Investing in Gaming Stocks – Complete Outline

Feb 11, 2021

Following the events that unfolded this month regarding GameStop stock and r/WallStreetBets  short squeezing Wall Street hedge funds, gaming stocks have become the ultimate buzz word. Now that the dust has settled, GME (GameStop) stocks are trading at $51.20 per share at the time of writing. But what about other gaming stocks? Or the gaming industry in general?  

The Gaming Industry  

The gaming industry is considered one of the most fast-growing and full of potential. From new consoles to new games and virtual reality equipment, the room for growth appears infinite. Not to mention that video game companies have created additional revenue streams by releasing merchandise, downloadable content, expansion packs, and sequels for their games. That is why the gaming industry has been attracting some serious investors.   

This industry doesn’t only relate to the games. It includes companies involved with creation, design, production, marketing, hardware, and other aspects.   

The concept of gaming properly took off in the late 1970s with the game Space Invaders, which paved the path for placing arcade games in public places. Roughly ten years later, the first Nintendo Game Boy was released. Fast forward another ten years, and we have CD games, 3D graphics, and the beginning of multiplayer gaming. It’s been approximately 50 years since the inception of the gaming industry, and its revenue has grown at least threefold since then. It started at approximately $59 billion in 1980 to $165 billion in 2020.  

The Best Gaming and Gaming-Related Stocks   

The gaming industry has top-notch marketing teams that know just how to deliver the products, captivate the audience and convert them into a loyal fan base.   

Tencent Holdings  

Tencent is a Chinese company headquartered in Shenzhen, which is often dubbed China’s Silicon Valley. It is a conglomerate that has records colossal profits from its multiple streams of revenue. The company has tapped into gaming, film production, FinTech, social networks, and many more. It’s mainly famous for League of Legends, Honor of Kings, and WeChat.  

 


 

Sony   

While Sony is prevalent in all the industries related to consumer electronics, its success in the gaming industry lands it a second-place here. The company was established in Tokyo in 1946, making them a veteran on the market. They are best known for their console PlayStation, ranked first in the world in terms of sales in 2019, with 18.3 million units sold worldwide.  

 


Activision Blizzard  

Blizzard is America’s largest gaming company, headquartered in California. The company has many subsidiaries under its umbrella, and collectively they develop and release content and services for consoles, PCs, and mobile devices.   

Their principal products include Call of Duty, World of Warcraft, Diablo, and Candy Crush.  

 


The Advantages of Investing in the Gaming Industry  

  • Chance to participate in one of the fastest-growing industries in the world   
  • Opportunity to diversify your stock portfolio  
  • Potential for earning passive income in the form of dividends  
  • Involvement in a highly lucrative industry  
  • Exposure to high liquidity stocks  

The Risks of Investing in the Gaming Industry  

  • As with everything digital, there is always the risk that something will go out of fashion or become replaced by something newer   
  • Exposure to the threat of government regulations which may impede on the progress or even production   
  • Higher evaluation of companies resulting in higher price/profit ratio  

Final Thoughts 

Starting from arcades and consoles in the late 70s, the gaming industry expanded to include handheld devices, PC, mobile, VR, and the cloud. People in the 70s had no idea the immeasurable heights to which the gaming industry would grow. Perhaps we still have no idea how far the industry can grow. It is projected that the number of players will rise past 3 billion, or 40% of the population, by 2023.  

Today billions of people around the world own smartphones, making every single one of them a potential gamer. With the rise of VR and AI, so who knows what the gaming industry will bring in the next 50 years?