Analyst Giddy About Videogame Industry

(RTTNews) - Piper Jaffray analyst Michael Olson said Monday that the video-game industry revenue could be 100 percent digital by 2022 and result in publisher margins being "dramatically higher."

According to Olson, an all-digital video game world would be a tailwind for publishers like Activision Blizzard Inc. (ATVI), Electronic Arts Inc. (EA) and Take-Two Interactive Inc. (TTWO). Currently, these publishers get about 70 to 75 percent of their revenue from digital sources.

Based on the 100 percent digital earnings per share scenario in calendar year 2022, Olson projects that the average 3-year share price compound annual growth rate or CAGR for the video game group would be 17 percent.

"Specifically, our CY22 scenario analysis shows operating margins >10ppts higher than current levels for each publisher," Olson wrote.

Olson maintained an "Overweight" rating on all three video game publishers - Activision, Electronic Arts and Take-Two.

According to the Entertainment Software Association or ESA, U.S. consumers spent $36 billion on the video game industry in 2017, up from $30.4 billion in 2016. The industry contributes $11.7 billion in value to U.S. GDP, fueling the employment of more than 220,000 Americans.