Gaming gets serious as our tip rises 17-fold in seven years

LAST week, Microsoft announced it was paying $69billion (£50billion) for Activision Blizzard, the video games group behind such hugely popular titles as Call Of Duty and Candy Crush. The amount, roughly equal to Northern Ireland’s annual economic output, provides graphic evidence of the store that industry giants set by the video gaming industry.

With good reason: the market generated sales of more than £130billion in 2021 and forecasters expect that to increase to £160billion a year within three years.

Keywords Studios is a major beneficiary of gaming’s growing popularity. The business was floated on AIM at £1.23 in 2013 and was recommended by Midas at £1.53 two years later. Today, the shares are £26.38, Keywords is valued on the stock market at £2billion and City brokers are confident that there is plenty more growth to come.

Keywords helps games publishers to make their products more successful. The group provides music and artwork for games, creates enticing trailers and social media posts, tests titles before they are released and translates them into several languages.

Keywords even helps to develop games for publishers. Customers include both Microsoft and Activision, Sony, Google, Apple and Nintendo. The company has worked on hundreds of top games and the business is growing fast, expanding its range of services organically and through acquisition.

A trading update last month revealed that figures for 2021 would be ahead of market expectations with sales up 35 per cent to €505 million (£420 million) and profits up 55 per cent to more than €85million. New chief executive Bertrand Bodson was even confident enough to declare that turnover this year would be at the top end of forecasts, as demand for Keywords’ services expands and develops.

Another update this week should underscore December’s upbeat outlook, perhaps prompting brokers to look again at their forecasts for 2021 and 2022. Current estimates show sales rising 18 per cent this year to €594 million, with profits up 9 per cent to €93million. The company reports in euros because it was founded in Ireland and is still headquartered in Dublin, but dividends are declared in sterling, with 2.1p pencilled in for 2021, rising to 2.25p this year.

Video games soared in popularity when the coronavirus pandemic erupted and lockdowns were declared across the world. There were predictions that growth would slow when consumers were allowed to leave their homes and pursue other leisure activities. But it seems as if gaming has an enduring appeal, as there are now around three billion gamers worldwide – almost 40 per cent of the global population.

Traded on: AIM Ticker: KWS

Contact: keywordsstudios.com or 00 353 1 902 2730