There is an argument that successfully doing our jobs from home in recent weeks will fundamentally change our approach to working life when we are eventually called back to the office.
The absence of the daily commute has created valuable extra time for those with hobbies and passions, which might make the return to the familiar desk less appetising.
It might also provide a big long-term boost to the already thriving business of selling us things to do in our additional leisure time, with most of us confined at home for long periods each day.
As lockdowns were being widely imposed across Europe last month in order to try to stem the spread of the coronavirus, sales of downloadable computer games soared, according to Gamesindustry.biz, a publication that tracks data from GSD, part of a European industry group.
In the week before the lockdown in the UK, for example, digital game sales increased by 67 per cent against the previous week, its figures show. Downloads in Italy, Spain and France rose even more.
Sales of gaming consoles in the UK also rocketed by 127 per cent in the week beginning March 9 compared with the previous seven days, followed by a 250 per cent rise the week after.
With a clutch of new launches due in the second half of the year and in the run-up to Christmas, it should also have had the effect of providing a late boost to sales of older versions of long-running series, which tend to wane as anticipation builds before new releases.
All of this can only be good news for the companies based in the UK that specialise in developing games or servicing the big multinational producers such as Sega, Activision, Sony and Nintendo.
Andy Bryant, technology and computer gaming analyst at the investment bank Liberum, said: “We are hearing of major highly rated games which could beat budget by well over 20 per cent and in mobile some games that have been up 100 per cent during lockdown.
“Lockdown clearly adds a short-term boost to digital sales for the whole gaming sector but the long-term implications for the UK market are very positive as the number of gamers increases.”
A handful of listed companies stand to benefit. Between them, Team17, Keywords Studios, Frontier Developments, Codemasters and Sumo Group are worth just under £3 billion, a valuation Mr Bryant thinks will rise toward £10 billion over the next three years. They are all profitable and their shares have outperformed the FTSE 350 over the past year.
It should be borne in mind that none of these five sells consoles, working only on the games played on them. Higher digital sales will be offset by declining sales of physical games at closed high street retailers.
Still, if the trend among gamers is into streaming services then perhaps the virus will accelerate the process.
Team17, Codemasters and Frontier Developments make their own games, albeit very different styles. Their output is high margin and moving to a system where staff work from home will have been relatively straightforward.
Team17 was founded in 1990 and is best known for the hit game Worms. Its products tend to have a very loyal following. It does make games for other developers but is in full control of the timing of its own releases.
Codemasters was founded in 1986 and has studios in Warwickshire, Kuala Lumpur and India. It specialises in racing games such as those based on Formula One. This month the company said in a trading update covering the year to the end of March, that it has had a strong increase in digital sales, though turnover of boxed games suffered. Physical games, mainly sold through retailers, have historically accounted for roughly 30 per cent of its sales.
While it forecasts that profits for its most recent financial year to be well ahead of its expectations, Codemasters said that the main benefits will probably begin to show through in next year’s sales figures.
Frontier Developments was founded in 1994 and its games tend to involve simulated worlds, such as the space epic Elite, Jurassic World and Wallace & Gromit adventures.
Like Team17, the company has made no specific reference to trading since the onset of Covid-19, though it has touted its new licence to develop management games for Formula One — but it too is likely to have enjoyed increased digital sales.
The experience for Keywords Studios and Sumo Group, which make games for other producers or supply them with services, will have been different.
Keywords Studios was established in 1998 and tests, translates and provides artwork for multiple international developers. Sumo was founded in 2003 and co-develops games with big international publishers as well as working on design projects for companies such as Amazon, Marvel and Sony.
Both companies will have had to obtain approval for staff to pursue projects at home, renegotiating contracts involving data and secrecy. This is likely to have taken about a fortnight, and in the case of Keywords Studios continues.
Securing contracts for future work is also trickier because the process has to take place through video conferencing rather than face-to-face meetings and pitches.
However, these disruptions are short term and detract only marginally from the likely increase in the game-playing population.
Sumo, Keywords Studios and Codemasters all pursued acquisitions last year, and both Team17 and Frontier Developments have made clear that they will move after targets if the right prospects arise.
There is plenty to commend these five including, with the exception of Codemasters, double-digit increases in revenues and profits. This is offset by a lack of dividend payments.
There is no shame, though, in investing in growth, which is the main appeal of these businesses.
This column recommended buying shares in Team17 in November, since when the shares — down 2p or 0.4 per cent to 550p yesterday — have risen almost 59 per cent. Mind you, the previous month, it advised that Keywords shares be avoided on valuation grounds alone. Up 62p, or 4.5 per cent at £14.25, they have gained in value by nearly 19 per cent.
That kind of growth means the shares trade on high earnings multiples. In the case of Team17, its shares are worth just over 40 times Liberum’s forecast earnings per share; at Keywords it’s similar. For those that believe the sector is a long-term winner, those ratings are uncomfortable but can be defended.
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