This Emerging Trend Could Lift Shares of Take-Two, Zynga, and Electronic Arts

"We've said our strategy is to meet consumers where they are. If they're buying hardware, we'll be there with software," Take-Two's (NASDAQ: TTWO  ) Chairman, Strauss Zelnick, told Gamesindustry International in a discussion surrounding his company's platform strategy.

Take-Two's Grand Theft Auto 5, the best-selling video game of 2013, was developed for the PlayStation 3 and Xbox 360 video game consoles. But Take-Two hasn't been a stranger to mobile game development either, porting its old hits to platforms owned by Google (NASDAQ: GOOGL  ) and Apple (NASDAQ: AAPL  ) .

Those two tech giants, in addition to Amazon, could soon bring their mobile platforms to the living room. For investors looking to play this emerging trend, the stocks most poised to benefit could be the video game creators, including Electronic Arts (NASDAQ: EA  ) , Zynga (NASDAQ: ZNGA  ) and Take-Two.

Apple, Amazon and Google prepare to enter the living room
Admittedly, I'm working off mere speculation at this point -- but as I've written before, Apple, Google and Amazon's forthcoming moves into the living room appear quite obvious.

For months, rumors have swirled that Amazon was working on a video game console, hiring game creators, and beefing up its in-house video game initiatives. Then on Wednesday, TechCrunch reported that Amazon purchased Double Helix games, the creators of the Xbox One launch title Killer Instinct -- signalling quite strongly that Amazon had something up its sleeve.

The same is largely true for Google and Apple. Neither one of those companies has purchased a video game studio, but widespread rumors have fueled speculation that both tech giants have consoles of some sort in the works. Apple is already a major player in the video game industry, with its app store kicking out billions to game creators.

Google Play isn't as significant, but given Google would probably like to change that. The Wall Street Journal has reported that Google has a Nexus video game console in the works, and the company has been adding video game features to its Google Play app store.

But even though the video game industry is enormous, these forthcoming consoles -- even if they are radically successful -- shouldn't affect Amazon, Google, or Apple too much. Sure, it would likely help to lock more consumers into their respective ecosystems, but ultimately, the financial gain would be minimal in the context of their core businesses. Instead, the companies best poised to take advantage of this trend could be the game creators.

Making games more valuable
An easy analogy to think of is Netflix: although the stock has been a fantastic investment for long-term shareholders, it wasn't just Netflix that benefited from the Internet video streaming revolution. Content owners like DreamWorks and AMC Networks have performed spectacularly as the push to offer original exclusive programming has made their content more valuable.

The same could ultimately play out for the video game publishers. Would Apple or Google acquire Take-Two in order to make the Grand Theft Auto franchise exclusive to their platforms? Probably not, but both companies could easily afford to, and Amazon's purchase of Double Helix shows that it's possible.

Even if they weren't to acquire a company like Take-Two, they could pay them for exclusive games. Video game-focused publication Giant Bomb reported that Apple paid Electronic Arts for the exclusive rights to the hit mobile game Plants vs Zombies 2 (Electronic Arts later brought the game to Google's Android, but it was an Apple exclusive for weeks). Apple denied the report, but Giant Bomb stood by its claim.

And even if they don't pay for exclusivity, the mere existence of the devices should dramatically expand the video game audience. In the same way a non-gaming consumer may have purchased Apple's iPhone only to spend their time playing Candy Crush, a consumer who has no interest in video games could purchase Amazon's forthcoming box for its media functionality only to later use it for gaming.

Zynga would be particularly interesting given its focus on mobile games. Late last month, Zynga acquired NaturalMotion, the mobile game studio behind the hit Clumsy Ninja, signalling a focus on mobile devices going forward.

Forthcoming consoles from Amazon, Google, and Apple would likely be an extension of the companies' existing mobile platforms, allowing Zynga to play to its strengths.

The video game industry is about to be shaken up
2014 could wind up as watershed year for the video gaming industry, with Apple, Google, and Amazon extending their mobile platforms to the living room.

All three companies have reason to do it, as the move would strengthen their burgeoning content ecosystems, but the companies most poised to benefit could be the content creators, video game publishers like Zynga, Electronic Arts and Take-Two.

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