Many people think that anything having to do with technology is a safe bet with a bright future. And that might be true generally speaking, particularly when referring to digital entertainment, one of the major phenomena in the last few decades because of the central role it’s had in society. After years of steep growth, especially in 2020 because of global circumstances that made digital entertainment practically the only possible entertainment option in many countries, 2022 hasbrought with it adjustments, in some cases severe ones, in terms of the value of the companies in this sector.
These adjustments have affected tech companies in general, but some of them related to this type of entertainment have felt them in a different way. The question many are asking is, “Is it possible for them to completely recover the value they had last year?” What’s certain is that in some cases, the recovery began some time ago, at the beginning of this summer. However, it’s been something of a slow recovery and their stocks are a long way from where they were last year.
Video games and mergers
Video games are part of the core of digital entertainment. Obviously, each of these stocks has been affected differently by different factors. Take, for example, acquisitions. The company Activision Blizzard, creator of titles such as Call of Duty and World of Warcraft, saw an enormous rise in its value last January thanks to its acquisition by Microsoft, and it remained stable in the following months. On the other hand, Amazon’s interest in Electronic Arts, another industry giant with a large presence in eSports because of its game FIFA, took its toll on EA’s stock value in the last few months when it turned out that nothing materialized. But outside of these specific examples, digital gaming companies have generally followed the tech trend with a steep fall at the beginning of the year and a slight recovery midway through, despite a “zigzagging” tendency. For example, in the gme realtime graph of GameStop, one of the main video game distributors, you can see that September hasn’t been particularly strong for them as they’ve lost part of what they had recovered.
Streaming and social media show different trends
The audiovisual streaming sector deserves a paragraph to itself, especially when talking about Netflix, which until now, hasbeen the industry leader. This year has been especially hard for the California company because of its staggering loss of subscribers due to market saturation and the global effects of the conflict in Europe. As we can see in the FinTech company NAGA’s graphs for this asset, all of this has greatly undermined its recovery, which means it’s going to have to take major steps to stop the outflow of users and find ways to get new ones. On the other hand, HBO has demonstrated an upward trend since the end of June, which is more in line with other tech companies.
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Social media trends are also noteworthy because like video games, they depend on particularly diverse variables. Facebook practically hasn’t stopped slowing since March. And Twitter has found itself caught in a hurricane because of the situation with Elon Musk and his interest (and lack of interest) in buying the company. It has resulted in sharp ups and downs according to how the situation has evolved. Twitch, on the other hand, now that it’s become part of Amazon, has seen how the general trend in technology that we’ve talked about has set the standard.
There’s a future, but with different solutions
Will digital entertainment completely recover its stock value? There’s no easy answer, and each case could be different. On the one hand, tech companies in general are recovering their value little by little. Millionaire philanthropist George Soros has even bet on these assets with a large number of stocks this summer when they were at their lowest point. On the other hand, the future logically lies with this type of entertainment, but there will be adjustments to its value and of course, big opportunities as a result.