Video gaming growth soars thanks to pandemic

Arga Dwi Ihsanul

Friday, Aug 07, 2020 | 05:16 pm

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Video game usage in the U.S. has skyrocketed during the pandemic, leading to record revenues and profits for gaming companies like Nintendo, Epic Games and Electronic Arts.

Why it matters: The pandemic has sped the rise of video gaming as a core consumer pastime, and the trend is unlikely to reverse even after life returns to normal. "What we're seeing is an acceleration of pre-existing trends," NPD Group gaming analyst Mat Piscatella told Axios. "It's like we jumped ahead two years."

Driving the news: Gaming companies are blowing past analyst earnings estimates and are attracting huge investment interest thanks to the stay-at-home lockdowns that have driven major increases in gaming.

Nintendo reported a whopping 428% increase in profits last quarter, driven largely by monster sales of its Nintendo Switch hardware product and its hit game "Animal Crossing." The Japanese company made $1.37 billion in profit for the second quarter, smashing analyst estimates.

Electronic Arts also blew away analyst estimates for earnings, with earnings per share some 66% higher than Wall Street anticipated. The company has surpassed analyst estimates on profit for the past four quarters.

Epic Games, the maker of the hit game Fortnite, said Thursday it raised $1.78 billion at a post-money valuation of $17.3 billion. The funding round includes a $250 million investment from Sony that was announced in July.

Between the lines: Gaming has become both a key solo hobby for millions of people stuck at home and a social lifeline, letting people connect and compete with friends while remaining socially distant.