I grew up on television. I watched so much television that I’m embarrassed to even estimate how many hours I spent dully staring at the screen each day – M*A*S*H* and WKRP in Cincinnati reruns, The Flintstones, Cheers, live sports and absolute garbage just to pass the time.
It was ridiculous, and I don’t watch near that much programming – cable or streamed – anymore but that’s still my frame of reference when talking about mass entertainment. So when I read “7 Reasons Why Video Gaming Will Take Over”, written by the former global Head of Strategy for Amazon Studios Matthew Ball, I have trouble wrapping my head around it.
Can gaming be that pervasive? That big a deal? Will Activision Blizzard Inc., Take Two Interactive Software Inc. or Ubisoft Entertainment SA be the next Disney, with live eSports instead of theme parks?
Mr. Ball started his essay by noting that the value of video programming is declining while gaming-related revenue is increasing by 15 to 25 per cent per year. He presents a long and detailed argument that gaming is replacing television by providing the same benefits, only in a more engaging format. He writes, “When atomized, it’s clear that essentially every single element of [the] TV experience is now being replicated by the gaming ecosystem.”
In 2018, the gaming industry brought in an estimated US$131-billion and the high rate of growth is expected to push revenues to $300-billion by 2025.
Images of stadiums packed with spectators watching eSports still surprise me but that, again, is likely the function of an outdated perspective. Quoted in a December 2019 Business Insider report, venture capitalist Rick Yang highlighted eSports as indicative of a sea change in mass media: “I actually think of esports as the mainstreaming of gaming, or the pop culture instantiation of gaming versus the pure idea of these players becoming professionals to compete at the highest levels."
The vast majority of investment assets are held by people over 50 for the simple reason they’ve had longer to save and ride equity and bond markets higher. The average age of a gamer has been rising but it’s still more prevalent among younger generations, so most investors are unfamiliar with the industry. They might be missing a massive investable trend that’s happening in plain sight, right beneath their noses.
I don’t own any gaming stocks either but it’s time to overcome a reluctance based on media consumption habits from the 1980s and 1990s. The easiest way for investors to participate in the trend is through the ETFMG Video Game Tech ETF.
-- Scott Barlow, Globe and Mail market strategist
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Stocks to ponder
TMX Group Ltd. Lou Eccleston is retiring early as chief executive of TMX Group Ltd., adding one more concern to a stock that has a high valuation and a company that reported weak trading volumes and financial activity last year. Are the risks outweighing the potential gains here? David Berman has this analysis.
Enbridge Inc. As recently as last August, you could have picked up shares in the pipeline company for about $43. Since then, they have gained more than 21 per cent. With a yield of 6.2 per cent, Enbridge is suddenly attracting investor interest again. What happened? Gordon Pape explains.
The Rundown
BlackRock’s green investing strategy is not a moral awakening
Larry Fink, arguably the world’s most powerful investor, has just delivered his annual letter to chief executives. This year, the chairman of giant money manager BlackRock Inc. used his institutional pulpit to thunder about the mounting dangers of climate change and preach the virtues of sustainable investing. It is all good, praiseworthy stuff from a company with nearly US$7-trillion in assets under management. Just don’t assume it means a major shift in policy. Ian McGugan explains.
Here’s what you’re giving up if you choose a government bond over a GIC
Is the safety of government bonds worth it if you’re a safety-first investor? The short answer to this question is no, Rob Carrick explains. Not with yields on both federal and provincial government bonds as low as they are today. You’re better off with guaranteed investment certificates from alternative banks and trust companies that are part of a deposit-insurance plan.
Others (for subscribers)
The 5 top-performing Canadian equity analysts – and their stock picks for 2020
Contra Guys: Investors shouldn’t be afraid to swing for the fences once and awhile
Wednesday’s analyst upgrades and downgrades
Wednesday’s Insider Report: These two REITs are being purchased
Number Cruncher: Four timber companies that could shore up a green economy
Number Cruncher: A closer look at 11 dividend stocks in volatile gold sector
Survey: Oil prices expected to stay around $65 to $70 through 2024
Others (for everyone)
BlackRock CEO: Investors not ‘overzealous’ on equities despite rally
Globe Advisor
RRSPs are a great way to hold these six U.S. dividend stocks
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Ask Globe Investor
Question: I have invested a total of $270,000 in my name, wife’s name, and daughter’s name in Mawer Balanced Fund. I would like to invest another $100,000 in the same fund. Is this too much to invest in the same fund or should we split it? I like the fund because it is balanced and carefully managed. Your comments would be highly appreciated. I am 80, wife 72, and daughter 42.
Answer: First, let me say that this is an excellent fund, with a great track record. According Morningstar, the average annual return over the decade to Dec. 20 is 9.49 per cent. Equally important for conservative investors is the fact the fund had only one losing year during that time, a fractional drop of 0.3 per cent in 2018. The MER is a reasonable 0.91 per cent.
That said, I would never advise investing more than 25 per cent of your assets in a single fund. Things can go wrong, even with the best-managed portfolios. If the new investment would exceed that target, you may want to look at other options. – G.P.
If you have a money question you’d like me to answer, please send it to gpape@rogers.com and write “Globe Question” in the subject line. I can’t guarantee a personal response, but I’ll answer as many as possible in this space.
With that, Happy New Year to all. I’ll be back in 2020.
--Gordon Pape
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What’s up in the days ahead
Tim Shufelt looks at what’s fuelling a mega rally in shares of Ballard Power, the fuel cell company that burned investors years ago but is now one of the top performers on the TSX over the last few months.
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Compiled by Globe Investor Staff