Should You Invest in Top Gaming Companies?
Gaming has become one of the world’s most popular pastimes, and money is flowing into the industry at an impressive clip. Opportunities abound to take advantage of the burgeoning medium, and the stock market is full of great tickers that represent creators of virtual worlds. Having said that, we’ll go over some of the top gaming stocks of 2017 and why these stocks could make you some serious cash.
First, let’s take a look at the industry on a macro level before we dive into the specific shares that are set to explode in 2017.
In gaming, innovation is the name of the, well, game. Take augmented reality (AR), which is another lucrative field for investors. The new technology is promising to add a whole other dimension (literally) to video gaming, along with its sister tech, virtual reality (VR).
One of the top gaming stocks we’ll cover later on will, in fact, involve the potential for huge new revenue streams to sprout from these emerging technologies. But for now, let’s look at how AR is driving the industry today.
Consumers spent $41.0 billion on mobile games in 2016, and a huge driver of that success was the AR video game Pokémon GO. Coupled with a beloved property in “Pokémon,” Pokémon GO allowed players to travel the real world and use their phones to project cutesy monsters everywhere, from their local grocery stores to outdoor parks, and, sometimes, less-appropriate places like cemeteries. (Source: “Market Brief — Year in Review 2016,” SuperData, last accessed March 22, 2017.)
The success of Pokémon GO has opened the door for developers to take chances with AR, seeing as there is a huge untapped potential customer base itching for novel experiences in the mobile gaming world. Mobile itself, of course, is one of the largest and fastest growing areas in video gaming.
VR, on the other hand, had a slower start, mainly due to the high price of its hardware and the lack of “need-to-own” apps like Pokémon GO. As more games are developed in that space, I expect that VR will experience a surge of momentum as soon as another hit product like Pokémon GO comes to one of the various headsets.
Another huge leap forward for games is the development of eSports. While currently amounting to a relatively low amount of revenue compared to the overall industry, the $892.0 million in revenue in 2016 is still no joke. And eSports has become the locus for publishers, TV executives, and advertisers looking to diversify their revenue streams in games from straight software and hardware sales. Some of the biggest names in game development and publishing are looking into selling media rights, and for other ways to monetize competitive gaming.
Chip development (again, a big part of a company we’ll cover later on) and the popularity of free-to-play titles have helped push personal compyter (PC) gaming to trend upward, earning $34.0 billion in 2016. (Source: Ibid.)
Gaming was also set to become a $100.0-billion industry in 2016, up 8.5% compared to 2015. While it ended up in the $91.0 billion revenue range for 2016 instead, these figures demonstrate the huge growth potential in an already massive industry. (Source: “The Global Games Market Reaches $99.6 Billion in 2016, Mobile Generating 37%,” Newzoo, April 21, 2016.)
With mobile AR and VR opening doors to new customers bases, expect the top gaming companies for 2017 to take advantage and begin to see huge gains over the year.
Top Gaming Stocks to Invest In
|Company||Revenue in 2016 (in millions)|
Tencent Holdings Ltd (HKG:0700)
Sony Corp (ADR) (NYSE:SNE)
Activision Blizzard, Inc. (NASDAQ:ATVI)
|Microsoft Corporation (NASDAQ:MSFT)||6,477|
|Apple Inc. (NASDAQ:AAPL)||5,864|
Electronic Arts Inc. (NASDAQ:EA)
(Source: “Top 25 Companies By Game Revenues,” Newzoo, last accessed March 22, 2017.)
Below, I’ve listed the top gaming stocks to invest in. While some are straight-up gaming companies, others have a more circuitous connection to the industry but are no less likely to generate huge profits from gaming, due to their products.
With all that said, let’s get started on the list.
1. Activision Blizzard, Inc. (NASDAQ:ATVI)
One of the biggest names in gaming, Activision Blizzard, Inc. (NASDAQ:ATVI) is synonymous with two of the medium’s largest franchises: Warcraft and Call of Duty.
Call of Duty is the perennial shoot-em-up that sees millions of customers flock to their local game stores in the months leading up to Christmas to pick up the latest iteration. Think of it like the Marvel superhero movies of the gaming world for shooter-simulator enthusiasts.
While this year’s version of the game failed to impress gamers and lagged in sales by reportedly as much as 50% compared to last year’s offering, the Call of Duty franchise is otherwise one of the strongest in the world.
While competition is certainly heating up and some analysts are concerned with the lack of creativity that the series has shown of late, this is still one of the premier names in gaming and will likely bounce back strong in 2017. (Source: “Analysts Say ‘Call of Duty: Infinite Warfare’ Retail Sales Are Down Nearly 50% From ‘Black Ops 3‘,” Forbes, December 10, 2016.)
(Source: “All time unit sales of selected games in Call of Duty franchise worldwide as of January 2017 (in millions),” Statista, last accessed March 22, 2017.)
The other franchise under the ATVI stock umbrella is Warcraft. Specifically, World of Warcraft and all its expansions. While the movie may have been a flop, the world’s leading massively multiplayer online role-playing game (MMORPG) had a peak of 12 million monthly subscribers in 2010.
While that has still fallen off quite a bit, the game remains the most popular of its kind in the world and has over five million players subscribed. The franchise has been successful in the gaming world (it’s been around since the mid-2000s, after all) and, as such, makes ATVI stock supremely powerful in the industry.
And those are just two of the company’s vast portfolio of strong-selling titles.
The company is on tear in 2017, off the back of strong revenue numbers. This has sent the company up 33% since the beginning of the year, and nearly 50% over the past year.
ATVI stock is the fifth of the largest video game companies by revenue, at $3.58 billion. With strong product offerings and a respected company culture, anticipate some big gains for Activision Blizzard as the year goes on.
2. Electronic Arts Inc. (NASDAQ:EA)
Electronic Arts Inc. (NASDAQ:EA) is one of the top gaming stocks of 2017 because it is one of the most constant powerhouse gaming publishers. With a bevy of sports titles under the “EA Sports” moniker (like the ever popular Madden NFL series) along with an ever expanding arsenal of AAA titles in various genres, EA is one of the industry’s most respected companies for a reason.
Sitting at sixth in the list of the largest video game companies by revenue, at $3.51 billion, EA is one of the mainstays of the gaming industry.
While its first major release of the year, the next installment of the space opera series Mass Effect, has failed to wow gamers, expect the company to follow up strong with its fair share of powerful gaming properties.
The Battlefield series, for instance, is usually a direct competitor of Call of Duty. Both are big-budget shooters that release new versions roughly around the same time every year. Battlefield got the better of Call of Duty this last holiday season, however, both critically and commercially.
EA stock is still running high from last year, up 12% since the beginning of 2017 and over 37% over the past 12 months.
3. Facebook Inc (NASDAQ:FB)
While perhaps not one of the top gaming stocks of 2017 you’d expect, there’s a reason I included Facebook Inc (NASDAQ:FB) on this gaming list. That reason is the “Oculus Rift.”
Facebook has banked hard on the VR and AR headset making some big waves, as it trots out its first attempt at video game hardware. While it has not yet broken into the market the way that FB stock would have liked, the headset is still a powerful example of the waiting potential in those developing fields.
If the Oculus Rift can score some big titles to use its headset exclusively, then Facebook might become a new hardware giant in the video gaming realm. All it takes is one Pokémon GO phenomenon to spark huge sales and dedication from famously diehard gaming fans.
Add that to the fact that Facebook is such a strong company regardless, and you can’t go wrong betting on FB stock. With the Oculus Rift officially released in the wild, there’s a good chance that Facebook might be one of the next big video game hardware producers in 2017 and beyond.
4. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Advanced Micro Devices, Inc. (NASDAQ:AMD), the darling of 2016, is one of the top gaming stocks of 2017.
As games become increasingly more demanding and need more powerful chips to run them, expect to see a surge in AMD processor and chip purchases by both everyday consumers and companies alike.
The close connection between computer chips and the gaming industry at large means that, as one rises, you can bet that the other will follow close behind.
As such, with AMD pushing some very powerful chips in 2017, expect more gamers to switch to the fast-growing chip-maker. And with them, expect AMD stock to continue to rise.
Not to mention that AMD has a strong stake in both VR and AR. Both of those technologies are going to be huge for video gaming in the near future, representing a new frontier for gamers to conquer. As such, AMD is in a unique position to reap the benefits from all sides of the gaming industry, whether it’s on your computer, your phone, or in a virtual reality world.