Emerging as a combination of hobby and technology around the 1970s, video games have evolved into a multi-billion-dollar industry. Supported by advances in technology, high-speed connectivity, and customized gadgets, the industry has grown leaps and bounds over the last decade.
Video Game Stocks
USA Today reports that the worldwide video game market could grow from $137.9 billion in 2018 to $180.1 billion by 2021, with China, the U.S., Japan, South Korea, and Germany being the top five global markets.
This article covers the performance of the top video gaming companies for the year 2018. The list includes stocks of the gaming companies which have a market cap of at least $1 billion and are listed on the leading stocks exchanges of America.
- The top 5 video game stocks of 2018 were Glu Mobile, Sony Corp., Huya Inc., Zynga, and Take-Two Interactive.
- Individual gaming stocks are often measured against the MVIS Global Video Gaming & eSports Index (MVESPO).
- Although the industry as a whole was down, certain video game companies outperformed the market benchmark.
The performance of individual stocks has been compared against the performance of the sector-specific benchmark index—the MVIS Global Video Gaming & eSports Index (MVESPO), which declined by around 12% during 2018.
Glu Mobile (GLUU)
- Market Cap: $1.34 billion
- Performance: 112% annual return vs. MVESPO
The California-based Glu Mobile was incorporated in 2006 and is in the business of designing, developing, publishing, and marketing a diversified portfolio of mobile games. The stock, which gained around 87% in 2017, continued its bull run and clocked gains of around 112% during 2018. Its interior decoration simulation game, called ‘Design Home,' continued to be the top contributor to revenues, followed by ‘Tap Sports Baseball,’ a baseball-licensed game. Booking figures of other celebrity-focused games like ‘Kim Kardashian: Hollywood’ and ‘Covet Fashion’ also fared well.
A healthy record of bookings all throughout the year continued user engagement with its old and established games, and a robust record of guidance that improved from one quarter to the next, Glu Mobile managed to achieve a strong top line. With a healthy pipeline of new games—which includes the much awaited Walt Disney licensed ‘WWE: Universe, Diner Dash Town,’ scheduled to be released in 2019—the mobile game-maker is expected to turn profitable for the first time in the last three years.
Sony Corp. (SNE)
- Market Cap: $61.96 billion
- Performance: 4.5% annual return vs. MVESPO
Founded in 1946, the Japan-based multinational conglomerate corporation operates across a diversified set of businesses which include consumer and professional electronics, gaming, entertainment, and financial services. It's Game & Network Services segment covers production and marketing of home gaming products, network services, and manufacturing and sales of related software. Its popular hardware gaming consoles include the PlayStation4 (PS4), PlayStation3 (PS3), and PlayStationVita (PS Vita), and the company uses its PlayStation Network (PSN) to distribute and market game software and network services internationally through its various subsidiary companies. The game segment accounts for around 25% of the company’s revenue.
A strong performance with a focus on content has helped the company achieve better earnings. The success of the PlayStation 4 game ‘Spider-Man’ helped Sony achieve sales of more than 91 million units globally, and featured over 90 million active monthly users on the PlayStation Network by the end of 2018. The latest quarterly results announced mid-October has prompted analysts to predict around a 30% rise in share price, with expectations of a record operating profit for the fiscal year ending March 31, 2019.
Huya Inc. (HUYA)
- Market Cap: $3.83 billion
- Performance: 4.1% annual return vs. MVESPO
Established in 2014, Huya, along with its subsidiaries, operates as a game live streaming platform in China that provides access to mobile, PC, and console games. Along with the game development and publishing activities, it also coordinates e-sports events and tournaments in sole capacity or in partnership with other organizers. The NYSE-listed company designs, develops, and operates mobile games and game-related apps in partnership with third-party distribution networks and platforms. It makes money by charging a subscription fee to users who access games through its platform which acts as a marketplace, and through the purchase of in-game virtual gadgets and items.
Starting at the IPO-price of $12 per share in May, the stock price hit a high of $48.5 in mid-June. Though the company reported robust quarterly results in August and November, the stock gave up the gains since the forward guidance was below par. Around the year-end, concerns about the increased interference from Chinese regulators weighted down on the stock price putting a question mark on new game approvals.
The third quarter results announced in November helped in a minor recovery. The company expects that the reorganization of the entertainment-related regulatory bodies by the country’s regulator will have a short-term impact, and its robust sales record will help stock price recover.
- Market Cap: $3.78 billion
- Performance: (-1%) annual return vs. MVESPO
The San Francisco, California-based Zynga operates in a niche field of games. Banking on the popularity of the shared, real-world experience, the company designs, develops, and markets “social games” which can be played on live platforms of mobile operating systems like iOS and Android, or on social networking sites, like Facebook. Its popular franchises includes FarmVille, Words With Friends, Zynga Poker, and Slots.
Throughout 2018, the stock traded in a narrow range. The month of May saw the company reporting earnings that beat the street expectations. Additional announcement about the $250 million acquisition of game-development studio Gram Games bolstered the stock price. Another key announcement of a deal with Disney in August to build a Star Wars licensed mobile game further supported the stock price. By November, the stock gave up the gains owing to the overall market meltdown. Heading into 2019, the company continues to ramp up development of several new titles, and the Disney deal is expected to be a key driver in shaping the future course of game development and similar partnerships.
Take-Two Interactive (TTWO)
- Market Cap: $11.81 billion
- Performance: (-8.67%) annual return vs. MVESPO
Founded in 1993, the New York City-based TTWO builds and markets entertainment products under the labels of Rockstar Games and 2K. Rockstar Games include popular games like Grand Theft Auto, Max Payne, L.A. Noire, Midnight Club, and Red Dead franchises, while 2K includes XCOM Enemy Unknown, Mafia, BioShock, and Sid Meier's Civilization games. Other popular 2K genre includes NBA 2K and the WWE 2K professional wrestling series.
Though the stock ended the year with negative returns of more than 8%, it fared better than the industry average. Despite the company achieving strong performances by its legacy titles, delays linked to a few new releases—like Red Dead Redemption 2—coupled with slight disappointment in earnings led to the stock having a volatile year.
Other stocks, like Activision Blizzard Inc. (ATVI) and Electronic Arts Inc. (EA), which are considered industry leaders, did not perform as well, and their returns were lower than the industry average.