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What Are Gaming Stocks and How to Trade Them?

Plus500 | Wednesday 13 September 2023

While gaming or video games date back to the 1950s with the first video game being invented in 1958, their hype has grown exponentially in recent years. In 2022, the gaming industry’s valuation alone was estimated to be over $340 billion and its projected growth is expected to surpass $521 billion in 2027. 

As such, given this market’s prowess and popularity, traders and investors may want to find out how they can potentially benefit from its price swings, and the companies involved in its development, and may also want to learn how this growing industry progresses and functions. Accordingly, this article delves into the ins and outs of gaming and lists some of the biggest companies involved in it. 

What Are Gaming Stocks and How to Trade Them?

What Is Gaming and What Are Video Games?

Simply put, gaming is the act of playing video games. The players are called gamers and they often use consoles, mobile phones, and computers to play video games. 

Video games are electronic games that were originally made for individuals but later became played by groups and nowadays there are also gaming competitions and even gaming conventions. The use of video games for computing education is also widespread, and some games are even designed to improve motor skills and hand-eye coordination.

The History of Video Games 

Before it became such a multifaceted and multi-purpose field, there were some events that happened to shape the gaming industry as we know it today. Here’s a brief timeline of the development of video games:

  • 1950s: Physicist William Higinbotham created the first-ever video game which was a tennis game called Tennis for Two, in 1958, and 6 years prior to that, British Professor, A.S. Douglas, created a game called OXO as part of his university dissertation. 

  • 1962: The first video game that could be played on multiple computer installations was created by computer scientist, Steve Russell. The game was called Spacewar! 

  • 1967: A system prototype of a multiplayer and multi-program video game was created by developers from the Sanders Association Inc. and led by Ralph Baer, the man who’s deemed the father of video games. The prototype was called The Brown Box. The system was then called Odyssey and was sold to people as the first video game home console. The hype surrounding this console later faded. Still, one of Odyssey’s games was then used as an inspiration for the first arcade video game, Atari’s Pong. 

  • 1977: Atari released the Atari 2600, a home console that used joysticks and interchangeable game cartridges as well as multi-colored games. This was the start of the second generation of video games. 

  • 1978: Space Invaders, a game that is often viewed as the forerunner of modern gaming was created. 

  • 1979: Activision, the first third-party game developer, emerged. Nowadays, the company is known as Activision Blizzard (ATVI) after a merger was completed between Activision and Vivendi. 

  • 1983: The video game market in North America crashed due to rising competition from computer gaming, low-quality games, and the oversupply of consoles among other factors. Consequently, numerous video game console companies went bankrupt before the video game market regained its momentum in 1985. 

  • 1985: Nintendo (7974. TY), a Japanese company, landed in the United States and improved the games' quality, sound, and graphics, which led to the gaming market’s recovery. In addition, Nintendo releases some of the most popular games to date including Super Mario Bros, Matoid, and The Legend of Zelda. 

  • 1989: Handheld gaming was introduced by Nintendo’s Game Boy video device which made a notable buzz then and was succeeded with multiple successful games in the years to come. 

  • 1995: Japanese video game company, Sega, created three-dimensional (3D) gaming as it released its Saturn system in North America. The system was the first of its kind as it played games on CDs instead of cartridges.

At the time, Sony (SONY) was supposed to release its famous Playstation, but Sega released its device 5 months ahead of schedule in order to beat Sony. Nonetheless, both Nintendo and Sega could not surpass Sony’s success then or now. 

  • 2005-2006: Modern gaming kicked off with Microsoft’s (MSFT) Xbox 360, Nintendo’s Wii, and Sony’s PlayStation 3. These consoles modernized gaming as the PlayStation introduced Blu-rays (disc storage units), the Xbox 360 had similar features to the PlayStation 3 but was also famous for its online gaming structure, while the Wii’s motion-sensitivity helped boost its sales. 

  • 2017-2023: Nintendo released the Nintendo Switch, the first to allow handheld and TV-based gaming, while Microsoft released its Xbox One X in 2017, and in 2020, Sony released PlayStation 5. Nowadays in 2023, many companies, especially Sony and Microsoft seem to be putting more effort into virtual reality (VR) gaming such as the metaverse technology. (Source:History.com)

The Most Popular Publicly-Traded Video Game Companies

Given what’s mentioned above, it may not come as a surprise to learn that some of the biggest video game companies in the world include Sony, Microsoft, and Nintendo, with Microsoft being the leader by market cap in 2023. 

Other companies include the Call of Duty-maker, Activision Blizzard, an American video game company, and Chinese tech company, Tencent (0700. HK), which is popular for PUBG and League of Legends among other games. 

American video game company, Electronic Arts (EA), is also one of the most popular names known by almost every gamer for its famous FIFA Series and the Sims among other big games.  In addition, French company, Ubisoft (UBI.PA), which is popularly known for its Assasins’ Creed series, is among some of the most known names in the gaming sphere. 

How to Trade Gaming Stocks?

For traders or investors seeking to speculate on the gaming companies’ stock price movements, one way to do it is through Plus500’s share CFDs

CFDs, which is an abbreviation for Contracts for Difference, are derivative contracts between two parties agreeing to pay the gap between the underlying stock price when the contract was initiated up until it expires. CFDs may be suitable for those seeking to gain exposure to gaming stocks without having ownership of them and for those seeking leveraged trading. In order to understand how CFDs function better and the risks and rewards associated with them, you can watch our free how-to video and read our article called “What Is CFD Trading?”. 

Alternatively, some may be interested in investing in stocks in the long run and having actual ownership of the gaming stocks. In such cases, they may find Plus500’s Invest* platform is more suitable. 

*Availability Subject to Regulation. 

Most Sold Video Games

Another thing traders and investors may want to keep in mind if they intend to trade gaming stocks is the most popular games during a specific time. Knowing this may help them weigh their trading decisions and understand how each company’s stock is growing or shrinking accordingly. 

As of July 2023, some of the best-selling games of all time are the following:

  • Minecraft, developed by Mojang Studios, which is owned by Microsoft, is a 3D game that allows players to interact and play however they want without an end goal. 

  • Mario Kart 8 and Super Mario Bros., are both developed by Nintendo. The former is a kart racing game while the latter is a platform game series. In addition, Nintendo’s Pokémon Series is also considered one of the most-sold games ever. 

  • PUBG, which is published by Tencent, is a player vs. player shooter game that allows up to 100 players to fight in a battle royale. 

  • Call of Duty, which is published by Activision Blizzard, is a shooter video game that simulates warfare. 

Other popular games include EA Tetris, Overwatch, Grand Theft Auto V, and Red Dead Redemption 2. 

The Gaming Industry’s Projected Popularity 

According to Statista, a German data-gathering and visualization platform, in 2023, the video game market is expected to grow to $385 billion and a YoY growth of 7.9% up to 2027. 

Moreover, segments like mobile gaming, cross-play games, and virtual reality as well as cloud computing gaming and artificial intelligence (AI) are expected to be advanced and more popularized. 

Conclusion 

Since its inception in the 1950s, the video game industry has experienced exponential growth, and this trend is expected to continue. With the creation of increasingly popular games and a continuously expanding gaming community, the industry may be poised for further growth in the future.

Nonetheless, given the rising competition, the market’s volatile nature, and the unexpected economic events that can emerge, whether or not these positive predictions will hold true is yet to be seen. Traders and analysts alike may have to wait and see what the future holds for this fascinating industry.


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