Game Digital shares rocket on back of e-sports market plans
Shares in struggling retailer Game Digital rocketed on Wednesday after investors warmed to plans that will see the firm ramp up its presence in rapidly growing e-sports markets.
Game said it is aiming to tap the "significant potential" of the group's e-sports activities, where professional gamers battle it out in front of crowds at events such as Insomnia.
The firm added that it has been encouraged by the roll-out of 18 gaming venues under the Belong brand.
The announcement, which came alongside a trading update showing improving sales in the second half, resulted in shares surging over 35% to 33.6p.
Sales by gross transaction value rose 6.8% to £325.4 million in the final six months of the year, a marked improvement on the first half.
Game still expects sales for the year to July 29 to dip 5% from £822.5 million to £780 million, having earlier said its performance would be hit by poor stock availability of Nintendo Switch.
But the video games retailer, in which Mike Ashley's Sports Direct holds a 26% stake, hopes the move into e-sports will help mitigate a difficult consoles market.
Neil Wilson, senior market analyst at ETX Capital, said: "E-sports is a fast growing industry but still relatively immature.
"IHS Markit said the market grew 19% last year to six billion hours of game time watched worldwide. It's estimated that this will reach nine billion by 2021. 280 million US dollars in advertising was generated with this projected to reach 1 billion US dollars by 2021.
"Game hopes to ride this wave."
Game said in June it was seeing "continued softness" in its core Xbox and PlayStation markets which, along with a "challenging trading environment", is impacting sales.
However, chief executive Martyn Gibbs said: "Game has made further progress in the second half of the year as we continue to focus on developing our strategic initiatives whilst creating a new cost base for our UK retail business to address the challenges in the UK console market."
Earlier this week, Game announced a concessions agreement with electronics firm Maplin as it looks for other ways to boost profits.