This article was originally published April 20, 2015 and updated September 28, 2016.
Want to know what the best stocks are in the video gaming industry? You’re not alone. The gaming industry has delivered fantastic returns in recent years, and make no mistake, the trend toward widespread video game usage means the outlook for game stocks is still strong. Given this self-evident trend, you might be looking for game stocks to include in your portfolio. It's not easy but thorough analysis will always yield the best stocks to buy today as long as one has a long term perspective.
The video game industry has plenty of great stocks to offer. Image Source: Getty Images.
Investors looking to get exposure to this industry have a variety of options, but Electronic Arts (EA -2.32%), Activision Blizzard (ATVI), and Take-Two (TTWO -2.79%) are three of the best companies in the space.
Electronic Arts could deliver the best-selling game of 2015
Electronic Arts was one of the single best performing tech stocks in 2014. Shares of the publisher more than doubled, as sales of several of its key titles, including Titanfall and Dragon Age: Inquisition, exceeded expectations. That surge has given Electronic Arts a more aggressive valuation than some of its rivals, but the stock could continue to deliver in the quarters to come.
Among video game publishers, Electronic Arts has what may be the most interesting game for 2015. In November the company will launch Star Wars: Battlefront, a multiplayer first person shooter set in the fictional Star Wars universe. On its own, the game already had the potential to be a top-selling title, but it could be catapulted up the rankings by the fervor surrounding the upcoming film, Star Wars: The Force Awakens, which will arrive in theaters roughly one month after Battlefront hits store shelves. Electronic Arts released a trailer for the game on Friday, and it looks -- to put it mildly -- stunning.
In addition, Electronic Arts also has its sports franchises (including Madden and FIFA), which continue to be consistent winners. Electronic Arts depends mostly on traditional consoles, but versions of its sports games designed for smartphones and tablets have helped propel its mobile revenue, which rose 26% year-over-year last quarter.
Activision Blizzard has the most established franchises
Activision Blizzard has fewer franchises than Electronic Arts, but the titles it does release are almost always massively successful. Activision has several billion-dollar franchises and household names under its belt, including World of Warcraft, Call of Duty, and Skylanders.
The latter two will receive new entries later this year, along with a new title in the Guitar Hero series. Destiny -- which is developed by Bungie but published by Activision -- will be supported with a series of digital expansions. Destiny was something of a drain on Activison shares last fall after reviewers panned the title, but it ultimately went on to become the best-selling game in a new series ever.
Hearthstone: Heroes of Warcraft, has been expanding to new platforms in recent months. Last week, it arrived on Android and the iPhone for the first time. Hearthstone is a free-to-play mobile game, but it is aimed more at gaming enthusiasts than casual players. Since its release last year, Activision has continued to support the game with a series of expansions, and its revenue has grown from month to month. When Activision last reported earnings, it noted that Hearthstone set a record for monthly revenue in December.
Longer-term, Activision has two new titles planned, Overwatch and Heroes of the Storm, and could reap long-term financial rewards from Call of Duty: Online, a free-to-play version of its massively popular shooter currently exclusive to China.
Take-Two has one of the biggest blockbusters in gaming
Take-Two is a much smaller company than both Electronic Arts and Activision, but it has one of the largest franchises in gaming: Grand Theft Auto. The latest installment, Grand Theft Auto V, originally released in 2013, has become one of the best selling games in history, moving more than 45 million units as of the end of last quarter.
Unlike its competitors, Take-Two has been reluctant to turn Grand Theft Auto into an annual series, instead releasing a new entry every four to five years. But in the meantime, Take-Two has been able to monetize Grand Theft Auto through Grand Theft Auto Online, a separate, online version of the game that includes the ability to purchase in-game currency with real money.
Of course, Take-Two is more than just Grand Theft Auto. It has two sports series -- NBA2K and WWE -- that should receive entries this year. In addition, Red Dead Redemption, a game Take-Two released in 2010 to both great critical and commercial success, could be about to get a sequel. It is not confirmed, but the company has been hinting at its development.
