The gaming industry is one of the fastest-growing and most profitable sectors in the entertainment and media market. It encompasses a wide range of products and services, such as console, PC, mobile, online, and social games, gaming hardware, software, accessories, and live streaming. The global gaming market was worth $229.39 billion in 2022 and projects to grow at a compound annual growth rate (CAGR) of 7.89% from 2023 to 2027, reaching $521.60 billion by 2027.
Gaming stocks are the shares of companies involved in the gaming industry, either as developers, publishers, distributors, or providers of gaming-related products and services. Some of the most famous gaming stocks include Sony (SNE), the Japanese conglomerate that owns the PlayStation brand and several popular game franchises such as God of War, Uncharted, and Spider-Man; and Nintendo (NTDOY), the Japanese company that created iconic characters like Mario, Zelda, and Pokemon, and produces the Switch console and handheld devices.
Investing in gaming stocks can be a smart way to capitalize on the growth potential and profitability of the gaming industry. Gaming stocks can expose investors to a diverse and innovative sector constantly evolving with new technologies, trends, and consumer preferences. Gaming stocks can also benefit from the increasing demand for gaming products and services during the COVID-19 pandemic, as more people turned to gaming as a source of entertainment and social connection while staying home. Moreover, gaming stocks can provide investors with long-term value-creation opportunities as gaming companies invest in developing new games, expanding their audiences, entering new markets, and forming strategic partnerships.
Microsoft Corporation (MSFT) - The Gaming Powerhouse Behind Xbox
Microsoft is one of the leading players in the gaming industry, with its Xbox console platform and its gaming division. The company launched its next-generation Xbox Series X and S consoles in November 2020, offering high-performance gaming and backward compatibility with previous Xbox titles.
Microsoft has also invested in its cloud gaming and subscription services, such as Project xCloud and Xbox Game Pass. Project xCloud allows users to stream games from the cloud to various devices, while Xbox Game Pass offers access to over 100 games for a monthly fee. Microsoft has also acquired several game studios recently, such as ZeniMax Media, the parent company of Bethesda Softworks, which owns popular franchises like Doom and Fallout.
In January 2023, Microsoft announced its intention to acquire Activision Blizzard, the maker of blockbuster games such as Call of Duty, World of Warcraft, and Candy Crush Saga, for $69 billion. The deal, the largest ever in the gaming industry, is subject to regulatory approvals from various jurisdictions. It got blocked by the UK’s Competition and Markets Authority (CMA) and the US Federal Trade Commission (FTC). The deal got approved by the European Commission (EC), but only after Microsoft offered remedies to allow users to stream Activision games on any cloud gaming platform of their choice.
Microsoft reported a 3% increase in revenue from its Xbox content and services division in the third quarter of 2022, reaching $3.59 billion. This was the second-best quarter ever for the Xbox business, only behind the previous record of $3.74 billion in the same quarter of 2021. The growth got driven by the success of Xbox Game Pass, which added over 10 million subscribers in the quarter. However, the company’s Xbox hardware revenue declined by 30% due to the higher console supply in the prior year.
Microsoft’s future outlook for gaming is positive, as the company expects to grow its user base, content portfolio, and cloud capabilities. Microsoft aims to reach more gamers across different devices and regions, offering exclusive and diverse games through its studios and partnerships. Microsoft also plans to leverage its cloud technology and artificial intelligence to enhance the gaming experience and create new opportunities for developers and creators.
NVIDIA Corporation (NVDA) - The Leader in Powerful Gaming Hardware and Software
NVIDIA is a dominant force in the gaming industry, providing cutting-edge graphics cards, processors, and software for gaming PCs, laptops, and consoles. NVIDIA also offers its cloud gaming service, GeForce Now, which lets users stream games from the cloud to various devices. NVIDIA's technology is also used by some of the most popular gaming platforms, such as Xbox Series X and S and PlayStation 5.
NVIDIA has been at the forefront of innovation in graphics technology, especially in real-time ray tracing and artificial intelligence for gaming. Real-time ray tracing is a technique that simulates realistic lighting and shadows in 3D environments, while artificial intelligence enhances the performance and quality of games. NVIDIA’s latest graphics cards, such as the GeForce RTX 30 series, get designed to deliver these features to gamers.
Nvidia’s fourth-quarter earnings surpassed analysts’ revenue and earnings per share estimates. However, the company’s gaming segment, which accounts for nearly half of its total revenue, saw a sharp decline of 46% year-over-year as the gaming industry faced lower demand and supply constraints after the pandemic. Nvidia said it is optimistic about the future of gaming and its role in advancing artificial intelligence.
NVIDIA’s future outlook for gaming is optimistic, as the company expects to continue to lead the market with its advanced products and services. NVIDIA plans to expand its cloud gaming offering to more regions and devices and to support more games and features. NVIDIA also aims to leverage its graphics technology and artificial intelligence to create new gaming experiences and opportunities for developers and creators.
Roblox Corporation (RBLX) - The Up-and-Coming Social Gaming Platform
Roblox is a rising star in the gaming industry, with its massively multiplayer online gaming platform allowing users to create, share, and play games of various genres and themes. Roblox is especially popular with kids and teens, who comprise most of its user base.
Roblox makes money from in-app purchases and a virtual economy, where users can buy and sell items and currency using Robux, the platform's digital currency. Roblox also offers a premium subscription service with extra benefits and features. Roblox shares part of its revenue with its developer community, which creates and publishes games on the platform.
Roblox grew significantly in the first quarter of 2023, earning $653.5m in revenue, a 22% increase from the same period in 2022. According to a previous report, the company also generated $579m in revenue in the fourth quarter of 2022. Its bookings, which represented the amount of virtual currency purchased by users, rose by 23% to $773.8m in the first quarter of 2023. The company attributed its growth to the success of its creator community, which attracted a large and diverse user base to its platform.
Roblox’s future outlook for gaming is bright, as the company expects to capitalize on the gaming trend, becoming more social and cross-device. Roblox plans to expand its global reach, especially in markets like China and Europe, and to explore new opportunities in virtual reality and metaverse experiences. Roblox also faces some risks, such as platform churn, regulatory uncertainty, and competition from other gaming platforms.
Sea Limited (SE) - The Fast-Growing Emerging Markets Gaming Leader
Sea Limited is a diversified internet company that operates three core businesses: gaming, e-commerce, and digital financial services. Its gaming segment, Garena, is one of the leading online game developers and publishers in Southeast Asia, Latin America, Taiwan, and India. Its flagship title, Free Fire, is a mobile battle royale game that has been the most downloaded mobile game globally for three consecutive years, according to App Annie. Garena also offers popular games like Call of Duty: Mobile and League of Legends.
Sea Limited’s e-commerce segment, Shopee, is the largest online shopping platform in Southeast Asia and Taiwan and operates in Brazil and Mexico. Shopee provides various products and services, including gaming offerings and live streaming. Shopee also leverages its user base and data to offer merchants and brands digital marketing and advertising solutions.
Sea Limited’s digital financial services segment, SeaMoney, offers mobile wallet services, payment processing, credit-related digital financial offerings, and other products. SeaMoney aims to serve the large and underserved population of unbanked and underbanked consumers and small businesses in its markets.
Sea Limited reported a net income of US$422.8 million and a total adjusted EBITDA of US$495.7 million for Q4 2022, which ended December 31, 2022, driven by revenue growth of 7.1% year-on-year to US$3.5 billion in its e-commerce and digital financial services segments, and improved profitability and cost efficiency across its businesses. The company's digital entertainment segment faced challenges from a revenue decline of 32.9% year-on-year to US$948.9 million, lower user engagement and monetization, and impairment costs of US$177.7 million from exiting non-core markets and divesting certain historical investments. The company's margins improved year-on-year, but its free cash flow margin remained negative due to its ongoing investments in growth initiatives and working capital needs.
Sea Limited's future outlook for gaming is promising, as the company expects to benefit from the increasing smartphone and mobile connectivity penetration across emerging markets, where it has a strong presence and competitive advantage. Sea Limited also faces risks, such as competition for time spent from short-form video and live streaming apps, regulatory uncertainty, and currency fluctuations. However, Sea Limited also has significant opportunities to tap into the massive populations and growing middle classes in its markets and to expand into new verticals and regions.
Activision Blizzard, Inc. (ATVI) - The Powerhouse Behind Call of Duty and World of Warcraft
Activision Blizzard is one of the world's largest and most successful gaming companies, with a portfolio of leading console, PC, and mobile game franchises, such as Call of Duty, World of Warcraft, Overwatch, and Candy Crush. These franchises have loyal and engaged fan bases and generate recurring revenue from in-game purchases and subscriptions.
Activision Blizzard has also been investing in its esports efforts, such as the Overwatch League, which features professional teams competing in live events and online matches. The company has also developed new mobile esports infrastructure, such as the Call of Duty Mobile World Championship. Additionally, Activision Blizzard has been moving into live operations and free-to-play models for some games, such as Call of Duty: Warzone and Diablo Immortal, to increase player investment and retention.
Despite the blockage of its acquisition by Microsoft, Activision Blizzard’s first-quarter earnings for 2023 exceeded analysts’ revenue and net income estimates. The company reported revenue of $2.38 billion and net income of $740 million, up 35% and 87% year-over-year, respectively. However, the company’s Activision division, which accounts for almost a quarter of its total revenue, experienced a slight decline of 2% year-over-year to $580 million as the Call of Duty franchise faced lower player engagement and competition.
Activision Blizzard's future outlook for gaming appears mixed, as the company faces some risks and opportunities. On the one hand, some of its key titles are aging and facing competition from other games and platforms. The company is also dealing with legal issues and employee unrest over allegations of harassment and discrimination. On the other hand, the company has opportunities to ramp up releases of new mobile games, such as Call of Duty Mobile 2 and Diablo 4 Mobile, and expand its esports and content offerings for its existing franchises.
Electronic Arts Inc. (EA) - The Giant Behind Blockbuster Sports and Star Wars Games
Electronic Arts is one of the world's biggest and most established gaming companies, with a portfolio of popular sports, simulation, action, and adventure games across console, PC, and mobile platforms. Some of its best-known franchises include FIFA Soccer, Madden NFL, UFC, The Sims, Apex Legends, and Star Wars.
Electronic Arts has also been expanding its business through acquisitions and partnerships, such as the recent purchase of Codemasters, a leading racing game developer, and Glu Mobile, a mobile game publisher. The company also offers subscription services, such as EA Access and EA Play, which provide access to games and exclusive content. Moreover, Electronic Arts has been adapting to the latest trends in gaming, such as esports, battle royale modes, and live services that provide new content and in-game events to keep players engaged.
Electronic Arts' revenue increased 11% year-over-year to $7.426 billion in the fiscal year 2023, driven by record net bookings and live services performance from its gaming portfolio, especially EA SPORTS FIFA, Apex Legends, and The Sims. The company's net income was $1.016 billion, up 21% year-over-year. The company's net revenue from digital channels was $6.583 billion, representing 89% of total net revenue.
Electronic Arts' future outlook for gaming is positive, as the company expects to leverage its diverse and loyal fan base, its rich portfolio of games and content, and its partnerships with global brands like Disney. The company also faces some challenges, such as competition for players' time and wallets from other games and platforms and rising development costs and regulatory risks. However, the company also has opportunities to expand into new markets and platforms, such as cloud gaming and streaming services.
NetEase, Inc. (NTES) - The Leader in PC and Mobile Games in China
NetEase is one of China's leading online game developers and operators, with a portfolio of popular PC and mobile titles, such as Identity V, Westward Journey Online, and Knives Out. These games have attracted millions of loyal and active players in China, where NetEase has strong brand recognition and reputation. NetEase also operates other internet businesses, such as live streaming, e-commerce, and music services, closely related to its gaming focus.
NetEase’s revenue increased 10% year-over-year to 96.496 billion yuan ($13.991 billion) in the fiscal year 2022, driven by record net bookings and live services performance from its gaming portfolio, especially Fantasy Westward Journey, Onmyoji, and Knives Out. The company’s net income was 16.7 billion yuan ($2.43 billion), up 17% year-over-year. The company’s net revenue from digital channels was 88.9 billion yuan ($12.92 billion), representing 92% of total net revenue.
NetEase's future outlook for gaming is optimistic, as the company expects to benefit from the large and growing market of gamers in China and abroad. NetEase also faces challenges like regulatory uncertainty, competition from other game developers and platforms, and rising user acquisition costs. However, NetEase also has opportunities to leverage its rich content library, innovation capabilities, and strategic partnerships to create more engaging and immersive gaming experiences for its players.
How to Invest in Gaming Stocks
There are three main ways to invest in gaming stocks: holding the share, buying an option, or trading a CFD.
● Holding the share means buying and owning a portion of a gaming company's equity. This gives you the right to receive dividends and vote on corporate matters. However, holding the share exposes you to market risks and requires a large initial capital outlay.
● Buying an option means acquiring the right, but not the obligation, to buy or sell a gaming stock at a predetermined price and date. This gives you more flexibility and leverage than holding the share but involves higher fees and time decay.
● Trading a CFD means entering into a contract with a broker to exchange the difference in the price of a gaming stock between the opening and closing of the trade. This allows you to speculate on the price movements of gaming stocks without owning them. You can also trade with margin and access a wider range of markets than holding the share or buying an option.
One of the best platforms to trade gaming stocks CFDs is VSTAR, a global regulated trading platform that offers low trading fees, deep liquidity, and institutional-level trading experience. VSTAR allows you to trade CFDs on over 1000 markets, including currencies, indices, commodities, crypto, US and HK stocks. Some of the gaming stocks that you can trade on VSTAR include Microsoft (MSFT), NVIDIA (NVDA), Roblox (RBLX), Sea Limited (SE), Activision Blizzard (ATVI), Electronic Arts (EA), and NetEase (NTES).
To trade gaming stocks CFDs with VSTAR, you need to follow these simple steps:
Download the VSTAR app and register for an account.
● Deposit funds using one of the supported payment methods, such as Visa, Mastercard, Tether, Skrill, Netteller, SticPay, or Perfect Money. The minimum deposit is only $50.
● Choose a gaming stock you want to trade and open a buy or sell position depending on your market view. You can also set stop loss and take profit orders to manage risk and reward.
● Monitor your position and close it when you want to lock in your profit or loss. You can also use the popular markets feature to catch real-time trading opportunities.
● Withdraw your funds anytime using the same payment method you used to deposit.
In this article, we reviewed the top 7 best gaming stocks for your portfolio. These companies are leaders in their respective gaming industry segments, with strong franchises, loyal fan bases, and innovative technologies. They have also delivered impressive financial performance and growth potential in the past year.
The gaming industry is one of the most dynamic and exciting sectors in the global economy, with a large and growing market of gamers across different platforms, genres, and regions. The industry is also undergoing rapid transformation and innovation, driven by trends such as cloud gaming, streaming services, esports, live services, and blockchain gaming. These trends create new opportunities and challenges for gaming companies and investors alike.
To invest in gaming stocks, you should research each company and the industry, diversify your portfolio across different gaming segments, platforms, and regions, and use a reliable and regulated trading platform like VSTAR to trade gaming stocks CFDs with margin and access a wide range of gaming stocks from US and HK markets. VSTAR also has a popular markets feature to help you find trading opportunities.