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Are These Really The Best Video Game Stocks?

Larry Davidson - October 24, 2018

sne video game stocks
esports video game stocks
source: Twitter

ESPN is an internationally recognized sports channel, broadcasting in more than 200 countries. However, it came as a shock to many when the Disney (NYSE: DIS) owned company announced it was going to start broadcasting esports, a form of competitive video gaming. Video game stocks are generating massive revenues and investors want in.

In just a short period esports has become a billion dollar industry.

fortnite video game stocks
source: Business Insider

That said, the video game industry as a whole generated more than $100B in revenues in 2017, according to a report by SuperData. There are more than 150 million Americans that play video games. The revenues generated by video games is now 2-3x greater than movies.

The highest grossing video game has generated more revenue than movies Avatar and Titanic combined.

It’s no surprise that wall street analysts are rating these companies as strong buy stocks. The sector will continue to see growth in esports, cloud gaming, and virtual reality. Other bright spots include growth in digital add-on content, free to play games, and gaming subscriptions.

Top Video Game Stocks To Buy

Now, if you play sports video games, you might already know this company.  I’m talking about the makers of the blockbuster game FIFA, Electronic Arts (NASDAQ: EA).

ea sports video game stocks
source: EA

Electronic Arts also makes the following series: NBA Live, Madden, NHL,  and the Sims Mobile. It has more than 300 million registered players around the world. EA Sports has more than 20 million competitive players this season.

FIFA Mobile in China became the most downloaded game in iOS China right after it launched. The firm has consistently done more than $4.4B in sales since 2015.

Now, when it comes to console games, Call Of Duty is the cream of the crop. It was the top-grossing console video game franchise globally in 2017.  It’s maker, Activision Blizzard (NASD: ATVI)  is the world’s most successful standalone interactive entertainment company.

Some of its top video games include Skylanders, Destiny, World of Warcraft, Heroes of the Storm, StarCraft, Diablo, Hearthstone, Candy Crush Saga, Pet Rescue, Bubble Witch, and Overwatch.

ESPN’s TV coverage of Activision’s Overwatch Leauge is a positive catalyst for the company.  That said the company was able to grow revenues to more than $7B in 2017 and 2018.

Competition in the space is ultra competitive. Let’s not forget Rockstar Games the maker of the ever popular Grand Theft Auto series. Take-Two Interactive (NASD: TTWO) owns Rockstar Games.

The last Grand Theft Auto sold more than 95 million units and generated more than $6B in revenues.

Top Video Game Stocks – OTC

Now, when we’re talking about blockbuster games, it doesn’t get bigger than Fortnite.  It’s already generated more than $1B in revenue and is a large part of the global esports movement.

Epic Games the maker of the game doesn’t trade publicly. However, Tencent Holding has a 40% ownership stake in the Fortnite game maker.

Tencent Holding (OTC: TCEHY) trades on the OTC markets.

tencent video game stocks
source: ESPN

Tencent is a Chinese internet superpower. It’s best known for its messaging app WeChat. However, the company has more than 800m monthly users throughout its network.

Tencent Games has the largest online games community in China. The firm has majority ownership in Supercell, the makers of the game Clash of Clans.

Tencent is one of the largest companies in the world based on market cap. That said its diversified outside of gaming.

nintendo video gaming stocks
source: Nintendo

Now, before Fortnite was stealing all the gaming headlines, Pokemon Go was the hottest game on the market. It’s pushed shares of Nintendo (OTC: NTDOY) higher by triple digits since launching in 2016.

Despite the company having a small stake in Pokemon Go, it was able to draw positive attention to the company which later helped boost the sales for its Nintendo Switch console.

Of course, the console maker still generates significant revenue from its Super Mario franchise, which is set to release a movie based on the series.

Easiest Way To Buy The Best Video Game Stocks

There is an ETF that you can buy that gives you a diversified basket of video game stocks. The ETFMG Video Game Tech ETF (NYSE: GAMR) is the first and only ETF that focuses exclusively on the video game industry.

The ETF has over 70 video game stocks in its holdings.  Some of its most significant holdings include Take-Two Interactive, NCsoft, Advanced Micro Devices, Glu Mobile, GameStop, CapCom, Activision Blizzard, Nintendo, Zynga, and Ubisoft.

The ETF was founded in 2016 and charges investors an expense ratio of 0.75%.

The Best of the Best Video Game Stocks

The following companies are not pure gaming stocks, but they have a piece of this giant pie.

Microsoft (NASD: MSFT), the developer of Xbox, remains active in the gaming sector. The Initiative is a new internal game studio that has gotten a lot of buzz for Microsoft. In 2014, the company invested $2.5B to acquire Minecraft game maker Mojang.  Other favorite games include Halo, Age of Empires, and Gears of War.

Amazon (NASD: AMZN) is more than just an online retailer these days. Its cloud business is the best of the breed. Its acquisition of Twitch in 2014 makes it a player in video game streaming space.

Facebook (NASD: FB) is a leader in the social gaming industry. The company launched its Instant Games with much fanfare. Facebook also owns Oculus, a significant player in the virtual reality space.

sne video game stocks
source: Sony

Sony (SNE), the maker of PlayStation, is one of the largest gaming publishers in the world.  The company sold 19 million consoles in 2017 and is making significant progress in VR gaming.

Bottom Line

The video game sector has become of the fastest growing areas in entertainment. Viewership for esports is set to rival and surpass the NHL, NBA, and NFL.

Cloud gaming is also disrupting the way people play games.

That said, virtual reality is still in its infant stages. However, Variant Market Research believes that the VR gaming market will value $43.4B by 2024.

The success of Pokemon Go has investors bullish on augmented reality games. According to consultancy.uk, virtual and augmented reality market could reach $170B by 2022.

Make sure to do your homework as there are plenty of growth stocks worth researching in this sector.

Larry D. is one of the most experienced writers at the Dork. His expert insights into the individual stocks have made small fortunes for some of his readers and profitable trades for many more. Best known for his work with under-the-radar growth stocks, Larry has been picking winners for over 30 years.

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