The global entertainment industry is expected to grow at a 5.1% CAGR to $2.23 trillion by 2020, according to PwC analysts. While digital entertainment has been a key area of focus, in-person events have become increasingly popular among the Millennial demographic.
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Traditional races like the Ironman series have become powerhouse brands over the years, with Chinese billionaire Wang Jianlin paying $650 million for the Ironman brand last year. At the same time, races designed to be more ‘fun’ than ‘competitive’ have drawn more diverse crowds. Tough Mudder, for example, generates more than $100 million per year in revenue by charging more than two million people to race through muddy obstacle courses.
In this article, we will take a closer look at the evolving entertainment industry and where the best opportunities may lie for investors interested in the space.
Real World Adventures
Millennial-focused event programming has become extremely popular over the past several years. The number of participants in adventure racing across the United States has soared from 730,000 in 2006 to more than 2.86 million by 2015, according to data compiled by Statista. In addition to racing, millions more have attended lantern festivals, bike mobs, music festivals, EDM and hundreds of other events taking place in thousands of cities across the nation.
Investors looking for opportunities in Millennial-focused event programming have relatively few options unless they are accredited investors capable of buying into private companies. For the general public, Sack Lunch Production Inc. (OTC: SAKL) may be worth considering given its broad portfolio of events that include Color Me Rad, Slide the City, Lantern Fest, The Dirty Dash, and Trike Riot, which have all experienced tremendous growth over the past several years.
During the second quarter, the company reported revenue that increased 278% to $5.6 million along with deferred revenue that increased 9% to $2 million. Management plans to improve cash flow by refinancing short-term debt, decreasing costs, and continuing to improve its top-line revenue. In addition, the company is in the process of completing its audited financial statements that could result in increased transparency and the potential to up-list.
Virtual Reality Tech
Virtual reality is another key area of the entertainment industry that could experience tremendous growth over the coming years. After Facebook’s acquisition of Oculus Rift, the industry experienced a revival with many large multinational companies – like Samsung and Google – entering the market. The demand for new technology and innovation could yield opportunities for investors in smaller pockets of the market.
GoPro Inc. (NASDAQ: GPRO) is a relatively unknown player in the virtual reality industry. While the company’s stock has been battered over the past two years, management’s new bets on virtual reality could help turn things around. GoPro recently shipped its Google Inc.’s (NASDAQ: GOOGL) Odyssey VR rigs that can capture spherical video using 16 simultaneous cameras, while it’s also equipped to run with Alphabet’s Jump open-source virtual reality platform.
Nvidia Inc. (NASDAQ: NVDA) is another company that’s worth considering in the virtual reality space. The company makes gaming graphics processing units – or GPUs – along with graphics cards that help power virtual reality headsets. As VR technology grows increasingly processor-intensive, these technologies will become a much-needed part of the ecosystem. The other upshot is that the same GPUs have become tremendously popular in AI development.
The entertainment industry may be dominated by large companies focused on movies, video games, and television, but some of the fastest growing opportunities come from real world adventures and virtual reality. Investors may want to consider companies like Sack Lunch Productions Inc. (OTC: SAKL) or Nvidia Inc. (NASDAQ: NVDA) in order to capitalize on these opportunities as a part of a diversified portfolio.
For more information about Sack Lunch Productions, investors can also see our Company Analysis at http://analysis.secfilings.com/companies/6-sack-lunch-productions-inc or visit the company’s website at www.sacklunchproductions.com.
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