Will Video Games Make Lions Gate Entertainment Stock a Better Buy?

Studio hires Peter Levin to lead investments in video games to boost growth. Lions Gate Entertainment stock will soar if he succeeds.

May 17, 2014 at 1:00PM

A plan to invest in and publish video games could boost Lions Gate Entertainment (NYSE:LGF) stock over the long term, Fool contributor Tim Beyers says in the following video.

Why the optimism when the gaming space is so crowded? Tim says Lions Gate hired well. Division chief Peter Levin comes over from Nerdist Industries, a budding digital empire that's since joined Legendary Pictures. Before that, he developed a track record for investing in media properties. Early bets included Angry Birds maker Rovio and GameSpy Industries, later sold to IGN.

In an interview with GamesBeat, Levin said his strategy won't allow for pigeonholing himself or Lions Gate. Instead, he plans to explore multiple avenues for publishing games based on key franchises such as The Hunger Games and Divergent.

Divergent Jumping From Train

Video games based on the Divergent franchise may be coming your way soon. Source: Lionsgate Entertainment.

Tim says that's encouraging, especially now that mobile games are gaining parity with console versions at a rate we've never seen. Dutch researcher Newzoo expects revenue from this segment to grow by 27.3% annually, hitting $23.9 billion by 2016.

On the other hand, Levin has no choice but to remain flexible. Walt Disney has found a profitable niche with Disney Infinity, while Time Warner continues to pump out hits based on its DC Comics properties. The latest -- Batman: Arkham Knight -- is due out this fall.

In the end, Lions Gate is simply trying to be more like its bigger peers. We've seen its strategy pay off in movies with The Hunger Games and Divergent, and in TV with Mad Men and Orange Is the New Black.  Similar success in video games wouldn't be surprising, especially with a seasoned executive like Levin running point.

Now it's your turn to weigh in. Do you believe Lions Gate can succeed publishing and investing in video games? Please watch the video to get the full story and then leave a comment to let us know your take, including whether you would buy, sell, or short Lions Gate stock at current prices.

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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Time Warner and Walt Disney at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends and owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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