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How to Invest in the Hot Video Game Industry

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  • (0:30) - Gaming Innovation: Where Should You Be Investing?
  • (3:50) - The Next Gaming Console’s: Microsoft and Sony’s Upcoming Projects
  • (8:30) - Streaming For Video Games: Project xCloud 
  • (15:25) - Google Ventures Into Gaming: Stadia
  • (19:40) - Is GameStop A Dying Retail Store?
  • (26:25) - Episode Roundup: GME, MSFT, SNE, GOOGL, FNKO, EA, ATVI, TCEHY, 

Welcome to Episode #182 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

This week she’s joined by Zacks Podcast Producer, Danny MacPherson, to discuss the innovation that is happening in the video game industry in 2019.

He’s a gamer and follows the industry trends, unlike Tracey who isn’t a gamer but is intrigued by the changes in the industry. There’s a lot going on in 2019.

The Comic-Con of gaming, the E3, just happened in June 2019 and Microsoft made a splash with its big Project Scarlett announcement as well as by bringing actor Keanu Reeves out on stage.

However, it looks like gamers will have to wait until 2020 for a new console as both Microsoft and Sony are set to roll out their latest versions next year.

Who is taking the spotlight in gaming?

5 Companies to Watch as Video Gaming Innovates

1.       Microsoft (MSFT - Free Report) is the King of Cool in gaming. It announced its new Xbox replacement for 2020 as well as Project XCloud which would let you stream games from Xbox to your phone beginning in October 2019. Additionally, it has new Game Pass plan which will have 3500 games available to subscribers. Microsoft remains the industry leader.

2.       Sony (SNE - Free Report) didn’t attend E3 this year but it’s also rolling out its latest PlayStation in 2020. It already has game streaming with 750 games which is $19.99 a month or $99.99 per year. This is meant to appeal to casual gamers as the hard-core gamers already have consoles. And mysteriously, Sony has formed a partnership with arch-rival Microsoft. What they are doing together remains unclear but it’s intriguing nevertheless.

3.       Alphabet (GOOGL - Free Report) is a surprise entrant into gaming as it announced its Stadia subscription service for $10 a month. It will launch in November 2019 and will host 28 games. However, it won’t initially have any exclusive games which may be a must-have to attract subscribers.

4.       GameStop (GME - Free Report) , the gaming retailer, has seen its shares sink 62% over the last year and 85% over the last 5 years as gaming moves towards digital formats. Same-store-sales are expected to fall 5-10% this year but it’s still going to see between $7.46 billion and $7.87 billion in revenue. Can GameStop save itself in a changing industry?

5.       Funko (FNKO - Free Report) has the license for Fortnite toys. It also makes other popular pop culture toys. Fandom is strong in video gaming. Last quarter, one of the GameStop’s bright spots was its Collectible sales, which rose 11%. Is Funko a way to play the video game industry without buying the hardware or software makers?

What else should you know about this hot industry?

Find out on this week’s podcast.

[In full disclosure, Tracey owns shares of GOOGL and FNKO in her personal portfolio.]

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