Adtech
Advertising in 2020 is way more than a billboard on the side of a highway these days. When it comes to catching consumer eyeballs, it’s personal.
As consumers, we know it well. We can’t scroll to a news site, or any site for that matter, without a barrage of ads that may or may not be tailored to our interests. And it’s true— thanks to advertising technology, advertisements are more targeted than ever.
Adtech is a relatively new industry that has become part of the fabric of the modern world, and it’s only just begun.
For consumers these days, the constant ads are the price of free, and so mostly, we accept it. After all, we aren’t paying for Google search, for Facebook, or to watch our favorite show on YouTube.
The internet-based services that have become so ingrained in our daily lives learn about us so that they can most successfully serve us ads and use those dollars to provide their services. This is especially true since the coronavirus pandemic shifted so many “in-person” norms to virtual experiences.
It’s a crazy world we live in, and for all of the unknowns, we can rest assured that advertising isn’t going away anytime soon.
What Is Adtech?
Advertising technology (or adtech) is driven by what’s called programmatic advertising. If that sounds more like an AI algorithm than a sales team, that’s because it is.
Programmatic advertising is “the real-time buying and selling of ad inventory through an automated bidding system. Programmatic advertising enables brands or agencies to purchase ad impressions on publisher sites or apps through a sophisticated ecosystem.”
And while we all gasp at how expensive Super Bowl commercials are every year, we don’t always consider how companies try to get in front of their target audience 365 days per year while consumers watch, click, and scroll throughout the day.
Programmatic advertising includes display ads, video ads, social ads, audio ads, native ads, and digital out-of-home ads. It’s at play whether we Google something random or tune into the season finale of our favorite show.
Consumer ad fatigue has simply led to more creative ways to grab interest. For example, native ads appear to be part of the media they appear on, rather than stand out like a pop-up or a banner ad.
The Economist famously used programmatic advertising to tap into an entirely new audience. In one campaign, it generated 650,000 new prospects with a return on investment (ROI) of 10:1 and increased awareness by almost 65%.
How did it achieve such success? It referenced subscriber, cookie, and content data to identify audience segments (finance, politics, economics, good deeds, careers, technology, and social justice), creating more than 60 ad versions to target potential customers effectively.
No longer was The Economist considered a dry, intellectual journal by most. Instead, it had new relevance. What’s more, it had new readers.
Adtech isn’t limited to the internet. For example, how many people have you heard at least consider ditching cable and just using streaming services? Meet connected TV, which is anticipated to grow to reach 204.1 million users by 2022 according to eMarketer.
As subscribers to services including Netflix, Hulu, Amazon Prime, and Disney Plus have increased, so have over-the-top (OTT) advertising dollars to the tune of $5 billion in 2020. These ads are typically highly personalized according to a viewer’s interest and cannot be skipped, but rather must be viewed to continue consuming content.
Ads on our computers aren’t the only adtech at play. Digital out-of-home advertising includes the high-tech billboards, on-vehicle ads, etc. Where online advertising can feel nagging, outdoor advertising is innovating in a way that appears interesting and grabs attention. According to IBIS World, in 2019 billboard advertising revenue grew by more than $8.6 billion in advertising revenue.
Why Invest in Advertising Technology?
Lots of companies these days don’t necessarily run on our dollars, they run on our eyeballs, and our clicks. According to VentureBeat.com, “all major ad-supported tech companies are ad tech companies. They market advertising technology and use technology to support their advertising businesses.” This includes Facebook, Google, Pinterest, and Reddit.
Adtech is the way of the future, especially as technology evolves and consumers become increasingly glued to screens. In addition to enhanced targeting capabilities, programmatic advertising gives companies real-time insights, enhanced targeting capabilities, greater transparency, and better budget utilization.
Advertising is part of the fabric of our modern culture. Because companies can use platforms to serve us advertisements, we have access to tons of information and entertainment for no cost. As a consumer, it’s hard to ignore.
It’s not just Google searches and websites that are ideal for digital ads. “In-game brand advertising is set to see tremendous growth in the coming years,” says Ajitpal Pannu, CEO of Smaato, an adtech platform. “We are building up a strong foundation to support this new media channel.”
COVID, interestingly, has moved more eyeballs on screens than ever before. And while advertising spending is down across the board as companies move to save money, adtech spending is bound to rebound, making now an ideal time to invest.
How to Invest in Adtech?
Advertising is by nature a very broad industry. Just about every company advertises in some way, and the technologies driving those activities are all over the map. Fortunately, a search on Magnifi suggests that there are a number of ETFs and mutual funds to help interested investors access the growing adtech sector without having to invest in many different companies.
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Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the September 14, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Cloud Computing (SaaS)
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Software-as-a-Service is now standard, from mobile phones and laptops to business solutions for the largest of entities. It seems that there’s an app for everything, and it’s all personalized to each user’s credentials.
Is your gym closed during Covid-19? Subscribe to Truecoach to build an online training platform for customers. Need to set up an online store, especially with COVID-19 closures? Build one on Shopify. Too busy to make a baby book? Text Queepsake your baby milestones and they’ll make one for you. (Not kidding.)
The solutions are big, small, and endless.
But, it wasn’t always that way.
Cloud computing has transformed how users interact with software. Before the software-as-a-service model, users had to purchase their software, either on physical media or via direct download, and had to pay for updates or replacements as technology improved. These days, that’s not how it works.
Rather than purchase software annually or biannually, users pay for access to the software that they need on a subscription basis. They have credentials and they pay a small fee to accomplish their needs.
This model has transformed how we operate as a society, and it offers a frontier of investment opportunities as software companies strive to create solutions for the next big thing.
What Is SaaS?
Salesforce, which pioneered the software-as-a-service model in 1998 defines software-as-a-service as “a way of delivering centrally hosted applications over the internet as a service. SaaS applications are sometimes known by other names: Web-based software, On-demand software, and Hosted software”
How is this different from previous models?
Consider that hardware is the physical computer or user device. Now consider that software is the programs and apps that help users do things on the computer.
Before software-as-a-service, customers would buy software housed on a physical source, such as a compact disc. After purchasing, they would take it home, download it to their computer, and then use it. While this utilization of software was helpful, it was also exceptionally hard for companies to update.
It also wasn’t the most user friendly. For example, if someone was using a tax software before SaaS, they would purchase the software, download it, and input their information. However, every year, they would need to repeat the process in full. Knowing the autofills and recalls of today’s applications, starting from scratch seems tedious and time consuming.
Not to mention that because traditional software is so difficult to update with information, such as the annually revised tax code, for example, users would need to repurchase the software every year.
Software-as-a-service is different in that it doesn’t require customers to purchase software. Instead, users purchase access to software that’s available on the cloud.
What exactly is the cloud? It’s a “a vast network of remote servers around the globe which are hooked together and meant to operate as a single ecosystem,” according to Microsoft.
This type of infrastructure has changed the way software companies administer software, users access and use software, and multiplied the uses and ease of use of software products. For one, SaaS companies can focus on improving their product rather than dedicate energy to producing and marketing new versions. It limits distribution costs like packaging. It also does away with the hassle of administering licenses because the software can only be accessed by paying customers.
It has also changed payments from one-time to subscription-based. While subscription fees are much smaller from month-to-month than the one-time purchase fees previously were, the fees often add up to more than the cost of the software over the course of the year.
For companies, pivoting to SaaS has more perks. Because the functions of SaaS have become so familiar and house a user’s data, switching services is often a hassle despite the minimum software cost. This user data can also be leveraged by companies to test new features.
Why Invest in SaaS?
There have been many success stories in SaaS, from Salesforce to Shopify.
In 2015 at its IPO, Shopify was valued at $1.27 billion. As of spring 2020, it’s valued at $127 billion. Founded by Tobias Lütke and Scott Lake, Shopify started as an online store in 2004 to sell snowboards when they couldn’t find a platform that worked well for them. Now, its e-commerce platform is used by individual sellers and big companies like Google.
And, the industry is poised to keep growing, especially in the wake of COVID-19.
Consider the workforce shift to remote and the Zoom solution, connecting coworkers, families, and even loved ones in nursing homes. Another SaaS platform on the rise is Dynatrace, which provides software intelligence that streamlines user experience and improves business outcomes.
SaaS companies are solving problems from providing e-commerce solutions for businesses, business solutions that are making remote work scenarios work, to giving users access to platforms that help them do everything from monitoring their finances to staying fit to doing their taxes.
As the world adopts new post COVID-19 norms, these new solutions are likely to stay in one form or another.
How to Invest in SaaS
Naturally, in an industry as large and diverse as software, picking winners and losers can be challenging. However, for those investors interested in accessing the segment more broadly, there are a number of ETFs and mutual funds available to help streamline the process. A search on Magnifi suggests that there are many SaaS funds available to choose from.
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Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the June 17, 2021 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Sports
While watching your favorite team from your couch or in the stands (probably sporting your favorite team hat or player jersey) you may have let yourself daydream a time or two…what would it be like to own a team?
But, for most sports fans, that’s only a dream. The Los Angeles Clippers in 2014 were sold for $2 billion. Most professional sporting organizations have similar sky-high values.
This huge cost doesn’t mean, however, that less wealthy investors are precluded from investments in the big sports. The elite nature of teams is, in fact, not a barrier to entry at all. Rather, the loyal fan base these teams attract makes for a broad market of investment portfolio possibilities.
[Is streaming the future of sports?]
More than 16.5 million viewers tune into the average NFL game, according to Sports Illustrated. In 2019, 102 million people tuned in to watch the Super Bowl.
And, sports are way more than American football. According to FIFA, 3.572 billion people watched the 2018 FIFA World Cup. That’s more than half of the global population aged four and over.
In other words, there is major opportunity to be had in investing and capitalizing on society’s fascination with sports.
In 2019, the sports industry in the United States topped $73 billion. It is anticipated to reach $83 billion by 2023. In part, this is because of the growing number of industry players.
The sports market has four primary segments: gate receipts (ticket sales for live sporting events), sponsorship, media rights and merchandising. That’s just scratching the surface.
Outside of the stadiums, technology in sports is helping fans to follow their favorite teams more closely than ever before. Technology is also changing the sports ecosystem in both some expected and some unexpected ways.
Can You Invest in Sports?
When it comes to investing in sports, opportunity abounds, especially for those who think beyond the playing field.
Think back to your favorite hat or jersey, and then to the millions of sports lovers wearing something similar that represents the team that they follow.
For investors, that means money can be well served in merchandising via publicly traded sports apparel manufacturers such as Nike, Under Armour, and Lululemon Athletica, top retailers like Dick’s Sporting Goods, or even equipment manufacturers such as Brunswick Corporation. This type of investing is ideal for those with an interest in investing in physical products.
Other less tangible opportunities include investing in the broadcasting of sports. ESPN, the world’s largest sports broadcaster, is owned by Walt Disney (NYSE:DIS). The station is a money-maker for Disney, offering live coverage of some of the most-watched sporting events.
By 1990, The Wall Street Journal ranked ESPN the # 1 channel on cable with 54.8 million subscribers, ahead of CNN & MTV at the time. The channel launched the streaming service ESPN+ in 2018, to provide expanded access to select live MLB, NHL, NBA, and MLS games, in addition to other sports offerings from boxing to cricket.
If ESPN isn’t interesting, there’s also the option of investing in publicly traded companies that own interests in professional sports teams. For example, MSG Networks (NYSE: MSGN), owns the New York Knicks and Madison Square Garden.
Investors can also consider venues. The MGM Grand Casino in Las Vegas, NV (NYSE: MGM) is a tourist hotspot. With its MGM Garden Arena in Las Vegas, it is one of the premier sports venues hosting major events like All Elite Wrestling’s inaugural event, Double or Nothing. According to All Elite Wrestling, the event sold out in four minutes. The Garden Arena also hosts professional boxing matches, UFC mixed martial arts events, amongst many others.
Why Invest in Sports?
The sports industry is growing and changing. According to Deloitte’s 2020 Sports Industry Outlook, the five trends likely to have the greatest impact on the industry are: (1) The rise of women’s sports, (2) The continued evolution of esports, (3) Legalized sports betting, (4) College athletes maximizing their short-term value, and (5) 5G and sports in the cloud.
And, perhaps to everyone’s surprise, sports are no longer strictly physical in nature.
Technology is not only helping fans to connect with their teams, individual athletes, and other forms of sports entertainment more than ever before, it’s allowing sports enthusiasts to attract their own audiences through eSports.
eSports are described as the world of “competitive, organized video gaming.” According to research firm Newzoo, the number of esports viewers worldwide will grow from 380 million to 589 million by 2020. It’s predicted that eSports viewership will eventually surpass even that of mainstream sports.
And, big companies are taking notice.
Amazon acquired Twitch streaming service in 2014. Now valued at $3.79 billion, Twitch has an average of 15 million viewers each day who tune in to watch or host live streams.
Sports technology goes beyond even the rise of esports to training and filming. Consider wearables, virtual reality used by athletes to train, and the advancing drone technology that captures live games like never before. These applications of tech are all opening up the market for more investment than ever before.
An investment in sports, with their eager and loyal fanbases and emerging technology applications, includes a world of opportunity beyond the action on the playing field.
How to Invest in Sports
But sports and its related industries are spread out and difficult for investors to access directly. Investing in the sector via an ETF or mutual fund, however, is a good way to bring these different industries together to gain exposure to this high-potential segment. A search on Magnifi indicates there are a number of ways for investors to access sports this way.
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Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the May 28, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Mobile Technology
Mobile technology is an integral part of our lives. Picture it: you get up, check your messages/emails, check-up people you love and work with, catch up on the news and other developments, and do much more on your mobile phone. And these are just some basic things people do on their phones, laptops, and other mobile devices.
Mobile technology’s key components include general packet radio service (GPRS), short message service (SMS), multimedia messaging service (MMS), global positioning service (GPS), and WAP, among others.
[Invest in 5G: What every investor needs to know.]
But “mobile” is a broad term. It essentially covers all hand-held mobile devices: mobile phones, laptops, tablets, smartwatches, and virtually any mobile device that can communicate with other devices.
Mobile technology, as mentioned, is shaping many aspects of human life: how we communicate, work, and live! The concept was mostly theoretical about three decades ago, but we now live in an age where our lives are heavily dependent on this technology.
Why Invest in Mobile Technology?
According to Morgan Stanley there have been four major computing cycles thus far: mainframe computers in the 60s, minicomputers in the 70s, personal computers (PCs) in the 90s, and desktop internet in the 2000s.
One eye-catching finding of this study is each of the subsequent computing cycles grew by a successive, continuous rate of 10X – the minicomputer cycle grew to ten times the size of the mainframe cycle and so on. The world is past the desktop internet cycle, and all focus now is on mobile technology.
The mobile technology cycle is expected to experience a boom ten times bigger than the desktop boom experienced in the 2000s – this is immeasurable, considering how big the 2000s boom was. The desktop cycle, however, was not as versatile and entrenched as the mobile technology cycle is. As such, we will likely see exponential growth as the world becomes more and more digitized.
Internet & Smartphone Penetration: There are about 14 billion mobile devices in use around the world today, according to Statista. 5.28 billion of these devices are in people’s hands, which accounts for about 68% of the world’s population.
Over half of the world’s population (about 3.5 people) is active online. 80% of internet users (about 2.8 billion people) own at least one smartphone – a sizeable fraction of this population owns more than one smartphone, which is especially well documented across Asia.
Internet penetration by mobile phone was about 48% in 2014. It grew to 61.2% in 2018 and reached 63.4% in 2019. It is estimated that mobile phone user internet penetration will be over 80% by 2022. The average mobile internet user spends about 3 hours online per day.
Smartphones are driving mobile technology. Their small size makes them convenient and hence more preferable to laptops and other larger devices.
Smartphone manufacturers have been recording increases in the number of devices they make, and this trend is expected to continue for the foreseeable future. Apple, which is one of the largest smartphone makers, sold more than 210 million iPhones in 2016 alone. It is now the first trillion-dollar company in the world, and it still plays second to Samsung.
The world aims to achieve close to 100% internet penetration in the coming decades. The internet is also expected to grow larger and more dynamic over the coming decades.
Currently, about 1.56 billion smartphones are sold to end-users annually. This number has been growing steadily over the past two decades, and it is expected to grow exponentially as the smartphone market expands.
Cloud Computing: The cloud has proven invaluable in more ways than one. Most notably, it is one of the few avenues left for businesses and people to use following the outbreak of the COVID-19 pandemic.
The global cloud computing market is currently worth about $236 billion, up from $87 billion five years ago. The market is expected to grow to about $623 by 2023, which would signify a CAGR of 18%. Its uses are also expected to expand over time, and they will overlap with the new opportunities brought about by 5G technology.
5G Networking: The mobile technology revolution is just beginning. It promises great things, such as Artificial Intelligence (AI) and Internet of Things (IoT) – IoT will also contribute to an exponential growth of mobile technology as it will connect virtually everything to the internet. 5G networking has emerged as the answer to bringing these innovative technologies to fruition.
5G technology is expected to be more than 100 times faster than the current 4G technology – to put this into perspective, 5G supports download speeds of up to 1.4GB per second. This will revolutionize technology across industries such as education and healthcare. For instance, hospitals will transmit large MRI files instantly, and surgeons can perform surgeries in virtual presence from anywhere in the world.
Mobile technology will help shape the future of mankind. Billions of people around the world are already dependent on mobile technology for their day-to-day living, and billions more are catching up. Soon, it will become necessary to join the grid just to keep up with the human race.
How to Invest in Mobile Technology
However, like many types of new technology, investing in mobile technology does come with potential risks. mInvesting in the sector via an ETF or mutual fund, however, is a good way to counter these risks while still gaining exposure to this high-potential segment. A search on Magnifi indicates there are a number of ways for investors to access mobile tech this way.
Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.
This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]
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5G
Although 5G appears to be a relatively new trend, it has been in the works for much of the last decade. This new type of internet access, which is anticipated to potentially replace in-home WiFi in the near future, is beginning to emerge among a few select carriers. Verizon, T-Mobile, and other popular carriers are making it easy for their current customers to transition from 4G LTE to 5G mobile internet, which is a stepping stone for applying the technology to other Wi-Fi-enabled devices in the future.
[5G is Just Part of it. Invest in Mobile Technology as a Whole.]
But investing in 5G while the concept is still relatively new, you can gain an edge over the competition by being one of the first to support an up-and-coming service that is likely to have a strong impact on the future of mobile internet.
What Is 5G?
Although some people may simply think of 5G as a replacement for WiFi, the overall potential of the technology is much more complex. First and foremost, 5G is beginning to replace the 4G LTE connection that most cell phone carriers currently use to provide internet access when a reliable WiFi connection is not available. 4G, which came out approximately a decade ago, was a modern replacement for the primitive 3G and 2G mobile internet of early cell phones. Each version made new features possible, increased the speed and capability of cellular data, and boosted the range at which cell phones could get a reliable signal. Like previous upgrades, the widespread release of 5G technology is expected to increase our ability to immediately access the information we need from anywhere in the world.
[What will 5G mean for the future of video streaming?]
5G coverage is divided into three groups: low-band spectrum, mid-band spectrum, and high-band spectrum. High-band spectrum, which is the classification that most major carriers are currently focusing on, generally provides the strongest and fastest signals. However, this type of spectrum has a much more difficult time reaching through buildings than low-band and mid-band spectrum. For this reason, it is important to carefully consider the pros and cons of each type of spectrum to get an idea of which is likely to be the most successful in your area before choosing one to purchase or invest in.
Why Invest in 5G
Although the 2020 5G market is expected to be in the range of $5 billion, 5G technology is anticipated to grow exponentially over the next five years, reaching over $650 billion by 2026.
The reason for this is the fact that widespread 5G coverage has not yet replaced 4G LTE and WiFi, in part because of regulatory hurdles and delays. Once those issues are resolved, it is expected that 5G adoption will take off nationwide, but it’s still not clear what that timeline will look like and how soon all of this will happen. Still, that explosive potential is why this up-and-coming form of mobile internet is an important area for investors that are interested in the latest technology to keep their eyes on.
After all, like many emerging industries, 5G technology is being pioneered by a handful of standout companies, both large incumbents and fast-growing startups. And it’s still early in this cycle. Investors who get in on 5G now will have far more upside to ride up than those that wait until the technology is fully rolled out and in broad use.
How to Invest in 5G
However, like many types of new technology, investing in 5G does come with potential risks. Although 4G, WiFi, Bluetooth, and other older signals have been studied in-depth as far as both immediate and long-term safety, not as much is currently known about the impact of long-term exposure to 5G’s electromagnetic fields. What’s more, it’s not yet clear how soon the national 5G roll-out will actually happen nor which companies will take the lead.
Investing in the sector via an ETF or mutual fund, however, is a good way to counter these risks while still gaining exposure to this high-potential segment. A search on Magnifi indicates there are a number of ways for investors to access 5G this way.
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Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the April 8, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Video Games
If the image that comes to mind when someone mentions video games is a teenage boy sitting in their parent’s darkened basement playing Mario Kart, surrounded by discarded Mountain Dew cans and Doritos bags, then it is time to discard this outdated stereotype.
Whether or not you yourself enjoy playing video games in your leisure time, gaming has evolved considerably and expanded well beyond its niche origins to sit squarely in the entertainment and cultural mainstream. Fortnite, you may recall, became a global cultural phenomenon following its 2017 release, with everyone from World Cup soccer players to Michelle Obama getting in on the dances popularized by the game.
The demographics of gaming are rapidly evolving with this expansion into the cultural mainstream. In a recent study by AARP, the percentage of adults age 50-59 who play video games at least once a month increased from 38% in 2016 to 44% in 2019, with women more likely than men to regularly play.
Gaming’s explosion in popularity is due, at least in part, to transformative changes in the video game industry over the past decade.
Ten years ago, if you wanted to play the latest game, you would go to a local store (GameStop, for instance), buy the game for around $60, and take the discs home to install/play. These days, mobile gaming (primarily on smartphones) accounts for the largest share of total gaming revenue worldwide, and popular games are often free to download and play. Developers monetize these free games by offering players in-game purchases.
Another relatively recent development is the rise of subscription gaming, which offers players access to a multitude of games for a monthly subscription fee. Similar to the “streaming wars” between Netflix, Amazon, Hulu, etc., developers are scrambling to build competitive subscription services as they work to attract larger shares of the growing market.
For those interested in the investment potential of this dynamic market, there are a few important points to understand.
What Are Video Games Circa 2020?
The Cambridge Dictionary defines a video game as “a game in which the player controls moving pictures on a television screen by pressing buttons or moving a short handle.”
Video games have been around in one form or another for decades, beginning with arcade gaming in the 1970s and transitioning to home gaming in the late 70s and early 80s with popular titles such as Space Invaders, Frogger, and PacMan.
Gaming today largely falls into three distinct categories: console gaming, personal computer (PC) gaming, and mobile gaming. Console gaming happens on devices that are built exclusively to play video games (think PlayStation, Xbox, etc.), while PC gaming happens on high-performance personal computers, and mobile gaming, as the name implies, happens on your mobile device (such as your smartphone or tablet).
Until relatively recently, console and PC gaming were the dominant forces in the video game industry, but the recent explosion of smartphone use and internet connectivity globally has dramatically reshaped the industry.
According to market research firm Newzoo, mobile gaming is currently the fastest-growing segment in the video game industry, and revenues from mobile gaming account for 46% of the total gaming market in 2019. This isn’t to say that dedicated gamers are ditching their consoles and PCs in favor of games on their smartphones; rather, the market is expanding as more people gain access to free or inexpensive games through their mobile devices.
This expansion and diversification of the gaming ecosystem have given rise to novel revenue streams; most notably, live streaming and esports.
Live streaming involves gamers broadcasting themselves playing video games live on the internet. The practice has become wildly popular, as evidenced by Amazon’s 2014 acquisition of the streaming startup Twitch for $1 billion.
Esports, meanwhile, refers to competitive, organized video gaming. You may recall the story about the 16-year-old who went home with $3 million after winning the 2019 Fortnite World Cup.
Global revenues from the burgeoning esports market exceeded $1 billion in 2019, an increase of 26.7% over 2018 revenues. The emergence of live streaming and esports has fueled greater interest in gaming while offering outside investors a new way to reach this diverse group of consumers.
Why Invest in Video Games?
According to Newzoo’s 2019 Global Games Market Report, there are more than 2.5 billion people globally who play video games, and global revenue from gaming reached $148.8 billion in 2019. The U.S. market alone generated about $35.5 billion in 2019.
As a point of comparison, the 2019 global box office for films reached a record $42.5 billion, and the U.S. box office finished with $11.4 billion. This means that in 2019, people spent more than three times as much on video games as they did on seeing movies.
This remarkable performance comes amid a changing revenue landscape in which console and PC gaming account for less and less consumer spending.
Mobile gaming comprised about 46% ($68.2 billion) of overall market revenue in 2019 – an increase of 9.7% over 2018 revenues. Though smaller than mobile, console gaming continues to see healthy growth, occupying 30% of the market ($45.3 billion) with an increase of 7.3% from 2018.
Newzoo forecasts that video game revenues will grow to $196 billion by 2022 at an annual growth rate of 9%. Mobile gaming will continue to grow over the next several years, increasing from 46% of the total market in 2019 to a forecasted 49% by 2020 ($68.2 billion to $95.4 billion).
Mobile gaming’s expansion in the market may even be accelerated by outside factors, including the rollout of 5G networks (faster connectivity means better gameplay in more places) and further advancement of augmented/virtual reality (think Pokémon GO).
The video game market offers a unique investment opportunity because the industry is projected to continue its extraordinary performance in the coming years, and the various segments offer a wide variety of options when it comes to risk vs. return.
How to Invest in Video Games
However, despite their popularity and long-standing growth, investing directly in the video gaming sector can be challenging. There are hundreds of different companies working on individual gaming properties, and the rise of mobile gaming has introduced new players to the sector, such as mobile providers and hardware manufacturers. However, a search on Magnifi suggests that there are a number of other ways to profit from the growth of video games as a whole.
Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
This blog is sponsored by Magnifi. The information and data are as of the Mar 17, 2020 (publish date) unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]
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The information and data are as of the January 22, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Internet of Things (IoT)
If you were among the lucky attendees to the 2020 Consumer Electronics Show (CES) in Las Vegas, you likely would have noticed that “connectivity” was one of the show’s most prominently featured trends.
CES bills itself as the “world’s largest and most influential tech event,” and many companies at the show chose to display “smart” products that feature internet connectivity as a means by which the product becomes more useful to the consumer. For instance, Weber, the company famous for its round, charcoal kettle grills, featured its new “Weber Connect Smart Grilling Hub,” which promises to serve as a kind of “step-by-step grilling assistant that sends notifications directly to your smart phone on everything from a food readiness countdown, to when it’s time to flip and serve.”
Kohler, the company primarily known for its plumbing fixtures, featured its new voice-controlled “Moxie” showerhead/wireless speaker, which “lets you stream your favorite music, news or talk radio right in the shower with you.”
Smart devices like these are becoming increasingly popular as daily life becomes more connected to and shaped by the internet. The interconnection of our devices via the internet is often referred to as the “Internet of Things,” or IoT for short.
An entrepreneur named Kevin Aston first coined the term “Internet of Things” back in 1999 in an attempt to describe the connection between physical objects and the internet. At the time, Aston was working on linking Procter & Gamble’s supply chain to the internet through RFID tags.
These days, IoT encompasses the vast, interconnected ecosystem of devices, sensors, computers, and networks that communicate with each other and with us. There are more than 20 billion devices with internet connectivity in use today, and there is enormous value in the data that these devices generate.
This value extends well beyond the realm of consumer electronics. For instance, IoT is considered the driving force behind Industry 4.0, a term described by Deloitte as the “new industrial revolution—one that marries advanced manufacturing techniques with the Internet of Things to create manufacturing systems that are not only interconnected, but communicate, analyze, and use information to drive further intelligent action back in the physical world.”
For those interested in the investment potential of this innovative technology, there are a few important points to understand.
What Is the Internet of Things (IoT)?
According to research and advisory firm, Gartner, IoT is the “network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment.” The overarching purpose of IoT is for physical objects to sense and report information in real-time so that a process can be made more efficient, convenient, or safe.
The practical applications of IoT are vast, and faster, more affordable technology is driving innovation across very different industries.
Let’s start with the problem of traffic safety. The City of San Jose, California, is currently integrating IoT solutions in order to make intersections safer for pedestrians. For instance, IoT sensors communicate with traffic signals when someone crossing an intersection may require a bit more time before the signal turns green.
Another problem IoT is helping to address is that of food waste. According to the UN, roughly one-third of the world’s food production is lost or wasted every year. The Danish supply company, Globe Tracker, is working to fix that by offering IoT solutions that keep a close eye on food as it moves around the world in shipping containers. Globe Tracker’s sensors continuously record and transmit data on the container’s location, temperature, humidity, etc.
This kind of data is highly valuable in all supply chains, but it is especially valuable in perishable food supply chains. Innovators in business and government are going to increasingly adopt IoT solutions to address the complex problems of the 21st century, and providers of such solutions will increasingly innovate and drive IoT technology forward.
Why Invest in the Internet of Things (IoT)?
By all accounts, the IoT market is thriving, and there is good reason to think that even greater growth may be on the horizon.
According to a 2019 report by the International Data Corporation (IDC), global IoT spending in 2019 was forecast to reach $745 billion, a 15.4% increase over the $646 billion spent in 2018. IDC also projected that global IoT spending would surpass $1 trillion in 2022, with manufacturing, consumer, transportation, and utility industries accounting for a significant portion of the spending increase.
Adoption of IoT is happening worldwide and across industries at a rapid pace. Mordor Intelligence projects that the compound annual growth rate of the IoT market is 21% between 2020 and 2025. Internet-connected devices are also getting cheaper to produce and are becoming more widely available. McKinsey & Company projects that the number of internet-connected devices will increase to 43 billion by 2023, a nearly 300% increase from 2018 numbers.
Underlying all these positive numbers is an enormous potential boost that is somewhat difficult to quantify: 5G. Mobile carriers are currently in the process of deploying 5G (the fifth-generation wireless network) across the U.S. and around the globe. 5G provides considerably faster mobile connections and will, according to Qualcomm, “seamlessly connect a massive number of embedded sensors in virtually everything through the ability to scale down in data rates, power and mobility to provide extremely lean/low-cost solutions.”
The 5G rollout will take time, and as with current data coverage, not every location will get lightning-fast speed. Those locations that do benefit, however, are in for a potentially transformative period of IoT innovation.
How to Invest in the Internet of Things (IoT)
Despite all of this growth and potential, the Internet of Things remains a developing, high-volatility sector, meaning that it can make for a risky investment when bought directly. Rather, a search on Magnifi suggests that there are a number of other ways to profit from IoT innovation via mutual funds and ETFs that cover this fast-growing sector.
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Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the February 12, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Virtual Reality
Our addiction to screens isn’t anticipated to change anytime soon, but with the growth of virtual reality, how we relate to our screens is sure to.
The proof? Headset sales are booming. Over the holiday season, Facebook’s popular Oculus Quest virtual reality headset sold out and is now on a two-month back-order.
In other words, when it comes to virtual and augmented reality, the technology is ready and so are the users.
So, what exactly is virtual reality?
Virtual reality is a type of technology that “shuts out the physical world,” creating a completely immersive experience in digitally created “real world” or imagined environments.
This is slightly different from augmented reality, which adds digital elements to our real-life view. Think of Pokémon Go, for example, which digitally plants Pokémon characters around real-life cities and towns for players to physically go and find. That’s augmented reality.
What Can Virtual Reality Do?
Both virtual reality and augmented reality are changing the ways that almost all industries deliver goods and services to consumers.
First, and maybe first to come to mind for most people, is virtual reality’s place in the gaming world. The video gaming industry is anticipated to grow to as large as a $300 billion industry by 2025. Virtual reality will no doubt help to stimulate that growth, transforming the gaming world by dramatically changing the dynamics of how players relate to their games.
After all, games are no longer built like the old Nintendo or Atari platforms. New games allow players to be real participants in the action, and virtual reality is just the next step in this direction.
For instance, the much anticipated virtual reality game, Half Life: Alyx, is set to release a sequel more than a decade after its first iteration. Other highly anticipated virtual reality video game releases include The Walking Dead: Saints & Sinners, The Walking Dead Onslaught, and Iron Man. These games have a ready market and mountains of consumers that have or have yet to order their headsets.
Virtual reality and gaming, yes. But what about virtual reality and spas? Yes, it’s a thing.
The Four Seasons Resort in Oahu is now offering the world’s first multisensory virtual reality and wellness experience in what it calls the Vessel. And, it’s not alone. Spas across the U.S. now offer similar experiences in a device known as the Somodome, a self-contained meditation pod.
Virtual reality is challenging companies to reimagine how they engage consumers of all kinds. This includes retail, even though online shopping seems to be doing just fine without it. Consider virtual reality shopping. Soon you may be sipping coffee and exploring the various kitchen options from the comfort of your couch thanks to Ikea’s Virtual Reality Showroom.
Beyond consumer goods and services, virtual reality has huge potential to improve training for higher education and corporate entities alike. Walmart is on board, training employees with virtual reality programs that offer new hires the opportunity to experience specific customer situations. The military is also using virtual reality for training purposes, and even the Denver Broncos football team is using virtual reality as a tool for training new and injured players (quarterbacks specifically).
The technology also has the potential to be used for highly sophisticated simulations in the healthcare field. Emmanuel Hospice, a non-profit hospice company, offers patients the ability to leave their rooms with virtual reality-based therapy. Using the technology, one patient went on a virtual trip to Frederik Meijer Gardens and Sculpture Park, and another to Ireland.
The possibilities are endless and virtual reality technology is everywhere.
Why Invest in Virtual Reality
With all of these different applications, it should come as no surprise that the VR industry is set to grow rapidly. The global virtual reality market is anticipated to reach $120.5 billion by 2026, a dramatic increase from $7.3 billion in 2018.
And, the market is ripe for investment. As the technology advances, virtual reality is expected to play an increasing role in training and education, entertainment, retail, healthcare, and more.
Not only is the technology required for virtual reality improving, but the costs associated with it are decreasing. Quality virtual reality experiences require both a headset and a powerful graphics card. These two elements have big-name companies like Sony, Samsung, and Facebook, as well as lesser-known companies, competing for market share in each. As virtual reality becomes increasingly mainstream, these companies are poised to benefit.
Beyond these two primary technology elements, virtual reality is also primed to create new investment opportunities in the industries that adopt it. Whether it’s the next big game, the next big hospital training platform, or something we have yet to imagine, industry-specific virtual reality solutions are sure to create a buzz and further stimulate consumer adoption.
When it comes to virtual reality, opportunity abounds. You can invest in the technology itself, or the products, services, and solutions that it delivers.
How to Invest in Virtual Reality
Of course, virtual and augmented reality are high-growth, high-volatility sectors, meaning that they can make for risky investments when bought directly. Rather, a search on Magnifi suggests that there are a number of other ways to profit from virtual reality innovation via mutual funds and ETFs that cover this fast-growing sector.
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Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the January 22, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Streaming
The rise of streaming services over the past 10 years has radically changed how we consume television and movies. Lest we forget, there was once a time not so long ago when we had to make sure we were in front of our television set at a designated time in order to enjoy an episode of our favorite program. If you were the poor soul who missed the show, you would have to go around with your fingers in your ears as everyone around you discussed it until you had a chance to watch it when it re-aired later in the week.
With the steady increase in internet access and speed over the past 10+ years, we gained the remarkable ability to instantly stream a vast library of television and movies at any time from anywhere and from a variety of devices. Pioneering companies like Netflix recognized the transformative potential of streaming content early on; so early on, in fact, that they were widely mocked by the established entertainment industry not long before they utterly change it.
In one particularly ironic moment from the early 2000s, a former Netflix executive recalled how Blockbuster executives turned down their offer to sell the fledgling startup by laughing them out of the office.
Netflix is undisputedly the biggest name in the streaming game, but their competition is starting to get serious, leading to a showdown that some are calling the “streaming wars.” Heavy hitters in the form of traditional cable companies and content creators have finally caught on that the future of entertainment is streaming, and they have been working furiously to catch up with more established streaming platforms like Netflix, Hulu, and YouTube.
After years of work and months of hype, these heavy hitters are finally ready to debut what they’ve been working on. Apple launched its streaming service, Apple+, on November 1, 2019, Disney launched Disney+ on November 12, 2019, and HBO Max (Warner Media Entertainment) and Peacock (NBCUniversal) are slated for launch in early 2020.
These launches coincide with news from the Motion Picture Association of America that the number of streaming subscribers worldwide (613 million) has surpassed the number of cable subscribers (556 million) for the first time. The new streaming giants are going to slug it out in the coming years, competing for subscribers with archive depth and quality, as well as the allure of original content. Netflix has demonstrated time and again that a winning streaming formula is one in which viewers come to binge-watch old favorites, like The Office, and stay to nibble on attractive new offerings, like The Crown.
Streaming services have already fundamentally changed how we enjoy television and movies, and continued innovation is going to present savvy investors with incredible opportunities as the industry enters a period of extraordinary growth and upheaval.
For those interested in the investment potential of this rapidly-growing sector, there are a few important points to understand.
What Is Streaming?
According to PCMag, a streaming service is defined as: “An online provider of entertainment (music, movies, etc.) that delivers the content via an Internet connection to the subscriber’s computer, TV or mobile device.”
The service that companies like Netflix provide is referred to as Subscription Video on Demand, or SVOD. These companies generate revenue from monthly subscription fees instead of from advertising or pay-per-view transactions. Other companies (such as Hulu) use a tiered pricing structure in which lower monthly fees are offered in exchange for advertising in the form of commercials.
Streaming service companies depend on reliable, high-speed internet performance in order to deliver quality products to their customers — a fact so integral to Netflix’s bottom-line that the company now measures and publishes the internet speeds of internet service providers responsible for streaming Netflix content.
Why Invest in Streaming?
According to a May 2019 eMarketer report, the top U.S. streaming services companies generated about $19.9 billion in subscription revenues in 2018, while subscription revenues in 2017 totaled about $14.9 billion.
For its part, Netflix earned three consecutive 30% year-over-year revenue increases between 2016 and 2018, and looks to be on track for a fourth. The company’s share price hovered around $50 in January 2015, and by November 2019, had soared to about $315 per share.
It is much too soon to tell how things are going to shake out in the streaming wars to come, though some analysts believe that Netflix may be in real trouble as other serious competitors step in to take a bite out of the streaming market. Others point to the fact that Netflix spent $12 billion creating original content in 2019, has 158 million subscribers, and has, by far, the largest content archive of any streaming service.
According to a September 2019 Digital TV Research study, the number of subscriptions to streaming services companies is projected to increase by 91% – or 462 million subscriptions – between 2018 and 2024. It is important to note that much of this growth is expected to occur internationally (i.e., outside of the U.S.), and international growth has been a cornerstone of Netflix’s success thus far (62% of Netflix’s subscribers live outside the U.S.).
Other streaming services have a lot of work ahead of them in order to match Netflix’s international success, which includes overcoming complex regulatory and content requirements.
During the seven-year period between 2018 and 2024, Netflix’s revenue is projected to more than double from $15 billion in 2018 to $35 billion in 2024, while revenue from Disney+ is projected to hit $7.4 billion by 2024.
While it is too soon to say how the streaming wars are going to turn out in the long-run, it does seem likely that streaming services as a sector will remain a dynamic, high-growth space in which well-placed investments are likely to do well.
How to Invest in Streaming
However, as the full landscape of streaming entertainment is still shaking out, investing directly in these companies can be risky. Rather, there are a number of funds and ETFs that give investors access to this asset class with more diversification. A search on Magnifi suggests that there are a number of other ways to profit from streaming as a whole.
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Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the December 27, 2019 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Cannabis Investing
On New Year’s Day 2014, history was made in Colorado. Hundreds of people lined up in the cold outside dozens of shops across the state, each eagerly waiting to be among the first to legally purchase cannabis for recreational use in the United States.
Voters in Colorado and Washington State approved the sale and use of recreational cannabis during the November 2012 election, and the first legal cannabis sales in Colorado in January 2014 represented the opening of a new, legal market for a product that had historically been exchanged only on the black market.
The creation and subsequent growth of this legal market have been driven by the public’s rapidly evolving views on cannabis. In the U.S., public opinion on the sale and consumption of cannabis have changed dramatically over the past decade. According to the Pew Research Center, only 32% of Americans oppose legalizing cannabis in 2019, while 52% of Americans opposed legalization in 2010. This dramatic shift occurred as the American public became more aware of cannabis’s medical uses, and 91% of Americans now support the legalization of medicinal cannabis.
As of November 2019, medicinal cannabis is legal in 33 states and Washington D.C., and recreational cannabis is legal in 11 states and Washington D.C. Cannabis remains illegal under U.S. federal law, a fact that makes the nascent cannabis industry a unique experiment in U.S. law and capitalism.
As more states legalize cannabis and as more businesses enter the market, the contradictions between state and federal law grow more profound. A cannabis producer, for instance, cannot legally ship their product to a neighboring state, even if it is legal in that state, because of federal interstate commerce law.
Cannabis producers are also largely excluded from utilizing formal banking services, which sets up a dilemma as described thus by the American Bankers Association: “The rift between federal and state law has left banks trapped between their mission to serve the financial needs of their local communities and the threat of federal enforcement action.”
There are signs, however, that the distance between state and federal law on cannabis’ legal status may be shrinking. Several bills are currently being debated in the U.S. House of Representatives that aim to combat the federal vs. state contradictions surrounding cannabis law, and there is growing bipartisanship (a word rarely used to describe the state of Washington these days) on expanding access to medicinal cannabis for veterans. There is still a ways to go before cannabis is fully legalized, but at this point, most people seem to agree it is a question of when instead of if.
For those interested in the investment potential of this rapidly-growing sector, there are a few important points to understand.
What Is Cannabis?
The word “cannabis” comes from the plant genus Cannabis in the family Cannabaceae, and it generally refers to the medicinal substance produced from plants in the Cannabis genus containing psychoactive chemicals. When ingested or smoked, cannabis can produce an altered mental and physical state, often referred to as feeling “high.”
Though cultivated as a medicinal treatment for several thousand years, cannabis is now being recognized by modern medical professionals for its promise in treating chronic pain, nausea, and PTSD, among many other ailments. It is also commonly used to help cancer patients manage their symptoms.
It is important to note that not all cannabis products contain the psychoactive chemicals that produce a high. CBD (which stands for cannabidiol) is one such product, and it has shown tremendous promise in treating a number of ailments – perhaps most significantly, childhood seizure disorders. Furthermore, recent research has found that in states that legalized medicinal cannabis, the number and rate of opioid prescriptions in the state decreased substantially.
The Market Opportunity in Cannabis
According to projections from The Nielsen Company, cannabis sales in the U.S. are forecast to increase from $8 billion in 2018 to $41 billion by 2025. While these projections are remarkable in their own right, they focus only on projected sales of legal cannabis from licensed sellers.
Despite the wave of legalization sweeping the U.S., there is still a thriving black market for cannabis. In the case of California, the value of cannabis sold on the black market in 2019 is projected to be worth about $8.7 billion, while the state’s legal cannabis sales are expected to reach $3.1 billion.
As more states move to legalize cannabis, and as public opinion continues to move in favor of broader access for medicinal purposes, there is likely to be increasing pressure on state and federal lawmakers to address the economic realities that drive black market cannabis sales. For instance, giving producers the freedom to move their products as dictated by supply and demand would decrease pressure to offload products on the black market, as well as increase overall efficiency, lowering prices and making products more competitive with those on the black market. Several states are already setting the legal groundwork for interstate cannabis imports and exports.
As with any economic experiment, the rise of the legal cannabis industry is going to adjust and correct itself as it matures. In that space, however, there are tremendous opportunities for the savvy investor.
Consider, for a moment, that the legal cannabis industry does not need to invent a new product or market that product to a new group of customers in order to realize enormous growth. With the right economic incentives and regulatory framework, the cannabis industry can harness the existing economic activity of the black market and legally supply customers with a product that is already quite popular and increasingly seen as an effective treatment for various ailments.
It is also worth noting that four out of the five top Democratic candidates for U.S. president in 2020 support full legalization of cannabis.
How to Invest in Cannabis
Despite the legality questions surrounding cannabis as of 2019, there is still a growing market of public companies in the cannabis space that are becoming popular with investors. However, as new companies (in an effectively new industry), investing directly in these companies can be quite risky. Rather, there are a number of funds and ETFs that give investors access to this asset class with more diversification. A search on Magnifi suggests that there are a number of other ways to profit from the growing cannabis industry as a whole.
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Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the December 4, 2019 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.