While the video game sector has proven to be a somewhat volatile one, investors who bought its top stocks at opportune times — and held on to their positions — have seen tremendous gains. The industry has experienced incredible growth over the past few decades, powered by expanding global demand, new technologies, and digital trends. And despite this impressive history, these may still be early days overall.
The interactive entertainment industry is a large, fast-growing market that still has lots of potential. Companies that can continue adapting to — and shaping — the demands of that industry are poised to deliver great returns for shareholders. With that in mind, Take-Two Interactive(NASDAQ:TTWO), Tencent Holdings (NASDAQOTH:TCEHY), Activision Blizzard(NASDAQ:ATVI), Electronic Arts (NASDAQ:EA), and Capcom (NASDAQOTH:CCOEF) stand out as top gaming stocks for the long term.
These companies look primed to take advantage of key trends and have assets and competitive advantages that set them apart from the field. Investors who want to tap into the video game industry’s promising growth trajectory should explore the individual profiles of these stocks in greater detail. But, first, it’s worth establishing some foundations about video games and investing in order to put some context around the appeal of these businesses and the space in which they operate.
Reasons to invest in the video game industry
Video games make up a large and fast-growing industry that looks primed to continue benefiting from increasing global demand for entertainment. Content is becoming an ever more important part of the product offerings of big tech companies, and massive platform operators including Amazon, Alphabet, and Apple are looking at entertainment as a strategic asset that can bring people into broader ecosystems and keep them coming back. That appears to be a smart approach — and there appears to be real wisdom in the old phrase “Content is king.”
The video game industry has been and continues to be highly competitive, but there’s proven demand for its offerings, and it seems almost certain that interactive entertainment will be even bigger in the world of the future. More people play video games today than ever before, and it’s likely that the industry will continue to expand and account for an increasing share of the overall entertainment sector.
Young people who grew up on titles such as Nintendo‘s original Super Mario Bros. (1985) or Capcom’s Street Fighter (1987) are in middle age now — and adults who played games including Asteroids (1979) or Centipede (1980) upon release might be playing in retirement today. Mobile phones have made gaming-capable platforms increasingly ubiquitous, and people of nearly every demographic group are more represented among the ranks of “gamers” than they were a decade ago. Video games have already gone mainstream, and the appeal is only getting broader.
A study conducted by Electronic Entertainment Design and Research found that roughly 211 million Americans played video games in 2018; that’s roughly 67% of the population. Globally, somewhere around a third of the Earth’s population plays games, and that figure is rising every day.
Newzoo estimates that the global games market generated roughly $135 billion in sales in 2018, and it expects that number to hit $174 billion in 2021. Interactive entertainment has undeniable momentum and plenty of untapped potential.
Within the broader context of industry growth, it’s worth taking a look at some of the specific trends that could power the expansion of gaming and help power performance for leading publishers…
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