16 November 2023
The 2023 Global Gamer Study from Newzoo, released in October, reveals a generational shift in entertainment preferences, with video games taking the lead among younger generations. Gen Alpha and Gen Z rank gaming as their top source of leisure, while only 10% of Baby Boomers engage in gaming during their leisure time. Gaming is also becoming an integral part of younger generations’ identities, with Gen Alpha players most likely to identify themselves as gamers.
Gaming has evolved into a social activity, connecting players of different ages and fostering shared excitement, particularly among newer generations. This trend is reflected in the rising importance of social features within games.
Mobile remains the most accessible platform for gaming across all generations, while console and PC gaming see greater popularity among younger players. Gen Alpha emerges as the most prominent group of multi-platform players, embracing cross-platform play options and PC and console games that move to mobile.
Younger gamers exhibit greater willingness to spend on gaming experiences, with 58% of Gen Alpha players converting to payers. In-game spending habits differ among generations, with younger players favouring playable characters, while Gen X and Baby Boomers allocate their spending toward in-game currencies and gear.
Brands are increasingly integrating into gaming, with younger generations positively reacting to branded content within games. Over 50% of Gen Alpha players discover and purchase from brands featured in games.¹
Meanwhile, Netflix announced in October that it is extending its game streaming beta to the U.S., enabling users to play cloud-streamed games on their TVs or computers. This expansion reflects Netflix’s ambition to compete with established gaming platforms like PlayStation and Xbox and follows the initial launch in Canada and the U.K. in August. The current beta offers a limited selection of games, including “Oxenfree” from Netflix’s Night School Studio and “Molehew’s Mining Adventure.” To play these games on TV, users must download Netflix’s controller app on an iPhone or Android device.
Netflix has been steadily building its games library to provide added value to its subscribers. While most games are available on mobile devices, the company is eager to expand beyond iOS and Android. These new games are compatible with select devices like Amazon Fire TV, Chromecast with Google TV, and Roku, amongst others. On the web, games are playable using a mouse and keyboard.
Netflix also has plans to release games based on its popular franchises, such as Squid Game, Wednesday, Extraction, and Black Mirror. Additionally, they have had discussions with Take-Two (held by the Fund) regarding the possibility of licensing a game from the “Grand Theft Auto” series.²
Company Specific Updates
Microsoft’s $69 billion megadeal to purchase video game powerhouse Activision Blizzard won final approval in October, ending a journey that began in January 2022.
Although the merger had secured regulatory nods in the European Union, China, Japan, and 37 other nations (encompassing a vast market of two billion people),³ its main opposition came from the United Kingdom’s Competition and Markets Authority (CMA). In April of this year, the CMA froze the proposed merger, citing antitrust concerns.⁴ In September, however, the CMA suspended its own litigation to evaluate Microsoft’s new proposal to address the regulator’s concerns about access to games across various platforms.⁵ These proposals from Microsoft restructured the agreement, transferring cloud gaming rights for both current and future Activision Blizzard games to competitor Ubisoft for the next 15 years.⁶ The CMA deemed that this revised deal addressed their earlier concerns and, in October, gave the deal final approval, with Microsoft and Activision formally closing the deal on October 13, 2023.⁷
Activision Blizzard has already announced that it will start adding highly anticipated titles like “Modern Warfare III” and “Diablo IV” to Xbox Game Pass early in 2024.⁸
Mattel, Inc. and Gamefam have announced the launch of “Barbie DreamHouse Tycoon” on Roblox. This marks the first official Barbie Roblox game and is a strategic move following a successful beta period that garnered three million unique visits coinciding with the summer release of a Barbie movie.
“Barbie DreamHouse Tycoon” allows players to create their DreamHouse, explore various careers, and express their fashion creativity. Embracing the popular “tycoon” genre on Roblox, players can construct a luxurious multi-level DreamHouse, including unique spaces like yoga studios, recording studios, and walk-in closets. The game offers amenities such as movie theatres, game rooms, and even a helipad. Players can interact by visiting each other’s DreamHouses and socialize in the virtual Malibu Town Square.
To keep the experience fresh and engaging, the creators plan to introduce new features and updates, aligning with significant Barbie brand events and other important occasions. This collaboration aims to provide endless entertainment and creativity for Roblox’s vast daily user base of 66 million people.⁹
Investing in Video Games with HERO ETF
Looking to invest in video games? Consider Canada’s first esports and gaming ETF, the Evolve E-Gaming Index ETF (HERO ETF). HERO ETF is an index-based exchange-traded fund that invests in the leading video game companies across the globe. To learn more about HERO ETF, please click here: https://evolveetfs.com/hero/.
Portfolio Strategy and Activity
For the month, Roblox Corporation made the largest contribution to the Fund, followed by NetEase Inc and Electronic Arts Inc. The largest detractors to performance for the month were Take-Two Interactive Software Inc, followed by AppLovin Corp and Capcom Co Ltd.
- Meehan, O., “New free report: How and why different generations engage with video games in 2023,” Newzoo, October 19, 2023; https://newzoo.com/resources/blog/how-and-why-different-generations-engage-with-video-games-in-2023
- Peters, J., “Netflix tests streaming games to US TVs to take on PlayStation and Xbox,” The Verge, October 16, 2023; https://www.theverge.com/2023/10/16/23919517/netflix-game-streaming-beta-tvs-us
- Fineman, J., “Microsoft’s planned $69B Activision purchase gets China antitrust approval – report,” Seeking Alpha, May 19, 2023; https://seekingalpha.com/news/3973465-microsofts-planned-69b-activision-purchase-gets-china-antitrust-approval-report
- Ziady, H., “UK blocks Microsoft takeover of Activision Blizzard,” CNN Business, April 26, 2023; https://www.cnn.com/2023/04/26/tech/microsoft-activision-blizzard/index.html
- Nylen, L., Ludlow, E. & Bass, D., “Microsoft, Activision Eye UK Rights Sale to Get Merger Done,” Bloomberg, July 13, 2023; https://www.bloomberg.com/news/articles/2023-07-13/microsoft-activision-weigh-sale-of-some-uk-cloud-gaming-rights
- Ricker, T., “Microsoft’s Activision Blizzard deal gets preliminary approval from UK regulator,” The Verge, September 22, 2023; https://www.theverge.com/2023/9/22/23885176/microsofts-activision-blizzard-uk-cma-preliminary-approval
- Browning, K. & McCabe, D., “Microsoft Closes $69 Billion Activision Deal, Overcoming Regulators’ Objections,” The New York Times, October 13, 2023; https://www.nytimes.com/2023/10/13/technology/microsoft-activision-blizzard-deal-closes.html
- Warren, T., “Activision Blizzard’s latest games will start arriving on Xbox Game Pass in 2024 if Microsoft deal closes,” The Verge, October 10, 2023; https://www.theverge.com/2023/10/10/23910961/microsoft-activision-blizzard-xbox-game-pass-2024-titles
- “Mattel and Gamefam Unveil Barbie DreamHouse Tycoon on Roblox,” BusinessWire, October 3, 2023; https://www.businesswire.com/news/home/20231003311480/en/Mattel-and-Gamefam-Unveil-Barbie-DreamHouse-Tycoon-on-Roblox