The world continues its quest to digitization. There are nearly 7.6 billion people in the world and about 5.1 billion have some form of mobile device. About 4 billion have internet, and nearly 3.2 billion are active on social media. While these figures are large, they also highlight the opportunity to further penetrate digital for individuals. As more places and people have reliable connectivity, and networks grow, use cases and offerings will enhance even further.
In our Avory Letter, we discuss the shift from physical to digital and its impact on certain industries. One prime example of this shift is how a company like Electronic Arts witnessed their gross margins grow from around ~50% to ~75%. The increase in gross margin has been driven by the digitization of the distribution of games. Distribution channels for gaming have moved from physical purchases to digital downloads, along with in-app purchases increasing revenue opportunities. This is a trend I continue to follow.
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Sean D. Emory
Avory & Co. Founder & Chief Investment Officer
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