Stocks

Videogame Industry Soaring to New Heights: 3 Winners

Videogame makers have been one of its biggest beneficiaries of the pandemic. The market was already thriving and the pandemic gave a further boost to sales as more people stayed indoors. So much so that the videogame industry is on track to become a bigger revenue generator than the global movies and sports industries combined.

While movie production companies and international sports have been taking a beating due to the COVID-19 breakout, videogames seem to be the only source of entertainment that has seen a surge in sales of consoles, hardware and other videogame accessories.

Videogame Market Soaring

The videogame market was doing well from the beginning of the year. Sales further started getting a boost from the second quarter after the pandemic compelled governments to go for shutdowns. This gave an organic push to sales as people started spending more on buying videogames and consoles after they were locked down in their homes.

According to a MarketWatch article citing an IDC report, the global videogame market is projected to jump 20% to $179.7 billion this year. This will make it a bigger industry than the global sports and movie industry combined. According to estimates by Motion Picture Association, the global movie business crossed $100 billion for the first time in 2019.

However, 2020 has been one of the worst years for movie trade with shootings and release halted, and theatres closed. Also, the PwC estimates the global sports market to garner $75 billion in revenues in 2020. Naturally, this makes it one of the worst years for both the movie and film industries.

Videogame Industry Poised to Grow

The videogame industry so far had a great year with sales soaring through all three quarters. And the scene may not be any different in the fourth quarter given that surging cases of coronavirus has once again ignited fears in the minds of millions, who will prefer staying indoors more or at least till the time a vaccine  hits the markets.

Experts believe that sales will continue to soar in 2021 following the recent launch of next-generation console games by Microsoft Corporation MSFT and Sony Corporation SNE. According to ReportLinker, the global market for mobile gaming is expected to reach $153.3 billion by 2027. Weekly downloads of mobile games in March 2020 jumped 30% compared to the year-ago period. Moreover, around 13 billion videogames were downloaded in the first quarter itself, which has only increased since then.

Our Choices

Given this sudden surge in sales and upbeat sentiment in the video gaming industry, this makes it an opportune time to invest in gaming stocks that are sure to gain in the near term.

Microsoft Corporationis one of the leading videogame makers and manufactures hardware and accessories. The company has been expanding its footprint in the videogame industry and recently announced that it will be acquiring videogame maker ZeniMax Media.

The company’s expected earnings growth rate for next year is 9.8%. The Zacks Consensus Estimate for current-year earnings has improved 5.8% over the past 60 days. Microsoft carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nintendo Co. NTDOY is the acknowledged worldwide leader in the creation of interactive entertainment. Nintendo has created such industry icons as Mario and Donkey Kong and launched franchises like The Legend of Zelda and Pokémon.

The company’s expected earnings growth rate for the current year is 49.4%. The Zacks Consensus Estimate for current-year earnings has improved 15.5% over the past 60 days. Nintendo has a Zacks Rank #2.

Glu Mobile Inc. GLUU is a leading global publisher of mobile games. Its portfolio of top-rated games includes original titles Super K.O. Boxing!, Stranded and Brain Genius, and titles based on major brands from partners including Atari, Activision, Konami, Harrah's, Hasbro, Warner Bros. and Microsoft. 

The company’s expected earnings growth rate for next year is 31.7%. The Zacks Consensus Estimate for current-year earnings has improved 13.9% over the past 60 days. Glu Mobile has a Zacks Rank #2.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.

Start Your Access to the New Zacks Top 10 Stocks >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Sony Corporation (SNE): Free Stock Analysis Report
 
Microsoft Corporation (MSFT): Free Stock Analysis Report
 
Nintendo Co. (NTDOY): Free Stock Analysis Report
 
Glu Mobile Inc. (GLUU): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Investing

Latest Stocks Videos

JPMorgan Says Buy the Dip as Investors Face Volatility

Dec 02, 2021

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More