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Power up: Carmignac’s equities chief goes big on gaming

Power up: Carmignac’s equities chief goes big on gaming

Video gaming has become a cinematic experience with huge levels of investment and will be a main growth area for the next decade, according to Carmignac’s David Older.

Speaking to Citywire Selector, the tech specialist said video gaming has started to create an emotional cinematic experience that investors cannot ignore.

‘Some video gaming companies have had major launches in the past few years, obviously, it’s something that has been around for a long time and there are a number of things going on in the space, but the quality has gotten much better,’ he said.

Older, whose ideas mainly go into the firm’s €24 billion Patrimoine fund, managed by Edouard Carmignac and Rose Ouahba, as well as the Investissement fund, said it’s easy to get excited about the growing industry.

‘I would say we have more plays in the desktop games space, such as Activision, other players include Tencent in China, which is really a play on mobile gaming.

‘Activision is basically our global publisher and we like to think that it has some of the best game franchises. We are very excited by some of its initiatives around esports.’

Back in August, Activision announced it would be building a professional eSports league around its popular first-person shooter video game Overwatch, a move Older said should be a big profit maker.

‘It will have teams across the US, Europe, and Asia and it’s set to be formally launched at the end of this year. What is interesting about this is that these teams have been selling for $20 million a team. A lot of the buyers of the teams are sports team owners like Robert Kraft, who owns the New England Patriots.

‘The sports team owners are realising that they have a threat to their business, they need to find a way of connecting to this new younger demographic and they are really focused on finding a way to do it.’

Attention please

Older said video gaming is a sustainable theme which will be even more prominent in the next 10 years. He also highlighted the continuing demise of attention spans as another reason why the sector is continuing to grow.

‘People aren’t willing to watch three-hour American Football games in the same way they used to. Thinking about it right now, my children, they like Real Madrid – but they don’t watch the games. They get up in the morning and they go on YouTube and they watch highlights for three minutes, which is a big problem for the sports owners.

‘If you go back to when Netflix started, it was all about movies and now it’s all about series. The fact is you now have a plethora of devices, so you can be watching something at night in your bed and then be watching the same thing on the train in the morning on your phone.’

Older said it’s this ‘snippet’ culture, with start and stop action, which has helped to lower attention spans.

‘People are looking for an intense experience in a short amount of time and I don’t think that’s going to change anytime soon.’

Digitalisation drive

With more and more people gaming every day, Older said the phenomenon is also an opportunity for investors to tap into the digital economy.

‘There is actually a social component of gaming, as the higher-end games use specialised PCs, while the vast majority of traditional consoles are now connected to the internet. So it’s a robust broadband experience allowing people to play against each other simultaneously.

‘People think about gamers and they think about kids, but in reality, the average age of a gamer in the US is 35. In our view it has become the most important entertainment for a big segment of the population, it’s what they like to do over watching the TV, reading or watching sports.’

With many games now being connected to the internet, Older said the digitalisation theme is helping to bring companies closer to their audiences.

‘Three or four years ago you would have had to go to a retailer and buy the game. By being connected by broadband it is allowing companies like Activision to interact with their users. Now they have their users’ details and know their demographics.

‘This is a huge theme in the media right now, this necessity of having a relationship with the end user,’ he added.

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