend cheques, they want growth, and that's what you won't get with AAA games publishers.

Well, the whole point of investing is to get dividends. What likely happened was that Activision gave this huge impressive power point presentation how they will be able to stuff their turkeys with $100 bills at the end of the year and instead the investors got a goose...Stuffed with $100 bills. One thing that companies don't want are investors placing their money somewhere else so they often get creative with figures. Some dodgy companies *cough*cough*TellTale*cough*cough would even resort to ponzi schemes to make their figures look good.

Dividends are absolutely a legit reason, but it's not what most investors want. They won't want a few % ROI (return on investment), getting a cheque twice yearly paying out 0.3c a share or whatever.

Some people absolutely want to invest their money into "safe" companies. Companies that are proven to generate profits and thus dividends. But most investors want serious growth so that share prices increase. Someone who invested a couple of $1,000s in Apple in 1997 would be a millionaire today because of the crazy growth they experienced in the Naughties. If share prices double, your $1,000 becomes $2,000 and that's what these guys want, only not double, they want more!

It's why these guys are so shortsighted, they'll undermine gameplay and ruin the reputation of their games to make as much as they can in the shortest space of time. Nothing else matters. Not long term, not reputation, not quality, not loyalty, just short term profit. Buy low, sell high, move on.

I don't know about TellTale TBH....to my knowledge, I didn't think they were publicly traded before they went bankrupt?

They weren't, they were an LLC, but that doesn't mean they don't have investors. It just means they just don't have investors in publicly traded stocks. A company like Telltale usually has investors in the corporate partnership sense. They get a license to make a game out of some other company's IP, they get an investment (some cash) and the IP, they do the work, and they and the investor split profits in some pre arranged way. Lionsgate had given them 40 million at some point. They were in talks with Netflix for some kind of similar deal. But they were advertising ridiculous levels of ROI that nobody could reliably deliver on.

Kyrian007:
They weren't, they were an LLC, but that doesn't mean they don't have investors. It just means they just don't have investors in publicly traded stocks. A company like Telltale usually has investors in the corporate partnership sense. They get a license to make a game out of some other company's IP, they get an investment (some cash) and the IP, they do the work, and they and the investor split profits in some pre arranged way. Lionsgate had given them 40 million at some point. They were in talks with Netflix for some kind of similar deal. But they were advertising ridiculous levels of ROI that nobody could reliably deliver on.

Sure, you are right there. But if they are an LLC then there's no share trading so it's not the same thing in terms of investors and growth. They sold projects to investors and IP holders, profit or otherwise. But Joe Bloggs couldn't buy shares in the company and even investors weren't buying a stake in TellTale, just a stake in a project, the same as traditional games publishing.

In the case of an LLC experiencing growth, the private shareholders are the beneficiaries. That generally comprises the companies owners/founders and is the reason most (good) studios get bought up at some point. BioWare was owned and founded by the good Doctors, but it was eventually bought up by a holding company that EA later went on to acquire. The private owners sold their "shares" in the company to another company. Notch got $2bill in his pocket for selling Mojang to Microsoft since he was the sole owner.

 

Reply to Thread

Log in or Register to Comment
Have an account? Login below:
With Facebook:Login With Facebook
or
Username:  
Password:  
  
Not registered? To sign up for an account with The Escapist:
Register With Facebook
Register With Facebook
or
Register for a free account here